Evening star., 1929-12-15
CONTINUED From First pasel

us alone.
Show Warm Satisfaction.
They were precisely right In that an
Sicipatton. They did not realize, though,
that they 50 soon would be aroently
welcoming his tendencies toward not
leaving them alone. A short time pc
fore these words were written tne
American Railway Association neIo
meeting in Chicago. The railroad eX-
ecutiyes present were In receipt OF
President Hoover's proposal that their
CAPITAL expenditures for permanent I'M
movements on their railroads during
the next II months should not be per-
rnittsd to slacken of. Instead OF re-
sentiment toward this nterpoSltlon IN
their affairs. they showed warm Satls-
faction and approval. Not a VOICE We we
lev. on the contrary-and not only IN
public statement, but in private con-
versation-the feeling was VrtuaIiy
unanimously expressed that the PIesl-
dents policy was the rendering OF a
great service to the country ana tnat
the railroads, so far as was Ieas4O'e'
should follow his lead" VA. 80
the sort of lead" that Mr.. Hoover N
such matters furnishes-and has fur-
nished. It is not a lead" simply 70.
ward shouts of all Is well' and toward
the ballyhoo and the whoopee OF the
declaring-and infating-of conn
dence." It is just as possible TO nnate
confidence as it is to innate comnool-
ties or securities, and IL IS 1usC as ~
evitab!e thereupon to reap the conse-
or1ent, deHationary process. Mr.. Hoover
e. not engaged, and never has been en-
rared. in being a prom1scuouS oooLn-
er'9 and confidence artist" quite
otherwise. the key to his policy in this
general field, and the key 70 coming
POSSIBLE developments In the Federsl
Government in matters OF TINS soIC,
To be found not in the blindly uttered
,1,ord FORWARD" but in the seientin-
eallv formulated expression business
balance"
Once Took Opposite Stand.
BealIv to understand Mr. Hoover nov,
v,e sholild recall what he did IN Marcn,
1928. in the matter Of the construStt1n
Industry. He formally and oncl1ny.
suggested at that time tnat puo1.t pat
buiidine by the Federal Government
should not be accelerated, but retarded
ana postponed. In the succeeding
month the committee which he hao
set up on business cycles ana unem-
niovn1ent" reported that all building
private as we'll as public, should pro
ceed with caution. ...
This policy was the precise oppos1Ue
Of the policy customar1ly expected from
people in high Federal station: II was
an outright "discouragement' TO Ger
tain variety of business effort. The rea-
son for it was based on ideas gained
from the theory or principle which now
81 often has been mentioned in TINS
article-the theory or principle OF "oal-
ance." Prices of building materials
were seen to be advancing toward be-
.EgSr ~
eral and there was the prospect OF an
''indation- -dehation" turn Of the wheel
into the mud To escape it, Mr.. Hoover
was willing to discourage" instead OF
trying to stimulate"
we NAV then proceed to observe his
policy, as President, toward the recent
colossal flow of funds into stock market
operations. 1t wcs Thoroughly known
that the President looked upon that
dow with anxiety and with dtsapprovaI
for the volume of it. The action OF the
Federal Reserve Board, just before he
became President, in striving, through
moral sussion, to prWent the use OF
Federal Reserve credit for speculative
purposes, was taken iN large degree
through the persistent support given to
it, within the board, Sy M. Adolph Mil
Ter, one Of Mr. HooveI~S Llost intimate
friends and associates.
Economic Balance" Cited.
At approximately the same time the
report Of 'ths committee on recent eco
nornic changes Of the Presidents Con-
ference on Unemployment" signed by
Mr.. Hoover as chairman, devoted Itself
centrally to the philosophy Of the eco
nonic balance" and spoke potntedly,
critically of the process whereby "tn-
vestors, as well as large body Of spec
ulators, have invested through the stock
exchanges not only their savings but the
proceeds of loans secured through banks
and brokers, until the credit structure
Of the country has been sufficiently
weighed to indicate a credit stringency,
resulting in an abnormally high rate for
call money and an appreciable increase
In the rate Of interest for business pur-
poses. . If money in quantity Is
taken out Of production and employed
for speculation, to this extent equilib-
rum will be destroyed, and destroyed
for all"
These warnings did not avail to check
the leaders of the speculative upward
movement. Any more drastic tnterver-
ton by the Government ip the circum-
stances would have been fraught with
great peril for two reasons.
In the first place, merely personal
utterance by the President regarding
the level of stock market loans and of
stock market prices would have been
thing so arbitrary as to call down upon
him, with justification, the complaint
Of every investor and speculator who
thereby might sustain personal flnan-
cial loss In the second place, the Gov
ernment contained within itself no ef-
fective organized body which could give
to the President and to the country an
authoritative, comprehensive, rounded
and balanced, view of the whole in
dustrial and commercial and transpor-
rational and agricultural and financial
situation and movement.
Aims to Resume Balance"
We here come to the only possible
permanent and valuable outcome OF the
whole crisis through which we have
been passing. The President te engaged
at present In a governmental effort to
encourage industry, without panic, to
resume the balance" long ago derange6
by the excessive attraction Of capital to
stock market uses. Might there not
have been better governmental organ
ization through which more effective
warning against that arrangement
could have been delivered and through
which the extremes Of that derange-
ment might possibly have been pre-
vented?
II we are to use government to pick
UP the pieces after the crash, is it not
valid, perhaps. to use government to
help avoid the happening Of the crash,
or at any rate to llelp avoid its happen
ing so loudly and so disaStrous!y?
To that question we shall presently
and concludingly recur. Here it may be
well to say a few succinct words about
the new CONSTITUTIONAL activities which
the President has been helping to sum-
mon into emergency being.
To begin with its earnestly hoped
that people will not be nesmerized into
thinking that a few new Federal gov