Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-09
DISCOUNTS EFFECT
OF DROP IN WHEAT
Statistics Company Declares
Break in Prices May Not
Result Seriously.

>SpeclaI Dispatch to The Star.
NEW YORK, June 8.-While in no
way attempting to minimize the extent
of the disaster which has befallen a
large number of farmers in the recent
drastic decline in wheat prices together
with large carryover and prospective
large production, the Standard Stats
tics Co. of New York, sounds an OPP
timistic note in an Interpretation of
the Break in Wheat Prices"
The survey, after reviewing the high
record earnings of the 500 manufactur-
ing concerns which reported average
profits for the first quarter 80 per cent
over the similar period Of 1928. says in
part:
by Fall it is quite possible that the
evil effects of the drastic shake down
in wheat prices may be somewhat miti-
gated.
Production Outlook.
Meanwhile, of course, and until there
are definite signs of more adequate ag-
ricultural incomes than at present avail
able, precautionary measures are like
ly to be taken by business men and
manufacturers to place themselves in
positions to withstand considerable
period of dizziness this Fall. Production
remarkably well, are likely soon to show
a more definite downward trend.
Nevertheless, the present is not q
time to be stampeded into a pessimistic
frame of mind. While there is clearly
ample basis for taking certain measures
of precaution, the wheat crop is by no
means an all-inclusive determinant of
business. There is no assured founda-
ton for expectations of serious bust
ness recession, and many reasons for
the belief that the handicaps of cur
rently low grain values can be at least
partially overcome later this Fall.
But virtually every important in
dustry normally looks to the quickening
effects of harvest income for decided
squirt in activity during the Fall months.
II the release of purchasing power to
the wheat growers is to be as sharply
below that of year ago as the present
comparative level Of prices would indt-
cate, there is need for caution in the
scheduling of business programs over
the next half year.
"On the other hand, the break in
wheat prices clearly signalizes the need
for consideration by the Federal Reserve
authorities of a less stringent credit
policy this Fall. Granting that ma
terially lower prices were probably justi-
fed by the prospective burdensome car
ryover of old crop grain and by the
favorable new Winter crop outlook, the
severity of the decline witnessed was
in all probability directly affected by
the strained credit situation, and by
pressure from the Reserve authorities for
general reduction Of borrowings
against speculative commitments.
Partial Recovery.
at is quite possible that the decline
in grain values in the process Of dis
counting oversupply overshot its mark,
as evidenced by the partial recovery
during the past week. Any amelioration
of the money situation when the bur-
den Of crop moving is more nearly at
hand would further tend to stabilize
and improve values. Moreover, much
will depend on the Spring wheat pros
pect. There is considerable doubt as
TO the ability Of Canadian growers to
attain last years harvest volumes, and
some likelihood also Of lower European
yields"