Evening star., 1930-12-14
GENERAL ECONOMIC
SITUATION BETTER
Money Reported Plentiful for
Legitimate Purposes.
Frozen Credits Few.
BY DAVID LAWRENCE.

Although very little is being said
publicly about the efforts of the Govern
ment here to restore confidence and
stabilize business, there is no doubt that
much r. going on in the way OF in
formal effort to accelerate an economic
recovery.
Events of the past week gave many
officials a good deal to be nervous about,
particularly with reference to the bank
merger in New York which failed to
materialize and which it was thought
here would relieve much of the tension
in the metropolis. Every encourage
ment was given the New York bankers
who tried to reconstruct a tangled
situation and certainly. if a lesson was
learned through the negotiations it was
that, rumors and reports about the con-
dttion of any financial institution once
they are circulated make it difficult to
prevent runs and conserve deposits.
Practically No RepercuSsiOn.
The significant thing about the epi-
sode in New York is that it had practi-
cally no repercussion in other parts Of
the country.
AS each institution with frozen credits
solves its problems, either by mergers
or consultations, the rest of the finan-
and corresponding amount of conf
dence is restored. The general situa-
ton reflected by reports from all parts
of the United States in the matter of
bank finances is very good Money is
reported plentiful for legitimate pur-
poses and, while there is a certain
amount of 'slow loans" and frozen
credits" the proportion which this
bears to the total amount of liquid
credit is said to be negligible.
The full effect of the sterilization
process which has been going on for
several weeks probably will not be felt
Immediately, but there is q feeling here
that business has girded itself for the
task energetically.
The problem of how to absorb the
number OF unemployed still remains un-
solved, however, and for the moment
the work of the Emergency Employment
Committee here IS directed toward pre-
venting an increase in UNEMPLOYMENT
The tendency OF many companies to cur
tail employment rather than pay losses
from reserves, but efforts are being
made to persuade these same business
es either to retain their employees or
b care for them.
Situation Considered Improved.
There is no doubt that the situation
today is considered much improved over
that OF several weeks ago. The psy-
ehology of the public is sometimes diff
ncult to analyze, particularly in view
Of conflicting reports. In this connec
ton a quotation from a magazine ar
ticle written in 1922, just after the de-
preston of that period, by Eugene
Myer, jr., who was then managing di-
rector Of the War Finance Corporation
and who is now the new governor of the
Federal Reserve Board, is well worth
reproducing
In general, pessimism follows and
does not precede untoward events. Pes
simism is rampant after a disaster; op-
timism precedes it. But to listen to
the pessimists, one would think that the
prophet of evil was anticipating events
instead Of merely recording them by
his emotional reactions If one could
plot the curves of optimism and pes
simism as exactly as one. can plot the
curves Of prices and the volume of pro-
duction and consumption, one would
find that they follow considerably be-
hind the material conditions Only the
few anticipate events; the many stop,
look and listen after the event is passed"
(Copyright, ls3o)