Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-10-03
HOOVER ADDRESS
HELD SIGNIFICANT
Pronouncement at Cleveland
Regarded as One of Best
Since Market Crash.
BY DAVID LAWRENCE.

CLEVELAND, October 3.-President
Hoover made here the most constructive
and significant pronouncement that has
come from the Chief Executive since
the stock market crashed year ago
and the business depression started.
With his audience comprising the
members of the American Bankers As
sociation-the counselors and advisers
of American business, as he chose to call
them-the President analysed the de-
preston as worldwide and predicted
that America would lead the world back
to prosperity.
The most interesting phase of the
Presidents speech was his emphasis on
the readiness of the Federal Reserve
System to cooperate with the banks OF
the country in keeping money rates low.
This means supply Of capital for
refinancing, for necessary expansion and
for readjustment Of capital structures
due to the effects of the depression on
industry.
Credit Prerequisite.
I'VE know" said the President In the
climax of his speech, that one Of the
prerequisites CT ending depression Is
an ample supply of credit at low rates
Of interest. This supply and these rates
are now available through the co-opera-
serve System"
Such an assurance coming from the
President of the United States will UNI
questionably have stimulating effect
on the credit machinery of the Nation,
for 1t means continued assurance of low
interest rates to borrowers for COM
mercial purposes at the banks and at
the same time encourages the invest
ment bankers to float new issues OF
securities. The return of an active bond
market, which has been patiently
awaited ever since last October and
which only recently has put in an ap-
pearance, had not altogether convinced
bankers of its permanence.
When the President tells the bank
ers that low money rates are going to
continue, he practically invites them to
fill up their portfolios with good bond
investments, as the days of higher rates
in the call money market for the 8 or
per cent yields on speculative stocks are
no longer possible-at least not for q
long time to come. Those bankers who
hesitated early in 1880 are approaching
the end of 1880 with their investment
portfolios rather unproductive as to in
come because they have chosen to keep
too much money on call.
Points to Underconsumption.
But apart from the. news that the
Government will do all in its power to
keep money rates Iowa circumstance
which will cut down the fixed charges
Of many a business conducted on
credit-the President urged the bankers
to adopt philosophy Of prudent OPP
timism. He pointed to the "unnec-
essary fears and pessimism" of the
people and called upon the bankers to
Join in the thought that there Is q
time in every depression when the
changed attitude of the financial agen-
cies can help the upward movement in
our economic forces"
Mr.. Hoover, in his analysis of world
wide conditions, put his finger on the
| single characteristic on which many
business leaders have lately been be-
ginning to put their faith-the under
consumption that has been going on,
due to diminished buying power.
Most of these commodities" he ex-
planned, as he referred to silver, zinc
copper, cotton, wheat, coffee, sugar and
rubber" are below the level at which
SUFFICIENT production can be maintained
for the worlds normal needs, and
therefore. sooner or later must recover
With banks in liquid condition and
the world compelled to begin buying for
necessity, the cycle Of economic prog
ress must start soon. Mr.. Hoover
doesn't say just when, for the reason
that nobody. knows how rapidly stocks
of commodities are being depleted, but
he does point confidently to the I'M
evitable reversal of the trend in COM
modify prices, which holds the key to
the recovery Of prosperity.
(Copyright, 1s3o.)