Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-01

maintenance-an increase of SIS, O0O, 900
over 1929
5. BY leaders of the construction and
building industries announcing that the .
highway construction for next year
would call for capital expenditures Of
l,lOO,OOO,O00-an increase of 10 per
cent over 1929.
s. If the job of undermining dwelling
houses was undertaken, and there will
be considerable work in this direction,
, 1t would require another So, 600, 900, 900
| for 1880.
Z. BY different cities and State gov
ernmentS agreeing to cooperate in put
ting ahead their plans for needed con-
! struction. so that a total of $625 200, 900
will be spent in this field.
8. By labor leaders agreeing not to
put on pressure for increased wages for
J 1890.
If the expenditures of these larger
groups are considered, it represents a
gain over 1929 of about Is per cent.
Net bad work on the part of the Gov
eminent and business in a period of
less than eight weeks.
Buying Power on Main Street.
1t is true that more fortunes we're
lost in the last three months of 1929
than IN any of the other stock market
drops. But the buying power of the
Nation is not on Park avenue New
York, but on Main street, u. S. A. Col
Ayres OF Cleveland made the statement
that during the SO years that have
elapsed since the United States returned
10 gold basis following the Civil War
there have been Is great bear" mar
KetS preceding this one. OF these IL
were followed by serious business de-
pressions. Nevertheless, this Cleveland
expert does not believe careful COM
parlSon between present conditions and
Cnose which existed when previous stock
markets went down indicates that we
SHOULD expect any serious decline in
| length Of time.
Col. Ayres believes that business
would have dropped in its activity about
ChlS time even had the stock market
coilapse not occurred, for two principal
economic reasons: The automobile in
oustry had overproduced in the first
nine months of 1929, so that a let-down
tnere was in order to allow the dealers
to clean up their stock of cars. NatIJ-
rally when the automobile industry
lessons its buying it affects score Of
industries depending upon it for their
activity.
The other factor, showing I'D before
the stock market decline, was the droD
IN the volume OF new building con-
Structlon. Throughout the year 1929
the volume of building has been c]ron-
ping because of the high price of credit.
rms was not the only reason, however,
Tor the decline in building. Two other
factors helped to slow up building.
First, the postwar demand for new
construction had been pretty we'll taken
care of, and, second. the great Diff
Guilty IN securing funds on junior mort
cages. Not in recent years has it been
harder to secure money on second
mortgages than the year, 1929.
Banks Borrowing Money.
The other factor making for a re-
TURN OF prosperity is more healthy
credit conditions New York banks he.
gin the new year with plenty of money
on hand. But many of the leading
nanks throughout the country are bor-
rowing money. The demand for their
1unos Is almost as strong now as IL
was before the market crash-stronper
in some cities.
In spite of the spectacular decline in
orckers' loans, the total bank credit
outstanding still is greater than at the
beginning OF October. Loans of re-
though lower now than in mid -Noven-
Der. So the banks have not liquidated
and credit Is not yet what would be
called easy.
1t is likely that the beginning of the
year viii see drop in the rediscount
rates OF the Federal Reserve Bank of
New York. followed by an outflow of
gold to Europe. Some expect the out
How, before June, to reach as high as
$3O0,O00,000. But the real burden that
the credit structure must recognize this
winter and through 1880 is just how
to make good the shrinkage of S4,5OO,-
100000 OF brokers loans which has
taken place since the stock market
drop. One writer puts 1t this way:
When stock prices discount the fu-
ture too far in advance great many
| people make money by selling their
stocks and taking their profits. These
winnings are not an addition to ma
tional wealth; they are an overdraft on
national savings. When the bull mar
ket is terminated the last margin buy
ers of the stocks shoulder the task of
paying of the overdraft That is what
has been happening in recent weeks.
In a bull market large part of the
increase in brokers' loans represents
profits taken out of the markets by
successful SPECTATORS and in so far
as prices are in excess of values these
profits constitute an overdraft on ma
tional savings credited to the bank ac-
counts OF the astute SPECTATORS. In q
bear market large part of the shrink
age in brokers' loans represents the
paying of Of the overdraft by other
ana less aStute operators"
1880 Should BE Normal.
TO sum up, the new year should
develop into normal one with the
first few months slower than for the
corresponding period of 1929 Bonds
should be more in demand than for
several years, with stocks being bought
on an investment basis through the
year. Commodity prices should show
slight rise, building costs should re-
cede and the number of employed
should remain fairly steady.
Confidence should be well restored
before the Summer, and credit should
be flowing easily into the country by
that time. Mergers should continue
probably with increasing frequency be-
fore the close of the year. Basically,
conditions are healthy. If we have any
depression 1t will be due to ignorance.
The year 1880 may not be the record
year of American business. It will not
show the spectacular ups and downs
of the extraordinary year just closing.
But 1t will be one which should show
steady advancement and business
progress.
(copyrisht. $780, North American Newspaper
Alliance)
A.