Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-01

after the surprising turn In the attitude
of the administration at Washington on
foreign debts, one can make ones self
believe that here again turn has come
about and that along with the evil
! dences of betterment in this country
even though these signs are none too
prominent-there Is the beginning of a
movement in which the leaders Of all
nations will cooperate in order to over
come the present world troubles. The
economic and financial crisis In June
may be paralleled with the military
crisis in the Spring Of 1918 which was
met by the appointment of a supreme
commander to direct all of the allied
forces that had been operating with
entire lack of coordination.
Even should the situation in Europe
be brought under control, however, 1t
will be. long time before the shat
can be integrated and the confidence
of investors re-established. Therefore,
this country must look to its own
people for the support Of markets for
its raw materials and manufactured
goods. The monthly foreign trade fig
ures during the past year, and par
ticularly those just published for May,
tell plain tale Of the impoverishment
in South and Central America, in Con-
tinental Europe and in the Far East
There are economists who believe that
it may take the greater part OF gen.
Grafton to overcome the effects of in
tense natfonalism, with tariff barriers
in every part of the world, and that
we must meet this situation and adjust
our output of manufactured products
and of products of the farm to the con-
Stunning capacities of our own 10000
900 people.
There Is no doubt that in the past
six months the spectre OF Russian COM
petition has been more in the minds
Of the American people than 1t was
capital in the United States is being
made of the alleged successes under
the Soviet fve-year plan, in order to
disturb those who have become more
disconnected and more inclined to fol-
low new leaders as their employment
and their earnings and savings have
steadily diminished.
Distress Averted.
The weekly pay envelope Of Amer
lean workers as a whole has been ma
terially reduced. There Is not today,
nor has there been at any time, the
widespread distress that characterized
other major depreSsionS. There has
been greater sympathy and unity of
policy between employers and employed,
so that fewer people than heretofore
have been cut of with no sort Of job.
Such work as there has been to do
has been more intelligently spread
around among those who most needed
it. It is striking fact that up to date
there has been a comparatively small
withdrawal of savings bank deposits In
centers of industrial activity and IN
iya
positS.
Relief to some extent has been given
those whose incomes or wages have
been reduced by the sharpest decline
in food prices, as well as in the prices
of other necessities. experienced IN the
past 90 years. It is now possible to OBJ
tain food and clothing at from 20 to
Is per cent below the costs OF 1928
and in 1929. Rents are also lower,
though not as much as they should be
in proportion to the decline in build
ing costs and in building values. The
man who lives on his income has the
advantage Of this change, though at
the same time the disadvantages re-
sulting from very general reduction
in dividends, in interest on back de-
posits and in the frequency Of default
on real estate mortgages.
There is large element in our popu-
lation who actually or psychologically
are prevented from taking initiative by
ments and the depreciation IN their
securities that has stared them IN the
face since November, 1929. There has
, never been a time In this country's his
tory when so many thousands OF peo-
pie were "blue" because Of the condi-
ton in securities For this reason it
has seemed to many economists that
the starting point in any pronounced
and permanent domestic business situa-
ton will be found when prices Of
stocks and bonds establish themselves
at higher levels and stay there.
Money at Low Levels.
Along with the lower prices Of COM
modities as compensation for lower
wages or income has come the situation
with respect to interest rates that has
not been paralleled in quarter Of a
century. This has been reflected more
in long-term than in short-term quo
tations. Call loans have held consist
emily at IL per cent, with an OCCASION
al drop to per cent. This is not much
different from the level in the latter
part of 1880. On the other hand, six
months money has declined from pa
per cent bid to IL per cent bid and
four months money from 2la per cent
to Ia per cent. Commercial paper is
now quoted at 2 per cent against 2Sl six
months ago.
The Federal Reserve rediscount rate
last January was per cent in New
York and 81 per cent in nine of the
l u per cent in New York and from
to az per cent in five Of the other Re-
serve centerS. Meanwhile, brokers
loans have declined Is per cent after
drop of over AZ per cent in 1880 and
are the lowest since June, 1924. This
Is only one Of the phases of liquidation
which has brought the credit structure
Of the country back to or below that
| which obtained even before the bull
market in stocks was initiated seven
years ago.
There is every prospect that borrow
ing rates will be easy for the remain
der of this year. They may not touch
such a low average as in the three
months just ending. But they will be
such as to take away from the bor-
rover in all sections of the country
the frequent handicap of interest rates
too onorous to permit Of business COM
mitments.
The lender of money has been COM
PEELED to take cut in his wages along
with the other concessions to hard
times that are being made everywhere.
His interest on savings is being reduced
his former rate on his checking account
is at about the irreducible minimum
and before long he will be asked to
make compromise on the rate fixed
on real estate mortgages. Eventually,
though slowly, this will direct idle
funds or funds on which the return is
low into investment channels This Is
the hope of the investment markets for
the next six months.
Corporation Finances Strong.
One Of the ways in which the pres
ent situation shows q stronger char
acter than in other depressions Il
through the reduction in debt that has