Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-11-21
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, November N.-<Ftve
outstanding disorders must be corrected
before there can be lasting recovery
of business, in the opinion Of the
Brookmire Economic Service, Inc. They
are: l. The frozen condition of bank
ing assets 2. The agricultural situa-
ton. 3. The railroad crisis. 4. The
instability Of England as symbolized by
the pound sterling. S. Instability on
the Continent Of Europe, especially in
Germany and France. @
AT the best, considerable time must
elapse before evidences Of improve
ment In these respects can come into
sight, and next Spring or Summer
would be the earliest probable time
for the beginning Of recovery, ewith
some reason to anticipate delay until
after the elections in November.
Russian Exports.
Recent appearance of Improvement,
according to grookmire, has not been
convincing and the significance of the
events that have tranSpired has been
overestimated. In wheat, It Is pointed
out, there has been no shortage Of
world supplies, and II prices rise in
pronounced fashion, 1t will probably be
due largely to an offsetting reduction
in next years crop. On the whole, it
cannot be said, Brookmire maintains,
that any material increase in farm in
season. Much will depend, however,
upon RllsSia's success or failure to be-
come again 3 large exporter Of farm
products.
Agricultural conditions" says the
statement, have reached pass where
by payment OF q substantial part of
the $4,000, 100000 Of existing farm
mortgages Is endangered. Railroad
earnings are SO low. present and pros
many cases threatened. The only i'm
portant means Of relief that seems
available to the railroads is wage cuts.
These would not be entirely adequate,
but, worse still, they are likely to be
too slow OF realization for much i'm
mediate practical benefit. The result
Of these conditions L. that real estate
mortgages and railroad bonds have de-
clined in value to q degree that
threatens the ultimate solvency of saw
ings banks, insurance companies and
banks are serious losers and the liquid
ity Of their secondary reserve IS inn
paired"
Regarding currency troubles abroad,
it is stated:
"The financial troubles abroad pre-
sent even more difhcult problems.
Briefly stated, stability can be restored
only by ID an increase in exports, (2)
q reduction in imports, CD loans from
the United States. The first depends
chiefly on recovery Of world trade;
some stimulus, but no Sufncient one,
may result from depreciation Of the
currencies. The third expediept is, for
an indefinite period, out Of the ques-
ton. The second one means a reduc-
ton In the standard Of living: it raises
the question Of revolution, especially in
Germany. Revolution would, Of course,
result in . decline of imports but would
probably, also, cause q slump in ex-
ports, so that stable government would
have to be restored before improvement
could be expected"
Suggestions for Recovery.
Nature of the needed readjustmentS
In the situation are outlined as follows:
I'VE are now in position to indicate
the things prerequisite for business re-
covery. At home we need evidence OF
banking stability through either a
lengthy period free from disturbance, or
Cf such proves necessary, some genu-
inely adequate emergency procedure.
Further, we shall need to have some
assurance regarding real estate and
railroad bond values; this may come in
the way Of improved earnings Of rail-
roads and agriculture, or eventually
Government action may be forced. The
question Is SO critical that conceivably
q Government guarantee of underlying
railroad bonds and, under certain con-