Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-02
CREDIT
HELD HOPEFUL SIGN
Washington'S Broader View
,Tempers New York'S
.1 Local Gloom.
BY MARK SULLIVAN.

A summary of the best Washington
opinion about business prospects cur
ing the coming year is marked by three
characteristics. One is deep-Seated con-
Viction that conditions will be better.
The second is hesitancy to say this
because already the country suffers, to
quote a Quip that must now be familiar
to everybody, from "oyerprediction."
The third is a real wish not to mis-
lead the public into expecting an I'M
mediate and eXtravagant period OF
activity
Judgments about future business
arising in Washington Mt all times have
q characteristic differing from iudg-
mentS arising in New York. Washing
ton, to a larger degree, derives both IT'S
information and the psychological in
fiuences entering into It's judgments
from sources scattered throughout the
United States. New York judgments
tend to take on the local color Of
community in which a large part OF
normal prosperity at all times depends
upon rise in the quotations of security
values. The mood of New York, at
bcth extremes of a business cycle, Is
more extreme than that OF the rest of
the country. The difference. especial
ly psychologically is important.
Reports Are Optimistic.
The reports washington receives
from throughout the country, both in
the shape Of statistics and in the form
of information about local states Of
mind, are more optimistic than is COM
monty assumed About the volume of
Christmas trade, two reports are re-
ceived One is that the volume was
actually greater than a year ago and
on the whole was thoroughly salts
factory The other is that the shelves
Of merchants are almost literally empty
both of Christmas goods and of other
goods. From this latter condition it
is de+uced that when normal consump-
ton resumes it will find manufacturers
and dealers unprepared, and WILL
therefore lead to a marked outburst
of volume.
In spite of drought in some districts
and of other untoward conditions else
where, the aggregate of reports from
the country is decidedly not gloomy.
The Wichita Kansas Eagle, for exam
pie, comments on the favorable pros
pect for local raisers of hogs and cattle.
The Knoxville Tennessee journal re-
ports establishment of a new high
price level in the Knoxville wholesale
tobacco market.
Such local fragments are. Of course,
insufficient basis for any Nationwide
generalization. They and similar evil
dence from many other points Go show
that the country as whole is not so
gloomy as New York supposes.
Bank Failures Understood.
The three considerable bank failures
In the Cities of New York, Philadelphia
and Louisville and the smaller failures
elsewhere are completely understood in
Washington. When understood they
are seen as having had in each case a
special cause standing alone. Thus un-
derstood, these failures occasion no
concern except, of course, regret for
what was inevitable. Such occasions as
have existed for banks to put or keep
themselves in liquid condition by being
chary in the extension OF credit to
business customers are now believed to
be past The principal recent cause Of
this has been the usual and normal de-
sire to take care of holiday and year
end demands. 1t is anticipated that
reasonably soon the banks will be net
only renewing loans willingly, but ac-
tually urging sound customers to make
use of more credit in proper ways. This
anticipation is based in part but only
in part, on the certain cheapness OF
credit for a considerable time to come.
It is now possible for business paper
to be discounted at the New York Re-
serve Bank at a rate which is the
cheapest in the history of the Federal
Reserve System ana also the cheapest
of any bank in theTEorld. The reduc-
ton recently put in effect in New York
has already been following by approx
mately similar reductions in two other
cities. It is anticipated that similar
reductions will be made in substantially
all the cities having Reserve banks.
Washington authorities who comment
on this are careful to refrain from say
ing that low rediscount standing alon'