Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-29
BUSINESS GAINS ARE NOTED
IN GUARANTY COMPANY SURVEY
Index of Industrial Activity Has Turned
Upward Since January SLOW Re-
covery In Trade Indicated.

is concerned, this strengthening in
prices is much more convincing in its
favorable implications than is the ex-
panSion reported in industrial output
during the same period.
December Results Favorable.
LAS more abundant evidence becomes
available, it appears that even in De-
cember the trend of business activity
was more favorable than generally sup
posed In addition to the fairly well
sustained volume of Christmas trade at
retail, the broader indications of pro-
duction and distribution in general
show no severe recession, aside from the
slackening that is always witnessed in
the closing weeks of the year. The pre-
liminary index of business activity of
the Guaranty Trust Co. for December
stands at Gal, as against $50 for No
vember, showing a fractional advance
in contrast to the sharp drops that ap-
peared during the Autumn. This Is the
first time since last April that the in
dex has not shown marked downward
movement.
Another feature of the December re-
ports is. of course, the unfavorable
comparison made by the years totals
with those for 1929 and preceding years.
These declines foreshadow similar tend
encieS in the annual statements of cor
porate earnings that will soon begin to
appear, most of which will undoubtedly
show substantial decreases in gross and
net incomes from the levels of the more
prosperous years in the immediate past.
eff it is desirable to avoid unwar-
ranted optimism based on the encour-
| aging developments of the last few
weeks, certainly it is no less important
to steer clear of the unduly pessimistic
views that will surely be expressed in
some quarters when these 1880 earnings
statements come to light. The results
shown in the annual reports reflect, in
part, set of conditions that existed
| more than year ago; and to regard
| them as necessarily indicative of the
present or future earnings positions OF
| the companies and industries repre-
sented would be to form an entirely false
conception of the present situation.
Danger of False Start.
GAS far as financial conditions are
concerned, the basis for business recov-
cry has been further strengthened this
month. The lowering of the rediscount
rate at New York in December has been
followed by rate reductions at several
other Federal Reserve centers. Time
loan rates at New York have declined
| to the lowest levels recorded in more
|
rate has receded to IL per cent, the
| lowest since 1915.
| Although loanable funds are plen-
tiful and money rates low, banking poll
cies continue to be marked by great con-
servatism. In spite of all that has been
said in favor of fearless enterprise, con-
f1dence, ETC., on the part of business
men, the fact remains that the ground
work for recovery must be laid slowly
and carefully, and that all but the most
soundly conceived and conServatively
financed projects had better be deferred
until the possibility of unforeseen set
backs is more remote than at present
While every banker and every business
man wishes to see expansion get under
way at the earliest possible moment
those whose experience goes back to
previous periods like the present realize
the uselessness and danger of false
| starts