Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-12
CHEAP MONEY SEEN
HOPE FOR BUSINESS
Lower Call Loans Traced to
Reduction of Reds
count Rate.
BY JOHN F. SINCLAIR.


stock market greeted traders yesterday
Interest charges for renewals OF cal
loans dropped to / per cent, the lowest
in % years. This is understood to have
resulted from the cut in the rediscount
rate Of the Federal Reserve Bank OF
New York to ~ per cent. The cut In
the bankers acceptances also had its
effect.
If cheap money is the dynamo which
starts business, as many economists
have stated repeatedly in the past. the
situation seems hopeful right now.
j., President Hoover has aimed his first
attack on the Treasury deficit at the
Nations military expenditures. AIteT
a lengthy consultation with officials OF
the war Department. 1t has been de-
cided that substantial economies are
nossibIe without weakening the national
defense. Future expenditures In the
Governments civil activities cannot De
pared down in the same way since they
are authorized by Congress and eXteno
in many cases for years to come.
It is natural for the administrator 70
attempt every desperate remedy before
esnecially with another presidential
election next year. Yet in the face OF
so huge a deficit, one wonders now
much the administration will be able 10
do in the way of economizing in this
fashion. Despite appreciate reductions
the balance of the deficit remaining
to be met will call for more decisive
action.
financial observers feel that even ar
early upturn in business conditions VII
fail to save the situation, since u taxes
some time for the reaction to be 1ei'
in revenue returns by the Government
but there is no point in preaching
calamity, and the present denclt OF 81
600 900 900. while huge, is Tar IRON
catastrophe.
The International Chamber of Com
nerce resolutions, adopted in WaSnlng-
ton last week, leave Hendrix ShlpSCeao
Farmer-Labcr Senator OF Minnesota
unmoved.l A..
The Senator's comment was that
foreign governments pay their debts to
the United States with less than one
half of / per cent of their national in
come. less than per cent OF their ma
tionai budget, and less than Is per cent
of what they spend for armamentS 1of
war"
Senator Shipstead believes that ~
man is only your friend on conoltlon
that YOU paw his bills, his friendship Is
of doubtful value" What the Senator
wants is a revision of the Treaty OF
Versailles. which he believes Is holding
back European recovery. but about
which Europeans talk Of only in whis-
pers."
The Minnesota Senator's views are
probably held by a great many others
The American people are far from
unanimous on the subject Of war debts
reparations and disarmament.
Gov. Eugene Meyer of the Federal
Reserve Board is reported to have said
recently that what the country needs
right now is 'leSs water in the banks
and more water on the ground" This
means that Gov. Meyer is opposed to
any artificial pumping Of credit into
the financial reservoirs of the Nation
But he does favor plenty OF rainfall
in the dry farming sections.
1T seems strange to me that the
Federal Reserve policy has not been
subjected to more severe scrutiny and
criticism than it has" said Western
banker in New York this week. IT
the purpose of the Federal Reserve, at
the beginning, was to minimize, If not
abolish, depressions and panics, some
thing must be seriously wrong with
its policy if it allows such a condition
to exist as we are in now. Before we
are through the Federal Reserve Will
have plenty to answer for"
There is a growing feeling through
out the United States that the Federal
Reserve System should get a move on,
tell the people what 1t is attempting
to do and how it expects to cooperate
to bring the country out of the present
business slough.
The illness of Capt Robert Dollar
of San Francisco has been followed
closely by Americans. A rugged, vigor-
Gus Presbyterian, this 87-year-old vet
eran is easily the dean of American
shipping. He has shown his country
men on the Pacific Coast how to build
up an extraordinarily successful steam
ship business with the Far East.
Probably no American is better
known or better liked in India, China
or Japan. In China, where they have
frequent revolutions. he is known to
the leaders of all sides and he can and
does travel between lines OF fire In
perfect safety.
For 80 years now, Capt. Dollar has
had his ships plying over the Pacific
Ocean. 1t was in 1901 that he took
his first lumber cargo to China. Today
he has a feet of so ships, of which
are the finest "around-the-world" liners
on the seven seas.
A bombShen has been exploded by
Italy, Austria and Hungary, en- the very
with a triple trade agreement. The
force of this defamation is almost GER
tain to knock Brands French plan
into a cooked hat.
The form of this new economic ALI
ance may help solve the present diff
culties in Europe, distasteful as it may
be for French ambitions. 1t is made
I'D of separate Austro-H Hungarian
Austro- Italian and Italo-Hungarian
pacts. The three pacts are tied to-
gether by triparte treaty.
Politics may guide, but are powerless
TO control the economic currents of Eu-
rope. Here is the beginning of the
breakup of the artificial jam brought
about by host of tariff barriers. Al
ready the natural trade areas of the
old continent are drawing their true
boundaries regardless of the politica,
map.
The member nations of the new Gen.
trail European bloc will enjoy cheap ex-
port credits, tariff rebates and import
quotas. The flow Of commodities among
them will be eased. When the current
of fresh economic vitality gains mo.
mentum, it will doubtless force TIT
fioodgates Of economic nationalism al
over Europe 1t Is one of the mos
momentous events in postwar time
and seems destined to alter the who'll
economic and political structure of tn
continent. Naturally, the impact will
be worldwide and will be felt by bust
ness in the United States, too.
copyright, 1881, by North American News
paper Alliance
FOREIGN EXCHANGE.