Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-15
CROPS IN j. S. SEEN
RECOVERY FACTOR
Worlds Business Men Be-
Iieve Depression viii End
With Good Farm Year.

OF DuSluSSS OSpEeSSlOIl, eApISSScu III
private conversations by business lead
of Commerce meeting, would begin
with crops in the United States. II
practical wisdom about the duration of
depression exists, 1t should be found in
this gathering. AS in the case of many
such gatherings, their privately ex-
pressed, informal views are rather more
Illuminating than the formal, set
speeches.
Their emphasis on the coming. sea-
sons crops in America Is part Of their
conviction that recovery Of the world
as a whole will begin with recovery
in the United States. The point made
about the coming seasons crops is that
these crops, If good, will be an enor-
nous addition to the wealth Of the
world. It will be actual, true, funda-
mental wealth which the world can feel
In its hands and eat and wear and
build with. II the crops are abundant
and at the same time low in price.
the latter of the two conditions will
not please the American farmer, but Is
regarded as rather q help from the
world point Of view.
Recovery Starts in Summer.
A confirmatory point made by some
of the older business leaders Is that
concrete recovery from every depression
in the past so years has begun IN the
Summer and in precisely the month in
which it was realized as Q certainty
that American farm crops would be
large. The emphasis by these leaders
on q realty like large farm crops as
the true ending Of depression Is in it.
self a sign of their disbelief In the
many devices, panaceaS, slogans or
other
quarters.
The second major point much relied
upon by these business leaders Is dis
crepancy between present using up Of
goods and present production OF new
goods. Present consumption, as judged
by many indexes, is. speaking roughly,
about 80 per cent Of normal. Present
production, on the other hand, Is, again
speaking roughly. only about 40 to go
per cent of normal, depending on the
line of goods. As one exceptionally
able business leader put 1t, Every turn
Of the wheel of this car we are In.
wears out a little rubber, q little cotton,
q little steel and q little Of everything
else that goes into an automobile. AS
sure as the sun rises this loss must
sooner or later be replaced. When the
replacement starts it win find con-
siderable vacuum due to accumulation
of exhaustion not now being replaced.
Once recovery gets under way. It win
60 very fast for q time at least"
Interest Rates Low.
An element in the speed Of business
recovery discussed very much by these
business leaders Is the policy of our
Federal banking system about interest
rates. This policy, carried out through
several steps, Is to make interest rates
a. -
low interest rates viii be q stimulus IN
two ways. It viii stimulate bankers
and other owners Of investment money
to seek sound businesses which win bor-
row money for purposes Of business
growth. At the same time It VIII slim
ulatc business men to borrow and to
make use Of the borrowed money In
new or additional volume of business.
That low interest rates viii lead ulti-
mately to larger volume Of business is
accepted as axiomattc. There Is, how.
ever. an element of time. about which
opinion Is not unanimous. Many be-
neve that the effect of low interest rates
VIII be very prompt. Indeed, some ef-
fectS are already apparent in the shape,
OF greater ease with which sound pri-
vate businesses can borrow money. At
the same time, some older business
leaders recall that in the depression Of
1893 the Bank Of England maintained
an abnormally low interest rate for
thoroughly under way.
Allied to this conviction about the
helpfulness Of making money and credit
abundant and cheap for private busi-
ness borrowers is feeling that recovery
IS being delayed just now by the SOL
diers' bonus. The bonus payments made
since Congress adjourned aggregate so
&0Ns .1-NN
To raise the cash to make this payment,
the Government has been obliged to
sell about that amount Of securities. It
has been or will be obliged to sell about
q billion more to meet deficit arising
out OF other appropriations by Congress
and out of ordinary Government expen-
ditures. The nearly two billion dollars
which the public will pay for these
Government securities is, speaking
roughly, money which would have gone
INTO industry had there been no Gov
eminent borrowing. From the point Of
view OF business recovery, there Is all
the difference in the world between q
dollar loaned to the Government and q
dollar loaned to a private business.
Believe in Mass Psychology.
Rather surprising Is the emphasis
placed by these practical business men
on so intangible thing as mass psy-
chology. Two men who would be recog-
nized by everybody as among the out
standing practical business men and
leaders of economic thought in the
world, one an American and one a
European, agreed in detail on this point.
The American. in private CONVERSE
ton, spoke about as follows: IT have
surveyed about everything that has
ever been written about causes Of busi-
ness depression and business recovery.
have reflected about it with the best
thought of which am capable. My
present conviction is that the largest
single agency in both depression and
recovery Is crowd psychology. 1t is not
the only one, Of course, but am salts
fed 1t is the largest one. Moods about
business are infectious and epidemic,
as much so as influenza or any physi-
cal disease. For several months past
the world has been in the high tide of
mood of skepticisn and cynicism
Twenty months ago 1t was in an equally
widespread and equally excessive cpl
demic of optimism and confidence. The
one will come TO an end as surely as
the other did"