Evening star., 1932-09-04
OFFICIAL ALLOYALTY INSTILLS
FAITH In ADMINISTRATION
State Of the Country of More Concern to
Secretary Mills and Gov. Meyer Than
acknowledgements Seen Clearing.

President Hoover was careful to say
in his speech last week that the major
financial crisis" is past. Unfortunately
major financial are long words to fit
into headlines. Consequently much Of
the reading public, which takes its i'm
pressions from skimming the headlines,
thinks that the President said, in effect,
that the depression is completely over.
On the contrary the President was
meticulous about saying in so many
words that what has happened is the
equivalent of the winning of the battle
of Chateau Thierry during the Great
War. That means that the end of drives
from the economic enemy has come; but
! that there remains now the long, pa
tient. uneven. and at some points diff
cult march toward the Rhine.
Economy Enemy Subdued.
The financial heads of the Govern
ment, and everybody else well informed,
know that the shocks from the enemy
are over for the simple reason that the
economic enemy has no power to shock
us further. Those shocks. the depres-
sion and the panics during the past
years phase of it, have come from Eu-
rope. They consisted of the fiscal col
lapse of two out of the worlds four
great financial powers, Germany and
mands made by Europe upon America
for gold, and further demands for money
and panicky selling by Europe of Ameri-
can securities. 1t was these events In
Europe and actions by Europe that
caused that part of our depression which
took place since about March. 1881,
Few people are able to trace the rela-
ton between these actions by Europe
and the price Of wheat in Spokane. or
hogs in Wichita. but the first Is what
| caused the second.
The present fact is that these shocks
from Europe are over, because Europe
withdrew all the gold from us that she
had title to- she has collected from
us substantially all the money that
American citizens owed to Europe. and
she has sold substantially all the Ameri-
can securities owned in Europe. Having
done all that. Europe's panicky state Of
mind could harm us no more. And since
we met all demands upon US, Europe
has suddenly turned from panicky fear
about us to having more confidence in
US than in herself. Gold is flowing from
Europe back to America, in the present
thought that America is about the safest
place Tor nervous ounce of gold to be.
Europe Is buying American securities
with the feeling that in the present
state of the world. sound American Sc
curities are the best there are.
Stronger Credit Structure.
What does this mean in terms of
future conditions in America? It means
that our banking and credit structures
can now be rebuilt without fear of
more disaster: actually. the new credit
structure is being built up right now
| with extreme speed. 1t means that
waves OF bank failures are over No
one can say positively that there will
be literally no more bank failures. At
all times, in the best of times, there
are and will be banks so unwiSely man.
aged that failure is inevitable. But fail
ureS in waves such as took place sew
eral times during the last three years
| are over. The new status, normal bank
/ ing conditions means that shortly mer-
chants and manufacturers will be able
to secure credit from banks as they
did In any normal past year, such as
1927. Out of this condition, primarily,
will arise the revival of business.
The revival must be gradual It Is
because the President and the financial
heads OF the Government knew the re-
covery of business must be at a slow
pace that they were careful to qualify
their statements last week about what
has actually been accomplished The
accomplished thing is not the revival
of business. decidedly not. The accom-
plished thing is the end of the major
financial part of the crisis. Incident to
that, and already largely accomplished,
is the restoration of much of the credit
structure that was destroyed by the
economic storms Of the last three years.
With these accomplished the way Is
open Tor business recovery and re-
covery Is sure to come-and that is
about all 1t is strictly safe to say.
Much Readjustment.
The process will involve much ac-
commodation and readjustment One
SUCH need was mentioned at the meet
ing last week by Franklin Portland
for saying it., Mr.. Fort got much ap-
plause from that banking and business
group. There must be consideration by
the creditor for the debtor. There are
many debts. contracted under condi-
tions Of 1929, and as the 1929 basis of
prices, which under present conditions
will be difficult to pay. For the mo-
ment. many are impossible to pay.
though more will be able to pay if
given time and patience. When Mr..
Fort made his plea for consideration.
banker in the audience made a
striking remark.
"If," he said, II and everybody else
must take a cut in my wages, why
should not my dollars take a cut in their
wages? If own mortgage on a farm
at the rate Of per cent interest, why
should I not, under present conditions,
cut the interest I receive to 5 per cent
or even more"