Evening star., 1932-07-10
ReparationS Settlement Part
Iy CounteraCtS Depressing
influences in Business.
COMMODITY PRICE GAIN
Is ENCOURAGING FACTOR
Proposals to Initiate Currency Are
Renewed in Some Sections
of Country.
BY CHARLES F. SPEARE.

b1 CHAkLkS +. SREAhE.
Special Dispatch to The Star.
NEW YORK, JULY 9.-The news
from Lausanne this week, climaxed by
the reparations settlement announced
Friday, helped to counteract the effect
on the markets Of the nomination at
Chicago the week previous of Demo-
cratic candidate none too popular with
Wall street and a platform which is
regarded in financial quarters as strik-
ing at vested interests. The Lausanne
results also relieved the dissapoint-
ment over the failure of Congress to
adjourn because of the bitter contest
over the relief bill
OF the several conditions that a
majority believe will have to be cor
rected before there is an improvement
in domestic and foreign trade. that
concerned with reparations had been
held as the most likely to reach an
early solution.
The gradual coming together Of
Germany and her European creditors
on the amount eventually to be paid,
coincident with the significant loan
conversion operation in London, has
stimulated all of the foreign markets.
The effect of this has spread to this
side of the Atlantic.
Return Of Credits Seen.
The satisfactory agreement at Lau-
same cannot Immediately change the
economic situation in Germany, though
it is likely to lead to the repatriation
Of enormous sums of money that have
been sent into neighboring countries
during the past few years. The return
OF this fund would accomplish much
the same effect as the long term loans
and short term credits, which were
given to Germany by the United States
and Great Britain. Assuming that a
moderately conservative government
can be maintained, this fund would
gradually start up industry and relieve
unemployment, with all its social and
political consequences
The reparations agreement will also
have its influence on the business af-
fairs of those Central European states
that are closely allied with Germany
In trade activities 1t will give a GER
tain stimulus to industry In Great
Britain. The immediate value to this
country will be in the ability of hold
ers OF German securities to write them
up after having written them down and
in giving better status to the German
short-term credits held by American
banks.
The most satisfactory development at
home has been the Stiffening in COM
modify prices For several weeks there
has been slight but gradual advance
in the commodity index This has
occurred before during the past year,
but has not been permanent. It re-
mains to be seen whether it now means
that the bottom Of the market for COM
modities has been reached or whether
the influence of few strong elements
in 1t is only of temporary character.
Last month there was a substantial
rise in the price Of sugar after it hai
fallen TO an unprecedented low figure
This month the live stock market has
taken the center of the stage, with
prices there buoyant and bringing en-
couragement to a large element in the
agricultural districts who are living
under the cloud Of farm values that do
not equal the cost Of production.
The fact that the strongests infia-
tlonary proposals come from centers
where Debated land values and the low
est prices for farm products in so years
have necessltated a return to a form of
barter carried on by past generations
suggests that at least a proportion Of
the American people believe that pur-
chasing power can only be recovered
through some form OF currency initiation.
Steel Operations Low.
Conditions on the farm. however. are
no worse than in some of the major
industries. This week registers the low
est ratio OF iron and steel OUTPUT to
capacity in the history of the trade.
Nearly all of the great steel mills of
the country are shut down. While thev
may become more active after the
period Of holiday suspension is over. the
outlook for July and August is no
better than Is to 20 per cent pro-
duction ratio. This is the one large
industry where there has been no ef-
fort made to stimulate business by a
reduction in prices. In fact. the whole
emphasis Of the trade has been to
keep prices steady or advance them.
consumers nave had practically no
benefit from the reduction of wages
that has been IN effect the greater part
OF the year. Steel rails cost as much
as they did during the period of in
flstion.
Such success as the motor industry
has had this year and the hope of
the industry for the coming six months
come from an adjustment in the prices
OF its products to the present buyinp
capacity OF the public Not all price
reductions, as in the building trade,
brought about a revival in building
construction. The consumer naturalIv
resists the effort to sell him goods that
may be manufactured more cheaplv
than in the past, but are held at the
old price levels. In the retail trade
it has been felt for some time that
the marking down process has gone
so far that 1t no longer promotes de-
mand and that from now on an i'm
proved quality Of product. rather than
lower quotation for it. will bring
larger customer following.
While the stock market does not
snow any great amount OF reSilliency
and has no leadership, there are large
sections OF it that clearly have been
completely liquidated. Further price
adjustments are likely to be made
where the full measure of decline in
profits is not represented by current
dividends.
The 20 per cent to 40 per cent YIELDS
on MANY listed and unlisted shares
forecast the application to them of the
current business doctrine of conserv-
ing cash resources as a preventive of
dHfeults and to avoid the necessity
of bank borrowing By and large.
however the majority of stocks have
reached a price area where they can
not be said to be out Of balance with
the factors Of cash assets. property
values, normally stable earnings and
good management.
Investors can be satisfied that the
most of what they hold has now
reached price that represents the
maximum Of adjustment to current