Evening star., 1932-04-03
Fresh 0utburst of Selling Fol-
lows Passage of Securities
Levy by House.
INDUSTRIAL HANDICAPS
REMAIN UNSURMOUNTED
Railroad Issues Continue in Down
ward Trend, Despite Gains in
Net Income.
BY CHARLES F. SPEARE.


Special Dispatch to The Star.
NEW YORK, April 2.-The end of
the first quarter of the year, period
when business traditfonally casts up its
accounts. takes inventory, adopts its
price policy and plans its production
program, finds the industrial world still
under the influence of those domestic
and international problems that have
depressed it for so long and which are
yet to be solved.
The season now being entered Is
normally one characterized by a
quickened flow along nearly every
artery of trade. 1t gives the first
reliable suggestion as to the outlook for
the years grain and cotton crops. 1t
is one in which a considerable portion
of the slack in employment Is taken up
and when buoyancy, aggreSsiveness and
optimism are the logical outgrowth of
natures revival.
The second quarter of the years 1880
and 1881 had to suffer for the errors
in business and in speculative Judgment
that preceded them. So these periods
both witnessed heavy fall in the price
of securities. InaSmuch as there have
been no false moves SO far this year,
there Is less opportunity for further
deflation even If there may be small
prospects for industrial progress or re-
covery in stocks and bonds.
Stocks at New Lows.
The present week has brought an i'm
provement in one phase of the business
situation and produced new irritants.
The latter have been largely responsible
for the fresh outbreak of selling on the
New York Stock Exchange and the
lowest average for prices so far reached
in the depression. Congress, having re-
jected the sales tax, found itself guilty
of an act that threatened the Govern
ment's credit. All of the foreign ex-
changes moved sharply against New
York early in the week. Bank balances
to the credit here of European inStitu-
tions began to go out, as they did last
Autumn.
1t seems quite unreasonable for
countries whose own credit is none zoo
good to be taking their funds away
from the United States, which still has
the highest financial rating in the
world It Is as if a depositor in a
bank that has withstood all of the
runs of the months, and whose integ-
rity has never been questioned, should
transfer his account to an institution
whose surplus has been reduced and
about whose condition rumors had been
current.
However, Congress has been i'm
pressed with the necessity for balanc-
ing the Government budget and has
swiftly passed item after item impos-
ing taxes on incomes and on various
kinds of business. In its demand that
the wealthy and the members of the
Wall Street fraternity shall cover a
goodly proportion of the deficit, it has
succeeded in upsetting what little con-
hdence remained in the financial dis
trict.
Investors Not Disturbed.
This phase of the situation is not
so serious as it appears. The taxes
proposed on transactions in securities
may limit the field of profit in them
during dull periods and when the pub
lie is not much given to speculation
They do not. however, involve the in
tr1nSlc values of securities. Therefore,
they should be less disturbing to in
vestors than to spectators. The net
gain in balancing the budget, even
though it works a hardship on Ger
tain professions, compensates for the
losses Of those who may not be able
to survive the burden of it. 1t has
been well said that the American idea
OF good tax is one that operates
against the other fellow. We have not
yet in this country sufficiently realized
the peril from questioning of Govern
ment credit to be willing to make indi-
vidual sacrifices for the sake of sup
porting this credit.
While nearly 81 900 100000 in addi-
tional taxes is being advocated. there
is great resistance by all Federal
agencies to reduction in appropria-
tionS and to a fair cut in the salaries
Of Government employees. The minimum
annual saving from the latter suggestion
Is placed at $55,000,000. Therefore the
opponents of a salary reduction profess
that the amount saved is too small to
have an effect. 1t would, however, pay
the yearly carrying charges, at the
present rate of interest, on 81 500, 900 900
of Government bonds. 1t would cover
the estimated cost in 1882 of the De-
partment of Commerce, or nearly the
combined cost of the, operation of the
legislative establishment of the Govern
ment, the Department of Labor and
the Department of State. Viewed in
this light, the argument Is specious. 1t
is but another way of protecting a
strongly organized political group and
passing the buck" to the taxpayer.
Collateral to the tax program is the
new proposal for paying the soldiers
bonus certificates in full. This is a
much more serious matter than the
moderate imposts that have been levied
against individuals or business. 1t is
not conceivable that Congress, finally
aroused to the danger of an unbalanced
budget, would vote for a measure which
would have serious effect on Govern
ment credit. One today has to main
tain a strong faith that the good sense
and integrity of the American people
will prevail and that they will, no less
than their British cousins, submit to
sacrifices to carry through period that
has been described by a justice of the
United States Supreme Court as "one
worse than war"
Trade Gains in Sight.
The incidents of the week bearing
directly on industry or representing
tendencies in the financial world have
been less important than for some time.
March ended with the iron and steel
trade operating at lower ratio than
in January, but confident that imme-
diate Improvement is in sight now that
the three largest manufacturers of low
and medium priced automobiles have
displayed their new models and an
nounced their schedule Of prices. This
is also the quarter of the year in which
automobile output reaches its peak.
From this fact there should be GER
tain amount of gain not only to the
iron and steel and associated industries.
but to the railroads, and. in all. some
absorption into manufacturing lines of
the unemployed. The composite price Of
metals Is steadier Elsewhere there has