Evening star., 1932-07-03
Continued From First Page)

Constructive Forces Gain.
The favorable fact in the outlook is
that these constructive forces now seem
to be gaining the upper hand. In the
last quarter of 1881 there were l l,055
hank suspensions in this country. These
were followed by 465 in the months Of
January and February. Total suspen-
sions since October. 1929. ere $500
Hoarding of currency by frightened
bank depositors reached its height last
Winter. From then on the banking sit
Uation has been comparatively placid
instead of greatly disturbed.
Bank failures had fallen to a degree
considered normal in good times until
late in June, when there was a mild
epidemic of bank troubles confined to
the Chicago territory. The change
came with the organization of the Re-
construction Finance Corporation, fol-
lowed closely by an enlargement OF
banking facilities under the Glass
Steagall bill
Commodities have continued to de-
cline and average 10 points lower than
a year ago. The pace of this reaction
has slowed up significantly in the last
few months. A demoralized bond mar
ket. which was the greatest concern of
the financial world during May. has ap-
parently been stabilized through the
formation of a corporation with $780,,
100000 of capital to prevent repeti-
ton of the minimum quotations for cor
poration securities made in that month.
After weeks of debate a tax bill has
teen passed and Government econo-
mics effected that, in large part, prom
ise to balance next years budget. The
much feared bonus bill has been de-
fpQtpd Insufficient economies in the
administration of Government have
been voted. but this unsatisfactory
feature of the fiscal situation must be
attacked more aggressively later in the
year, after the elections remove the
threat against those who would vote
for a deeper cut into expense accounts
than has been so far made.
Gold Outflow Halted.
The alarms of Europe over our ma
tional credit situation, which led to the
Withdrawal of $450,000, 600 gold late in
the Spring. have been quieted as the
last balances of the Bank CT France
were liquidated and other European
creditors satisfied This is a triumph
for the United States that should def
nitely remove the fear of Abandonment
of the gold standard and emphasize in
Europe the financial integrity of the
United States.
Great Britain has again shown Ter
ability to meet a financial and CONNER
cial crisis. Her national credit has been
constantly improving this year. 1t is
now higher than it was last September.
The first act of the Lausanne conference
was to postpone July payments of rep
aratlonS and to indicate a willingness
on the part of Germany's creditors to
relieve her of obligations which her eco
nomic situation does not permit her to
pay to the extent outlined in the Young
plan and which her new political lead
ers have impressed on the world they
will not pay.
Extent of Liquidation.
Liquidation of securities has carried
the item of loans to brokers to nomi-
nal figure, with the amount outstanding
only about 5 per cent of that reported
in September, 1929. In the past year
tctal loans of Federal Reserve member
banks have decreased approximately
$3.250.000 900, of which about $1,000
Goo,o0O represents loans on securities.
On the other hand, deposits of member
banks IN the Federal Reserve system.
which decreased rearly $4,000, ,000. 900
from sune, 1881, to the end of last Feb,
ruary, are slowly increasing.
The embarrassment of large operators
in stocks is the daily talk of the mar
ket place. They have been liquidated
and their holdings are no longer an
oyerhanging menace 1t is significant
that there has been no important New
York Stock Exchange failure this year.
The prices at which many common
stocks are quoted is less than the
assets per share available to such
stocks. Some companies have nearly
the equivalent in cash or marketable
securities of the per share price of
contained a list of 135 junior issues
selling below net earnings per share
in 1929
The degree to which equities" have
shrunk since the climax of the 1929
market is suggested in the subsequent
decline of 90 per cent in the average
Of industrial stocks, 90 pr cent in
rails and 80 per cent in p40lic utilities.
The first group lost As pfr cent be-
tween last December and the early
part of this month, the second go per
cent and the third about the same.
This also has been - era of market
deflation that has Wk rely shattered
the values of preferret ahareS of cor
porations as well as the stocks of fire
insurance. casualty and mortgage COM
panies and those of banks and trust
companies All have been pounded
down to what would seem to be bed
rock.
Record Of Price Movements.
After the Autumn Of 1929, when
business activity and security prices
were abnormal. We witnessed an
abrupt slump in both; then in the
Spring of 1880 return TO what were
considered fairly normal conditions In
industry and in stocks. That period
of between four and five months was
the only hopeful one during the de-
preston and was notable for an arti-
fetal stimulus to business and fragrant
manipulation of securities. From then
on there has been an almost steady
retrograde movement, with no fewer
than six major declines in the sub
sequent period in stocks, an extended
panic in bonds and. finally, sub
normal situation in market for securi-
ties and in commodities and busi-
ness index only so per cent OF the
level of two years ago.
In some industries the decline has
been even greater than this. For in
stance, the iron and steel trade at the
end of June was operating at about
y per cent Of capacity. Sales of au-
tomobiles in the first five months of
this year were As per cent under those
OF the equivalent period in 1881. Bank
clearings are only half Of last years
six months total Building permits in
May were nearly 10 per cent below the
same month last year. The value of
building contracts is from 35 TO 40
per cent Of that in the first half of
1881. Prices of agricultural products
are at a level that give no greater
purchasing power to the producer than
he obtained in the early 70s.
Rail Traffic Problem.
Railroad traffic at present requires
the use of only about go per cent of
the facilities of the carriers. Not only