Evening star., 1932-04-17
TRADE SENTIMENT
GAINS, SAYS AyRES
Cleveland Economist Points
to Need for Further
Credit Extension.
Special Dispatch to The Star.

NEW YORK, April 16.-In his
monthly business review, Col. Leonard
P. AyreS of Cleveland states that great
improvement in financial conditions has
been made during the first quarter of
this year." He confirms this by such
confidence as the cessation of bank
suspensions. the return of idle money
to the banks (this is estimated by Gov.
Eugene Meyer of the Federal Reserve
Board at $3.50, 900, 900 since February -
and by credit conditions that are stead
lily become easier.
The reverse side of the situation is,
according to Col. AyreS. that the shrink
age in bank loans and in deposits con-
tinueS because of business inactivity
creating the anomalous condition of
continued credit deflation, when credit
expansion is needed, and under condi-
tions which should stimulate credit
extension" The latter is now the prob
lem with which the Federal Reserve
Board is dealing and which it has at
temped to correct through its policy
of purchasing Government securities.
These purchases have amounted in the
past week to over 500 900 900, bring
ing the total portfolio of the system
in United States Government bonds
and Treasury obligations up to ap-
proximately 81 000, 600, 900.
Problem International.
'Our efforts to restore business
activity" states Col. Ayres, "are national
or local and scattered. and mostly
directed at the prevention of break
downs. The problem with which we
are struggling is international and gen.
eral. The fundamental truth which we
as a Nation have not yet fully grasped
] DC 70 hn iV1fn c&c hot -,
In common are of far greater import
ance to them than are those competitive
| advantages for which they struggle
| singly. Our frontiers are those of
| finance, and our boundaries those of
business"
A chart which appears in the AyreS
bulletin attempts to make an index of
business sentiment. This rather elusive
factor has been cornered. The graph
representing business sentiment follows
quite closely that of the various indices
of business volume, but separates itself
| from the latter at the end of 1881. 1t
points quite sharply upward this year
while business volume is still pointing
downward, and this month has reached
the lowest level of the depression. The
index of sentiment is perhaps the more
important of the two at this time, be-
cause it reflects the changed mood or
psychology of the public, which has not
| yet been translated into an increased
activity in the heavy trades, or in such
elements as car loadings, electric pro-
| duction and automobile output, that
! figure in the usual trade barometers.
! Actually, trade indices show a steady
decline for the past year, with fall in
! the volume of production from 23l
| per cent below normal in April, 1881, to
over 40 per cent under normal in Febru
airy. If the figure were brought down
| to date it would indicate a decline of
nearly As per cent from normal since
| April, 1880, when the last Spring re-
| covery in business occurred. This year
has been distinct from either 1880 or
1881 in that the business index did not
conspicuously turn upward when the
| Spring season opened.
An interesting feature of the Ayres
bulletin is an analysis Of railroad freight
in relation to population. This indi-
Gates that in 1882 the total Of railroad
freight per capita will be about half as
much as it was in 1918. 1T seems"
says Col. Ayres, almost incredible that
its volume can have fallen so low, even
in the period of severe business depres-
sion, for there is no record OF any COM
parably great decline in previous periods
per capita tonnage this year will be less
than that OF any previous year since
the depression Of the COS.
The relation of this to motor truck
competition, Col. Ayres believes, Is not