Evening star., 1932-07-17
Confidence Being Rapidly Re-
stored, July Bankers Mag
azine Declares.
RAILROADS AND BANKS
IN STRONGER POSITION
Balancing of Budget and Forma-
ton of Bond Pool Prove Help
full to Securities.
BY EDWARD c. STONE.

The July issue of the Bankers Maya
Zlne, which appeared yesterday, believes
the stage has already been set for re-
turn to more normal conditions. While
this conservative publication sees no
sudden business turn ahead. yet it men
tlons many encouraging factors.
The better tone in the New York
stock market during the past few days
has also diSpelled considerable gloom.
The modest gains in a quiet Summer
market have been considered much
more encouraging than the new lows
Of two weeks ago. During yesterdays
session a local broker remarked that a
strong stock market for two weeks. in
which gains were held. would do more
than any other one factor to change
sentiment entirely.
There is declared to be a vast amount
Of investment and speculative buying
awaiting signs that things have really
hit bottom and turned upward Reports
also state that there is a good deal of
small lot investment buying right now.
Stage Set for Improvement.
But to return to the magazines views
OF the general situation. After stating
that excursions into the realm of proph-
ecy are hazardous at all times, the
publication says:
Without any disposition to enter
this speculative realm it may be point
ed out that apparently, the stage is
being set for the return of conditions
perhaps at a remote date - generally
considered as more normal Already
something has been done. The work of
the Reconstruction Finance Corpora
ton has, without question. aided in
bridging over very difficult situation
for the railways the banks and the
farms. Whether the relief already af-
forded and that still to be given will be
sufficient to establish a permanent re-
Covery. time alone can tell But, at any
rate. something like a complete break
down has been Warded off.
The liberal credit policy Of the Fed
eral Reserve has, thus far. proved ef-
fective only in part. Indebtedness OF
member banks has been greatly reduced
and they have been put in poss ession OF
ample funds for lending or investing
But in the latter respect, which is the
most important objective, the policy has
not been made effective. To accomplish
this aim committees of leading bankers
and industrialistS have been formed at
the principal financial centers.
Their purpose is to md means
whereby the released funds may be
safely and profitably employed. Until
quite recently the banking situation
was such that banks were reluctant
either to lend or to make further in
vestmentS because of the possibility
that they might be called on at any
time to use their liquid funds in meet
ing calls from anxious depositors. In
this respect the situation has changed
FOR the better.
1--WE seem to have passed out OF the
era when there was more or less dis
of hanl-S in Unnpr9l Commence
In the banks is practically restored. NOT
only So but the member banks are we'll
out of debt to the Federal Reserve and
now have abundant reserves for lending
and investing The committees to
which reference has been made, COM
posed as they are OF men OF experience
Should be able to render help in the
gradual direction Of banking funds into
safe and profitable channels.
Pool Stimulates Bond Market.
"A further and most important step
IN the same direction IS the formation
of bankers pool in New York with
an initial fund of Sl00000OO0 to en-
gage in the purchase of sound bonds.
This wise action at its very inception
exercises a stimulating effect upon
stagnant bond market
For months the country has been
ringing with the cry, Balance tne
budget Important as it is TO have
the Government finances IN equlIlorlum,
It is quite possible that, from an act
ual standpoint, the urgency of action
BY Congress was unduly emphasized
But, however that may be, Congress has
at last enacted the legislation conSid-
cred necessary for making income equal
outgo Apprehension from this source
is therefore relieved
The foregoing may not show that
We are out of the woods or have turned
the corner, but should offer ground for
believing that at least some rather i'm
portant steps have been taken looking
toward the restoration of better condi-
tions whenever public hysteria has sub
sided and the people come to realize
the part they themselves must play in
ending this too-long-continued depres-
sion," the magazine concludes.