Evening star., 1932-01-24
Prices Harden as Govern
ment Hastens Work on Re-
construction Program.
BANKING WORLD BU0YED
BY CONSTRUCTIVE NEWS
Corporation Circles Exhibit Con-
viction That U. S. Industry Has
Finally Turned to Upgrade.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, January 23.-The two
domestic developments expected to have
an important reviving influence on cor
poration credit made important prog
resS this week. The reconstruction
finance bill has now been signed by the
President and by next week agreement
will most likely have been reached in
the railway wage controversy.
Each has already had a strong senti-
mental effect in checking liquidation
of securities. 1t is in their application
to specific as well as to general situa-
ations in the banking, industrial and
railroad fields that their practical value
will be demonstrated and progressively
moderate the distress which compelled
unusual remedies. |
The faith that the business and
banking world have in the measures is
reflected in the markets for securities
There has been an integration in the
values of railroad bonds after one OF
the most disintegrating periods in
American financial history. Assurance
has been given this week that every
February railroad maturity will be met
through the assistance of the recently
formed Railroad Finance Corporation
In another month the benefits of in
creased freight rates and Of decreased
railway wages should make 1t possible
for a majority of the carriers to de-
pend on their own resources or to bene-
fit by a revised attitude on the part of
their bankers toward their future net
incomes. More has been accomplished
III the negotiations Of the past two
months between railroad executives and
Io In
volved in wages, for in one important
ital and labor have come together with
a sympathetic attitude toward each
others problems, have adjusted them
amicably and have kept their individ-
ual ranks under discipline. At a time
conspicuous for isck of leadership, 1t
Is heartening to flno the development
Of high degree of craftsmanship In
the two men who sat on opposite sides
of the table at Chicago and, apparently
with tact and patience, are guiding the
negotiations to successful conclusion.
Markets Are Stabilized.
For several weeks there has been lit
tie evidence of liquidation In securities
The stock market has not progressed
very far, but it has had the longest
period of stabilization, following new
low level, that it has enjoyed since last
June. The railroad bond list has gained
additional ground, with buoyancy In
some groups that had a critical appear
ance few weeks ago. So long as the
bond market remains steady banking
sentiment will improve even though
there may be further reaction in stocks
The smaller number of bank failures
recently bears close relationship to
the change in the bond market situ-
alton.
With an acute condition in New York
City's financial affairs adjusted this
week by the sale Of a $l00,000,000 issue
OF notes at the highest rate since 1914
IT is probable that attention may now
be given to other municipalities that
have been denied relief pending settle
ment of differences between local ad-
ministrations and their bankers Ir
each case the guarantee of economy ir
municipal operations is required as 9
prerequisite Of further credit accommo-
dations. This applies to the smallest
boroughs as well as to the largest cities
Other remedial measures are likely tx
follow the passage of the Reconstruc.
ton Finance Corporation bill. The
most prominent Is that having to dc
with correction of obvious faults in oul
banking system and suggested this weel
in the bill advanced by Senator Glass
The immediate demand for this Is aic
to the several thousand institutions thai
have become inSolvent in the past two
years and whose depositors have beer
limited In their purchasing power BY
inability to attain the credit normally
| due them. The bill also looks ahead tx
greater mooiizatlon Of banking re-
| sources and an expansion of the fielC
| Of Federal Reserve activities. 1t make.
| an approach to the policy of branch
banking, which has gained advocate!
from the wreckage since 1929 among
| small and isolated non-member instt.
tutions. 1t is significant that in Canada
where branch banking reaches it's per,
! fection, there have been no failure,
| during one Of the most severe depres
/ sionS in the history of the Dominion.
Restoration of Confidence.
Altogether the machinery set in mo.
| ton to improve and strengthen bust
ness conditions is working smoothly
and gradually it should have the effec
of restoring confidence If the trad,
index fails to show a perceptible for
ward movement it at least does no
uncover the dismal record of new low
levels week py week that characterized
the past year. This is a distinct gain
Eventually it will promote courage anr
initiative. The statements of corpora,
tionS that have presented their baIanc,
sheets for 1881 indicate reduced inven
tories and reserves in the form of casl
and marketable securities that ar,
astonishing in view of the poverty II
production and the meager profits O
| the past 18 months.
Again this week there have been few
important dividend reductions. To dat,
the month has contrasted strikineE
with the corporation policy in Deem
ber, when dividends were slashed rioh
and left. 1t will be interesting to &C.
how far an improved sentiment will in,
fiuence the directors of the Unite,
States Steel Corporation when the,
meet on Tuesday to declare the ouar
terly dividend on their common stoct
also the effect of it on the management
Of leading railroad and industrial cor
! porations who must shortly face a simi
lar problem. There is no doubt tba
some of the dividends recently declare,
at regular rates have been influenced h,
the conviction OF those voting for then
that the material affairs of the co,,r
try are on the upgrade
II (Copyright 1892