Evening star., 1933-09-17
Administration Action So Far
Indicates Plan to Hold to
Normal Recovery.
R. f. c. OFFER ON LOANS
DECLARED FAR-REACHING
Problem of Raising Prices and In.
ducing Public to Buy Is
Proving Difficult.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, September I6.-The
pressure on the administration for a
more positive policy in the direction Of
imitation has increased this week, and
such movements in stocks and in COM
modities as have occurred reflect the
hope that this may be put into effect.
Still there is hesitancy and dispo-
sition to let recovery take a natural
course before injecting new credit
stimulants into the situation. It is well
realized that the crisis in the recovery
plan IS approaching; that the stage Of
planning has been passed and that Of
achievement Is now present. The
N. r. A. demonstration in New York
on Wednesday emphasized the generous
moral support being given the effort to
restore business
On the other hand. there is a notice.
able lag in industry compared with the
activity earlier in the Summer. while
the problem Of raising prices and at
the same time inducing the public to
buy is becoming more difficult to solve.
Imitation Cry Louder.
Were Congress in session today there
is little doubt that it would be debating
measures for imitation Of different de-
grees. The representatives of the
farmer interests, who have been passive
for several months and were satisfied
with developments so long as wheat,
| corn and cotton were rising, are now
becoming vocal and calling for relief
for their constituents. They are asking
for rational or controlled" imitation.
The r. F. c. is Offering to make loans
to banking institutions at per cent.
with the proviso that they relend to
1nfrft NatN hr
the same time the corporation gives no
tice that it will reduce its base lending
| rate to per cent to banks that are now
! being accommodated by it at 4iz per
cent
| The two highly significant policies
established by this weekend announce
ment are that the Government is going
into the banking business on an in
creasing scale, even though the banks
have excess reserves of s700,0O0, 900,
which they hesitate to employ, and that
the day of strict adherence to the max
| imum legal rates of interest is over. It
has long been contended here that in
| terest rates should be reduced to con-
| form to the conditions of superabun-
dance of money. Now this change has
been forced by Government decree.
Industry's Pace Slowed.
| II was to be expected that after the
| emotional phase of the recovery pro-
gram had ended there would be let
! down and that the failure of results at
given time to meet predictions would
develop counter wave of criticism and
doubt. This is now being witnessed
| 1t is increased by the difficulty in bring
| ing several large industries into the
spirit and letter of the recovery act
Programs set up month or six weeks
ago for immediate expansion have been
deferred
The slowness with which outlays for
public works are made and the reluc-
| tance OF the railroads and the public
| utilities to make expenditures are re-
SponSlble for the reaction that has oc-
CURED in the capital goods industries
Iron and steel production Is back this
week to about 40 per cent of capacity
There has been evidence of showdown
both in railroad car loadings and in use
of electric power. Labor troubles have
become more serious. In spite of them
the latest figures of employment indi-
cate that it is steadily expanding and
may be between 100000 and 100000
as Winter approaches.
That we are passing through an in
duStrial and social revolution is OBJ
vious. For this reason it seems un-
wise to insist that great experiments in
business practice should reach a stage
of perfection in few months There
is. however, the impatience and the
great need of those who have not so
far benefited from the rise in prices
or the gain in employment. and who
face another Winter with exhausted re-
sources. This condition makes it prob
able that within the next month more
drastic measures than have so far been
employed will be thought necessary to
redeem the promises of recovery made
wnen the N. R. A. was taking its first
steps.
In view of the confusion that exists
with respect to the recovery plan and
its outcome and the lack of definite
and openly stated policy towards infla-
tion, the position of the holders Of Sc
curities is complex one.
Should he sell his bonds and buy
common stocks? Should he realize the
paper profits made from the purchase
Of common stocks in the Spring?
Ought he to draw down his bank bal
ance and invest it in equities?
The markets for several weeks have
given no satisfactory answer to these
questions.
Copyright. 1887