Evening star., 1933-08-06
Pause in New Commitments
Held NormaI-InfIation
Uncertainty Felt.
"PRIMING" OF DOLLAR
DECLARED SUFFICIENT
Gains So Far Regarded as Natural.
Stimulated Recovery Believed
Dangerous for Program.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

special Dlspatch TO The Star.
NEW YORK, August 5.-As August
Is likely to determine the degree of
success of the national recovery act,
and as the month is one when, nor
mally, speculation quiets down, a pause
In the making Of commitments in Sc
curlties and commodities is to be ex-
pected.
There already has been some shrink
age in the proportions of business due
not only to the season but to evidence
that production was outstripping con-
sumption. This is shown in iron and
steel and retail trade. Markets have
taken an uncertain trend Volume Of
trading has materially decreased.
There also is the factor Of imitation
uncertainty now to be considered OBJ
viously. the administration is not pro-
ceeding along the lines anticipated by
those who bought common stocks, grain
and cotton with such abandon during
the first half of July.
The dollar recently has been rising
instead of falling. This has been
ascr1bed to purchases of United King
dom bonds. 1t is the result rather Of
the impression Washington has per-
mitted to get abroad that it proposes
to test the recovery plan to its full
extent before using the powers granted
by Congress to force more currency
into circulation or to go to the ex-
treme of dollar devaluation. This is
a sane policy.
Dividends Restored.
trade improvement are to be seen each
week. The July record indicates that
IS corporations either re-establshed
their rates or increased them, COM
pared with six a year ago.
Significant also is the number Of con-
Germs that are anticipating short-term
note payments, indicating that their
cash reserves are rising. The Penn
sylvania Railroad, for instance, has can
celed its debt of about S29 ,000, 900 to
the Reconstruction Finance Corpora
ton.
The June quarter figures Of indus
trial corporation earnings indicate that
net profits replaced deficits in the
March quarter and small net returns IL
the similar period of 1882.
The proposal of the Government
through the R. F. c. to supply the
banks with 81 ,0Oo, ,00O, 900 additional
capital and by such means to enable
them to extend this credit without fear
of their own positions" fits in with the
various aids to recovery. The banking
situation Is still sore spot in the ma
tional economy. There is much COM
plant of inability to obtain funds for
worthwhile and constructive enter
prises. Banks continue to have the
hquidity complex to high degree.
Bank depos1tors, rather than bank
officials and bank stockholders, are
carrying the burdens of reorganization.
Just why the laws covering the liabil-
1F to, efo hoi,1
generally imposed is a mystery. In
comparatively few cases have assess
ments been compelled. though deposit
tors have been forced to waive their
immediate right to from IS to so per
cents of their deposits in order to
place their bank on going basis. Po-
litical preferences have smeared the
record of attempted rehabilitation in
numerous States
Bank Rift WidenS
The cleavage between national and
State banks is increasing on the issue
uniform banking program this plan
will fail Of its purpose, as have all
others OF its kind. The major prob
lem In connection with it is that Of
accommodating hundreds of small in
stitutions that cannot meet the re-
quirements of the Glass-Steagall bill
as to solvency if their assets are ap-
praised at current market prices. There
is little harmony regarding values be-
tween the Federal Reserve and the
State authorities. The one appears
too rigid and arbitrary, the other too
lenient The fear Is that when the
day comes that the guarantee must
be made effective a politically minded
Congress will compel modification of
the entrance requirements. Then
many banks that are too weak to sup
port themselves will at once lean on
their strong competitors, involving q
prohibitive carrying cost to the latter.
The timidity Of Treasury officials in
so long withholding Government is
sue from popular subscription was not
justified, as the response this week to
the offering of eight-year 314 per cent
bonds teStifies. Neither has there been
any indication Of a decrease in respect
for United States paper since principal
and interest ceased to be paid in gold
Every new note or discount bill for
four months has been many times COW
cred and at steadily improving terms
to the borrower. The latest financing
will reduce the short-term debt by
fully $500, 600, 600; possibly more There
will remain over $4,000 100000 to be
paid off before the end of 1888. This
gives opportunity for further appeal
to the public to become holders of
Treasury obligations.