Evening star., 1933-08-15
GRAIN COMMANDS
MAJOR ATTENTION
Chicago Market Held Critical
Point In Financial
Situation.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, August l5.-The critical
point in the immediate financial situa-
ton Is the Chicago wheat market.
The Government crop report given
out a few days ago was sensationally
bullish. Wheat production, on the basis
of the estimate made as Of August J.,
Is expected to be the smallest in IS
years, or close to crop disaster.
The offsetting consideration is huge
carry over, which, for the United States.
is the largest in history. The total sup
ply will be less than last years, but
there will be no shortage and the coun-
try still is on an export basis. without
much chance OF disposing of the SUI
plus abroad because the domestic price
is so far above world parity, partly In
reflection of the depreciation In the
gold value OF the dollar.
To appraise these conflicting factors
would be a difficult matter under any
circumstances. The problem is COM
plicated. however. by the fact that when
trading was resumed in Chicago on
july "a. after the suspension following
the big break Of that month, RUE
was put into effect by the governors
of the Chicago Board OF Trade pro-
hibiting transactions In grains al prices
below the closing quotations on Juiy ~;
the last previous day OF unrestricted
business. and also limiting the huctua-
tions for any one session.
Doubt Overhangs Markets.
1t Is now proposed to lift this limita-
ton and allow the market to nnd lts
own level, and it Is doubt as to What
would happen In that event that is
oyerhanging all the markets, stocks as
we'll as grains.
In Chicago yesterday every wheat
option closed unchanged. All OF them
closed at the pegged minimum prices.
The same thing happened on SATURDAY.
In Winnipeg where there are no re-
strictions wheat broke cents SATURDAY
and added to the loss yesterday.
The decision to remove the peg may
be revised but whether 1t is or not the
uncertainty will continue until the
market itself removes it. What the
trading element fears is that there Is
leftover urgent liquidation to be &C
complished.
1t Is a comparatively simple matter
for the governing body OF an exchange'
either at the inSistence OF the Govern
ment or OF its own option, to set
minimum price for commodities or 1or
securtieS-but neither the exchange nor
the Government can force any one to
buy at the minimum.
The result is that when prices fall to
the lower limit Of the allowable fuc-
tuations trading stops. Then 1t Is ieit
to the imagination to picture how much
lower the price might 60 II there were
no restrictions.
Case Is Fundamental
Inasmuch as 1t is the underlying
principle Of the new deal to raise COM
modify prices to the level OF 1928 OF
1926. the case Of wheat Is fundamental
If there is q hitch in the plan here
and wheat Is now down Is to 80 cents
a bushel from its high Of the recovery
while corn Is OF 35 to As cents from
its top-there are those who Jump 70
the conclusion that the Government
will be forced to use other measures
and possibly extremely radical ones.
OF course, the first suggestion Is de-
valuation Of the dollar under the
powers entrusted to the President py
the Thomas amendment. VIII that
happen? No one knows, excepting the
President himself, and perhaps he has
not come to q decision.
As for the experiment OF increasing
purchasing power by raising wages ano
shortening hours under Government
guidance. there is enough doubt aoou'
that to cause hesitation in the markets
The strongest reason for assuming sue.
cess Is that advanced by Col. Leonarc
Ayres. who points out. in the business
bulletin Of the Cleveland Trust Co, that
the new measures run with the eco
nomic tide. for in most of the countries
of the world employment is increasing
production Is moving up and the gen
eral levels of prices are advancing. II
is a factor Of the first importance that
the new effort is well timed
The thing for all of us to bear IN
mind is that, despite all the seemingly
unsurmountable difficulties, the stage Is
set for world recovery.
Finance Reports Favorable.
One feature of the quarterly and an
nual reports now appearing is the way
in which so many corporation manage
ments have succeeded in maintaining
strong financial positions in the face OF
declining earnings.
The latest example is furnished by
Virginia Carolina Chemical That com
pany operated at a net loss Of S762. 1928
in the fiscal year ending June 80 last
1t had a net loss Of S783.5O9 in the pre-
ceding year. Nevertheless its balance
sheet shows current liabilities of only
$368277 while cash and United States
Treasury notes total S6411.336.
The first capital obligation is $4,000.
600 Of per cent prior preferred stock
which has q 100 per cent equity in net
quick assets. That leaves inventories
accounts receivable and all fixed assets
for the junior preferred stock and the
common.
Copyright, 1898. bv North American News
paper Alliance. Inc.)