Evening star., 1933-01-01

| creased car loaQ1ngS ana an expansion
| in numerous indices Of trade This
season Of good feeling continued for
several months and was only checked
as the time approached for the national
| elections in November
Subsequently there was injected into
the situation the controversy over
| European war debts. This caused the
postponement OF business commitments
and revived much Of the pessimisn that
had existed In the earlier part OF the
year. The enforced payment OF the
December is quotas by Great Britain,
/ italy and other foreign debtors and the
J defaults voted by the Parliaments Of
France. Belgium, Poland and other
! smaller nations have undone much OF
the good accomplished at Lausanne,
So we find business at the end Of the
time since 1929 and about so per cent
OF normal Commodities are back to
approximately their low average level
of last July, but securities, fortunate
| ". are able to show substantial net
gain over prices prevailing in the early
part of the Summer.
Many Gains Recorded.
In several directions there have been
| fundamental gains during the six
month period The banking situation
is obviously much stronger than 1t was
In the first half Of the year. There
| has been considerable reduction IN
the amount Of boarded funds. Bank
deposits In metropolitan centers have
increased by more than 81 900 600, 600.
The United States has recovered q
large portion OF the gold which u lost
to France last Spring and there Is to-
dav very little serious discussion Of the
necessity for this country going OF
gold" Il was the fear Of this that was
responsible for much Of the disturbance
! in banking centers and In security
markets nine months ago.
| Concessions that have been nade
between creditors and debtors OF vari-
GUS kinds have eased the relations be-
| tween them.
There have been fewer dividend re-
visions downward in this half year
than in any similar period since the
second half Of 1880.
Liquidation In securities has appar-
| emily been more thorough and has aP-
preached nearer to completeness than
| in any other form Of property.
The outlook for the first half OF 1888
tains the elments Of unsettled business
and probably new low levels OF pro-
| duction In the major industries; con-
| tinued unemployment On about the
present scale, additional mercantile
| failures and railroad receiverships, dis.
| tress in both industrial and agricultural
| communities, and not much prospect OF
an Improvement In commodities so long
as there are the existing abnormal sup
plies and the handicaps which tariff
barriers impose against the free dis
trtbution Of surplus products.
Debt Problem Foremost.
AS we enter the fourth year Of the
depression, taking october, 1929, as its
| starting point in the securities mar
ket but remembering that business be-
gan to decline in March of that year,
we face one of the final and most
troublesome questions that appears In
every panic period. This is the Diff
Guilty OF debtors of all kinds to continue
! to meet their obligations after long
period of shrinking incomes whether
| these are derived from the production
! of farm products, the manufacture OF
] goods or are obtained from wages, rents
! or from the payment for services.
1t is the firm belief of those who
/ have carefully studied the question that
| a resumption of what may be regarded
as fairly normal business conditions
cannot be attained until there has been
! substantial scaling down Of debt, not
only that covering domestic properties,
! but In the form set up between the
United States and the allies after the
war
| There has never been such debt
creating epoch as that between 1920 and
| 1880. II mortgaged a large part of the
! civilized world for the next two or three
! generations 1t is an unbearable bur-
! den. In some countries, notably Ger
many and Austria, the attempt has been
/ made to correct 1t by imitation. with re-
suits that none that has experienced II
cares to repeat. The suggestion has been
made that imitation could counteract in
the United States the effect of debt
pyramiding and mild form Of infia-
ton has been practiced by the Federal
Reserve Board, but to no avail.
The process maybe brutal one, but
! looking at the situation without senti-
ment, there seems to be no other way
to correct the evils Of the past thar
through the old-fashioned process Of
financial reorganizations.
j Economy Rules oficialdom.
Assistance in this perplexed perioe
Of the country's life is being given ane
will be increased by the general prac.
tice today Of economy IN municipal ant
state administration, which, 1t is hoped
during this session OF Congress will bt
put into effect by the Federal Govern.
ment Recognition after long tern
Of education that the squandertng o.
the public's money must be checked
has been one Of the greatest steps to-
ward recovery in business that has beer
| Talon this has haAYf Aiarnv,
cred that until the budget OF polit
ical division is balanced 1t has no credi
or borrowing capacity in these times
In no direction has the improvement
in conditions In the second half of tn
year been so clearly defined as In do
mestic banking. While there have beel
few troubled districts, as In Nevada
Oklahoma and In Pittsburgh, the coun
try as q whole has been freed from tn
terror among bank depositors that pre-
vailed in the greater part Of 1891 an,
in the first half Of 1882.
Confidence has succeeded suspicion
deposits in the metropolitan center
have experienced phenomenal mcreas
and there has been decided drop Il
the amount Of money that was in hidin
last Spring.
It is quite possible that In the sus
pension Of nearly 5000 institutions Il
! the past three years those that hav
been able to survive the financial storr
will now ride 1t out successfully. Thei
problem Is one Of slow liuuidation G
,, loans that have been found to be unde
! sirabie and, even more, of their alb Lit
gradually to Offset through economic
: and smaller dividends the losses whic
E they have already taken and mus
: eventually accept in that portion {
their Investment portfolio which cannc
: recover the capital placed in It. It
obvious that, at some time within tn
next year or two, deprecated bond
must be written In In bank statement
at their actual values and not ak III