Evening star., 1933-12-31
TRADE TO DEPEND
ON MONEY POLICY
Commodities and Securities
Also to Get Cue From
Dollars Course.
(continued From First Page.)

(COQLQueQ FTO1l FlISO fdeCJ
banking and the position Of the rail-
roads may now be described in more de-
tail.
Earnings and Trade Outlook.
There is much evidence that the de-
preston reached its low point in July
1882, and that. had not the banking
crisis subsequently developed, a perma-
nent upturn in business would have oc-
Cured from that date. However, after
the moratorium in March the index OF
general business dropped several points
below that OF 1892. In April there be-
gan a recovery of a scope and intensity
that has seldom been witnessed in this
country 1t carried the business index
up over 80 points, where 1t halted IN
August. Then began decline as abrupt
as the previous rise. BY the end of Oc-
tober this had erased about so per cent
of the advantage gained in the Spring
and Summer. In the last two months
the business index flattened out over a
considerable period, but at the end of
the year was again showing slight
upward direction.
There is much hope in the general
business outlook. In the September
quarter 2o5 industrial corporations had
net profits of about S130,000,000. an in
crease of nearly 40 per cent over profits
in the second quarter Of 1888 and COM
paring with a deficit Of more than SILL
100000 in the third quarter of 1882
Since October l nearly 400 corporations
have reported larger earnings than in
1882. This has resulted in the reSump-
ton Of many dividends that had been
suspended in the previous two years, as
well as in an increase in dividends al
ready being paid.
Because of the banking and business
troubles in the first half Of the year,
which compelled many dividend suspen-
sions, the total dividend disbursements
for 1888 will probably be smaller than
in 1882, but the momentum now under
way will make the showing for the first
half Of 1884 more favorable than that
in the July-December period of 1888.
1t Is seldom now that suspended or
reduced dividend by an industrial COM
pany Is announced, though there are
frequent downward changes in the rates
of the public utilities and of the banks
and other financial institutions.
Buying Power Increases.
The net of this situation is that the
investing public today has more pur-
chasing power from additional dividend
dollars. At the same time, the Depart
ment Of Agriculture has estimated the
farm income for 1888 at $4,000 ,000, 900,
or nearly 25 per cent more than in 1882.
It is reckoned that between 10000 900
and 100000 unemployed have been put
to work in the last few months. either
under the Public Works or the Civil
Works Administration and that the lat
ter will continue to function for some
months after the present allotment of
money to it is exhausted in February.
From all Of these sources there is buy
ing power that must have its effect in
many directions, but mainly on retail
trade.
Supplementing this is the release of
funds now in closed or restricted banks
and the more liberal attitude Of bankers
toward their customers, likely after the
deposit guarantee plan becomes ef-
fective. Even should there be no ma
terial rise in prices as the sequel of the
gold-buying movement, there is sound
basis for an expansion in trade in the
first half of the new year. Leaders in
many of the major industries, such as
iron and steel, oil production and re-
fining, motor manufacturing, car equip
ment, and even in the depressed
building trade, are looking ahead to
they are not so confident Of the amount
of net profit to be realized on their
turnover. There Is better prospect for
foreign trade as well as for domestic
trade
Many students of conditions who pro-
1ess to be confident that industry will
Of 1884 are disposed to limit their pre-
dictions to this period, because of the
unknown influence that a radical
change in our money policy might have
later in the year.
Conditions in the banking world in
the second half of 1888 contrast sharply
with those in the first six months of
the year. It was period Of recovery
by the banks of not only part of their
loss n deposits, but of their prestige.
The iepositor had little to worry over
if his account was in a going institu-
ton; If in one that had been closed or
under restriction, there was, however,
likely TO be a disappointing trend in the
efforts to pay him a portion Of the debt
due him. This has not been the least
of the many factors hindering business
recovery.
II Is significant that since the end of
the bank moratorium in March the de-
posits in United States postal savings
have increased from S705,000,000 to
nearly 81 200 100000 and are now more
than Sl,000,000,000 larger than at the
end of 1929, when they touched the
high figure to that time of $164,000000
On the other hand, savings deposits
in banks and trust companies in the
United States for the year ended June
80, 1888, showed loss of 81 ,857 900, 900,
or nearly IL per cent from the previous
year, and loss of almost 25 per cent,
or over $1,000 100000, compared with
1880. 1t is explained that this three
year decrease in savings partly repre-
sents money that has gone into hoard
ing. portion that is tied up in closed
banks and another proportion that has
been transferred into postal savings.
The largest part of the loss has been
due to the necessity of depositors to
draw down their accounts to meet their
ordinary living expenditures, as well as
to pay taxes.
Deposit Guarantee in Effect.
A brighter day is unquestionably
ahead for American banking. There
may be valid arguments against the
guarantee Of bank deposits, which be-
comes effective January /. Undoubt-
edly 1t does place certain premium on
bao banking and imposes burdens on
served the banking code and have asked
no aid in the greatest of emergencies.
The public, however, demands the max
imum of safety for its money and has
a right to make such a request after
the exigencies it has faced in the last
four years.
There are at present about $500
licensed members of the Federal Re
serve System and approximately 5000
unrestricted non-member banks. 1t Is
probable that of the total of the two
between 500 and 1000 may not qualify
for entrance into the Federal Deposit
Guarantee Corporation. This would be
a small percentage of all banks that are
now to function under an entirely new
system. With the banks that were per-
manently closed or had consolidated
with other institutions prior to last
March, 1t removes most of the dead
ho,, &n1l