Evening star., 1933-04-09
Ragged Exhibition During
Week Does Not Reflect Bet
ter Business Reports.
EASIER MONEY MARKETS
PROVE HELPFUL FACTOR
Talk of Imitation Is Still Control
ling Influence Upon Investors.
Dividend Cuts Continue.
BY CHARLES F. SPEARE.

BY CHARLES F. SPEARE.
Special Dispatch to The Star.
NEW YORK, April 8.-Some new
and promising signs have appeared on
the business horizon this week.
Trade has quickened a little. Specifi-
cally. the observer of conditions is able
to report an increase of ~ per cent
In the rate of steel output better
showing as to car loadings on some of
the larger systems, smaller decline
in electric power output, quite sub
stantial advance in wheat and corn,
with better prices for cash grain than
in nearly year, and a demand for
lumber that suggests a revival in the
building Industry in certain parts OF
the country.
Relief Program Watched.
These developments have given en-
couragement to producers even though
they may not have done much to
stimulate trade or to reduce the
number of the unemployed, reckoned
at 100000 at the end of February.
This figure was probably exceeded
during March, when business generally
touched the low point of the depres-
sion. It. however indicates a slight
turn in the tide 1t has developed in
spite of a ragged market for securities
and increased concern among bankers
over the proposals for issuing large
amounts Of Government guaranteed
securities for relief purposes snd be-
cause of certain loosely drawn features
new banking measure.
Wall Street fears that there Will be
further exposure of banking practices
from which the public has suffered and
that this may have an unfavorable
effect. There is a wide difference OF
opinion as to whether 1t Is wise TO
have a thorough house-cleaning now
or to postpone 1t until public con-
fldence has been re-esta blished. Ap-
parently Congress takes the view that
the former is the better method and
that its constituency will not be salts.
fed until it has the complete story OF
"high finance"
II is reasonable to believe that the
latest phase of liquidation IN junior
railroad bonds comes from the pressure
Of sales from conservators of banks,
for 1t Is this type of security That mas
been conspicuous in bank portfo!los
Certainly the plans which are under
wav for repairing some Of the financial
damage done to the railroads warrants
a higher valuation for bonds OF TINS
than is now being placed on
them. In spite of the exaggerated
estimates of economies to be effected
through coordination and consolida-
ton. it is clear that savings can De
made that will bring many roads OUT
of the red and into the black. :,
There are still enough banks cioseo
or operating on restricted PASS 70
have a limiting effect upon the business
of their communities: as well as upon
even wider areas. They represent ap-
proximately S5,O00,000,000 Of frozen
deposits. This is in addition to de-
posits affected by bank extensions prior
to March 4. Furthermore, there is still
a large amount of money boarded. In
spite of the return during March OF
81 ,16O 100000, of which over $60O,000,-
900 was of gold and gold certlf1cates.
It Is estimated, however, that there is
still outstanding, either in the United
States or abroad, 81 900, 100000 Of gold
and gold certificates 1t is this that
President Roosevelt seeks to recover,
even If severe penalties for boarding
gold from now on must be imposed.
Money Rates Decline.
The return flow of funds has changed
the entire aspect of the money situa-
ton. Call rates dropped this week to
per cent and 60 to go day time loans
were quoted as low as " to IA per
cent. compared with 5 per cent last
month. On Thursday the New YORK
Federal Reserve Bank reduced its dis
count rate to per cent. New York
Federal Reserve member banks now
have excess reserves of SlOO,O0O,OOO
which have been built up from about
zero, after they had dropped from
1856, 900, 900 in January. 1t seems prob
able that we are re-entering another
period of low money rates, for with all
of the aids to expansion OF the cur
rency and the limited demands OF busi-
ness. another accumulation of funds is
in prospect.
Until, however, there is a greater de-
gree of confidence. easy money rates
will not mean higher prices for securi-
ties. In fact at no time in the past
three years have low rates for money
for any length of time produced ris-
ing market for fixed interest securities.
Just now the fear of imitation, or some
compromise with the monetary system
that may affect payments contracted
for in gold, has stronger influence on
investors than the readiness with which
they may borrow money cheaply. On
the other hand, there is no disposition
to make commitments in common stocks
on the premise of imitation. The con-
trolling factor with them is the funda-
mental one of earnings and dividends.
Neither at the present time Is salts
factory.
Before the bank holiday it was be-
lieved that most of the necessary divi-
dend adjustments had been made. Since
then they have sharply increased and
appear to be spreading to corporations
and institutions that previously had
preserved their dividend record This
is one Of the phases of deflation that
cannot be cured by pumping new cur
rency into the arteries of trade or by
changing the gold content of the dollar.
Copyright 1880
POTATO MARKET.