Evening star., 1933-12-10
Decline in Prices Checked,
But Effects Still Are
Believed Moderate.
TRADE Squirt F0RESEEN
EARLY IN new YEAR
Treasury Refunding Terms Bolster
Confdence-Rising Debt Total
Is Feared.
BY CHARLES. F. SPEARE.


NEW YORK. December s.-The
mathematics of the managed currency
program Of the administration is as
obscure today to the average person as
when first proposed six weeks ago. On
the surface it does not appear to be
making progress, though there may
have been mdercurrents developed by
1t that are not apparent to any but its .
promoters
It possibly should be credited with
checking the alarming decline in COM
modit1es in October. To this extent it
has been an aid IN quieting the more
violent of the inflationary talk. Its
positive effects, however, have been
moderate. Again this week there are
a considerable number of commodities
whose value is hover than the week
previous and numerous others whose
price has not changed.
There has been the same hesitancy
In making commitments in common
stocks observed for several months.
though more OF swing in speculative
sentiment to medium grade corporation
bonds. U. s. Treasury obligations have
rejected the higher rates paid by the
Government for its 90-day bills and
for the one-year notes with which the
December Is maturities are to be
financed.
Situation Facing Congress.
1t Is fair argument that a lag in
price recovery is to be expected as
phase of such a monetary policy as is
now being developed. On the other
hand. If there is any virtue in stimu-
lating commodity prices through the
instrument OF rising quotation for
gold. some evidence of this should now
nave been exposed Due allowance
should be made for counterbalancing
effects, such as the French budget
crisis and the threat Of going of gold
by France. Still there remains an un-
satisfactory net gain to the credit of
the Warren School Of Economies.
This Is the situation as the time
draws near for convening the new
session OF Congress. VIII it be salts
ned with an experiment that really
began last April when this country
abandoned gold. or will It set out i'm
mediately to force prices up by the
leverage OF greenbacks or non-interest-
bearing certificates?
The decision of the Treasury to re.
fund its short notes in the orthodox
manner should allay some of the fears
OF currency imitation, though the same
confidence prevailed In October when
the Government AZ -3A per cent bonds
were issued at l01 Y, now at per cent
dlscount. The person who studies the
Government program of expenditures
in 1884 cannot fail to be alarmed at
the magnitude of it and the weight
that 1t will impose on national credit
It is probable that by the end of the
fiscal year. June 80, outstanding Treas
ury issues will approximate S26 ,0Oo..
o00,OO0, or the maximum of the war
time debt.
The Government bond market cannot
De constantly diluted without suffering
any more than can other markets sub
Ject 10 the factors Of supply and de-
mano. Tnls Is recognized in Washing
ton. 1t is significant that open Gov
ernment support has been given twice
In the last two months to shaky mar
kets-to cotton and grain In October
ana, more recently, to Treasury obi.
cations
Foreigners Buy Dollars.
-, The frequent and extended pausss in
tne process OF marking up the price Of
goid ana the greater strength Of the
uoiiar may explain the calmer feeling
tnat prevails In financial and business
circles: There is little evidence at
or Canada: on the contrary, there are
signs Of foreign purchases of the dollar,
Had there not been such a rush last
Spring and in the early part of the
Summer to anticipate the rise in
prices which Washington so freely pre-
dicted, as well as to replace long ex-
nauSted supplies of goods, the volume
OF business today would be greater. The
industrial reaction Is as much due to
ADVANCE purchases which anticipated
tnls seasons normal demands as to un-
certainty over the money situation.
Consequently. there is reason to ex-
pect another active period of trade in
the early part Of next year. for BY then
new requirements will have assembled
and the cumulative effect of a wider
distribution of employment under the
Civil Works Administration will create
more buying power. Furthermore, the
steady recovery in world trade contin-
ues.
The daily record of resumed increased
divfdends Is a denial that all business
Is poor. The Atchison and the Bur-
nngton this week have been able to
distribute portion Of 1888 profits to
shareholders. A year ago they could
sfford little or nothing More Of the
oil companies have prospered under the
new regime and are making liberal dis
bursements to their owners. The Inn
portant fact. however, is that enter
priseS OF many kinds are giving proof
OF . return to the black, and, for the
f1rst time since the Spring Of 1892, are
declaring dividends. There are rela.
lively few commercial defaults through
out the country. Bank failures ceased
last March. Railroad and public util-
ity receiverships are no longer to be
found In the weekly business reviews.
Easier Credit Likely.
If we are willing. therefore, to take
our business measurements from those
Of last December or Of March or April
this year, we have cause for satisfac-
ton. It Is when we compare with July
or August that the figures are dis
pleasing. The American business man
cannot control his passion for q mount
ing monthly sum Of gross earnings. Ths
interludes Of the industrial cycle 1n4
nerve him.
Still another reason why more busi-
ness may be expected after the first
Of the year Is that then there shouIi
be ample credit accommodation. Pends
ing the examinations Of banks for en-.
trance into the Federal Deposit Guar.
antee Corporation. they have been
maintaining as high degree Of
hquidity as can be justified. They have
been rather arbitrary toward borrow
ers, passing on to them some Of the
philosophy Of bank examiners. There
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