Evening star., 1933-10-01
Consumers Pocketbooks
Feel Pinch-Credit Expan-
sion Drive Pressed.
DOLLARS DEVALUATl0N
DECLARED STILL LIKELY
Slash to 65.Cent Basis Believed
Possibility-Natural Processes
Help Recovery.
BY CHARLES F. SPEARE.


Special Dispatch to The Star.
NEW YORK, September 30.-Until
recently the public at large has been
passive toward the threats Of imitation,
partly because it did not understand
its operation and. If it did, it had faith
that the administration would avoid the
extreme effects Of it.
The fight against imitation has been
mainly waged by the newspapers and
by economists who have no misconcep-
ton as to the ruin to the credit of the
country and to the fortunes Of indi-
viduals that currency expansion would
produce The banking element. who
should have been the first to combat
any trend that debases the currency in
which they trade, have been Singularly
quiet as the tide of imitation demand
rose.
Like the minister who preached on
sin and was against it." SO are the
bankers opposed to inflation-but in
private. There has been no command
ing personality from their ranks who
has day after day countered the argu-
ments OF the extreme inflationists and
started q public sentiment against
their creed. This Is the same lack Of
leadership In the banking world that
has been conspicuous the last four
years.
Rising Prices Resisted.
What has finally aroused the public
is the pinch on its pocketbook of rising
prices for necessities without a COM
pensating increase in its income. II
became evident as far back as the first
week in August that September would
bring the test of the success of the
N. r. A. movement. for then high costs
to the consumer might cause him to sit
back and wait for q more favorable
buying period instead Of exchanging
his idle dollars for goods. This Is what
has happened.
With the advance in retail prices in
the early half of the month. the volume
of the turnover decreased. Employment
has not yet extended to enough 1nd1-
viduals and the margin between wages
and living costs has not been great
enough to stimulate trade to the de-
gree anticipated At the same time the
capitalist class has become more tlmld
as the threat Of devaluation has grown
and has adopted policies OF retrench-
spending.
It became apparent, therefore, that
the lag In business had to be attacked
through other agencies than those OF
the N. r. A. It was either currency
imitation, as proposed by the radical
Southern element, or further efforts at
credit expansion to recover the losses
in trade and, primarily, to lift the level
of farm prices. For the present the
administration seems to favor the lat
ter. 1t is holding to its policy of Civ
ing liberal financial aid to restore agri-
culture. banking and the heavy in
dustries before it yields to the extreme
expedient of issuing at-money."
The promised loan of 10 cents a
pound on cotton, the offer to provide
funds to the railroads for the purchase
of from 100000 to 100000 tons of
steel rails If the price is "right"-that
is, under $4o-and the arrangements
by which banks with SLOW real estate
or commercial paper can be freed OF
this and depositors paid a consider
able portion of their claims, are steps
in this program. Each one has q Ger
tain "priming" value.
Powers Increasing.
Attached to each also are conditions
revealing the degree to which the Gov
ernment Is wriggling its way into the
center of the business structure, indi-
eating it intends to stay there for years
to come Its coercive power is daily
becoming more prominent. The iron
and steel men said a week ago: I'VE
positively could not sell rails under $40
a ton. We feel that we were very
liberal in reducing the price to that
figure" This week they were. in effect.
told by washington to offers rails well
propose to do
The administration has in its favor,
in its present purpose to relieve busi-
ness by credit expansion rather than
by currency imitation, the fact that re-
covery Of a natural character has been
going on here and abroad for the last
six months. Charts and graphs of
trade emphasize this The general
picking up in industry began to be no.
ticed last Spring. In spite of the sub
sequent international disturbance caused
by this country's going of gold, it ap-
pears that the improvement Is perma-
nent.
It is not the purpose of the admin
istration to reject all of the contingent
imitation measures voted by Congress.
Quite probable is an early announce
ment Of its intention to devalue the
dollar and bring about its stabilization
Many who. opposed imitation in any
forms at the outset Of the price-raising
effort now are In favor of changing
the gold content Of the dollar, believ-
ing that it cannot for years return to
parity. What they insist on as essen
tial to a return Of confidence Is q
dollar whose value. wherever fixed, is
a known quantity. and one on which
commitments in trade may be made
daily.
Inasmuch as the dollar has lately
shown resistance around the IS per
cent discount basis, there is a belief
that this will be the point at which
stabilization Is attempted. This notion
has gained large following abroad,
where concern is expressed over the
extent to which American funds now
located there will be called home. These
are variously estimated at from $780,
100000 to $1,000, 100000.
(Copyrtght l933l