Evening star., 1933-05-28
Governments Credit Expan-
sion Program Has Promoted
Rise During Week.
ADVANCES IN INDUSTRY
HAVE AIDED STOCK LIST
Better Political Outlook Also Has
Proved Factor in Rapid Up
swing of Markets.
BY CHARLES F. SPEARE.

By the Associated Press.
NEW YORK. May 27-The first di-
rect Government move to effect imitation
was made this week in the purchase by
the Federal Reserve banks of 5000 900
of Treasury paper. This Immediately
revived the markets for securities and
has since forced the average of prices
to the highest level In over year, With
speculation expanding into large daily
volume of transactions.
While the impulse has been mechani-
cally promoted, it has been strengthened
by natural forces. There has been
abundant evidence Of a quickening in
industry. The iron and steel manu-
facturers report an average production
in the country just little short OF 40
per cent, with an even higher ratio
among individual companies. This IS
the best showing in nearly two years
1t brings the steel industry to a position
where net profits should soon begin to
accrue.
Power Output Rising.
Furthermore, statistics of the electric
power and light companies express the
benefits OF expanding business and are
now making a most favorable comparl-
son with a year ago. The May produc-
ton figures of the automobile trade re-
fleet the benefit of released bank funds
and greater employment. Clearings OF
the banks, long recognized as an accu-
rate index OF business activity, show
gains in all of the leading cities and
even among those where they are not
Influenced by speculative operations.
The fact must not be lost sight OF,
in analyzing the cause of better SEN
t;x,,an% eac11rifioS fhof rf1urh
progress has been made recently In the
international political outlook The
declaration at Geneva on Monday by
Ambassador Davis, following that OF
Premier Mussolini, quickly changed the
entire atmosphere in those parts OF
Europe where, in the last three months.
hopeless view had been taken and
early warfare had been predicted. 1t
is now felt that even if the maximum
expectations of the Lcndon Economic
Conference in June are not realized,
there will be definite progress made
at that meeting. and that this may well
result in correcting the chief obstacles
to trade recovery. Assistant Secretary
of State Moley in outlining the prob
lens before the London Conference,
said this week that one Of them had
to do with the removal of exchange
restrictions and that these are the re-
suit of a top-heavy debt structure.
Linked with this is the policy of the
American Government in the matter
Of currency stabilization, which this
week has been placed in the hands of
newly appointed assistant to the
Secretary of the Treasury DR.. O. M. w.
Sprague. who is credited with the man
agement of the sterilization program
of the British Government
Gain in Commodities.
In discussing the price level, which
it is the policy Of the administration
to advance. commodities alone are cen
sidered. In less than three months
grain prices have risen from 40 to over
80 per cent. Other speculative COM
modities have gained from Is to more
than 10 per cent, and hides nearly $50
per cent. 1t Is estimated that the ef-
feet of the rise in farm products alone
has been to add 100000 900 to the
purchasing power of the agricultural
states. This has been evidenced so
far in reducing or paying off loans
and in meeting interest and tax bills,
rather than in purchases of merchan-
disc. although the national distributors
this week are reporting more demand
OF tIuS SOTt.
Associated with the rise in commcd-
ity prices is that in securities. Their
appreciation is several times greater.
than that in commodities. This, also,
is a powerful stimulant to trade. The
most important effect of it is to re-
cover for institutions that are large
owners of bonds a substantial portion
of their reduced assets
Applying the rise in securities to the
individual, it is logical that his willing
ness to spend money and pay his bills
has been increased by the recovery In
stock. Taking an Illustration from
railroad securities it will be found
that 10 of the most active railroad
stocks are now quoted at an aver
age of S45 share, compared with their
low average last Winter of S2l share.
A similar percentage of gain would be
found in active industrials, though not
SO much in the public utilities The
general improvement has been substan-
tial and has led to a reduction of loans
and a greater freedom in making es-
sential purchases.
Copyright, 1880