Evening star., 1933-10-15
Termed Concrete Evidence
That Treasury Opposes
InfIationists.
RELIEF OF DEPOSITORS
WILL FREE NEW FUNDS
Industry Slackens Amid N. r. A.
Confusion, but Some Lines
Continue to Gain.
BY CHARLES F. SPEARE.

NEW YORK, october IA sound
money policy has been initiated by the
Roosevelt administration this week in
dealing with refunding Of the fourth
Liberty Az per cent bonds in a natural
way. 1t has chosen to retire a portion
Of them through a conversion that will
materially reduce the service Of the
national debt and which excludes any
process that might be regarded as in
fationary.
This conservative program furnishes
concrete evidence that the Treasury Of
hcialS are maintaining stubborn op-
position to currency expansion. 1t has
already raised the level Of Government
credit as well as advanced the status
of different grades of corporation bonds.
The conversion operation is timely,
for the entire Government program of
credit expansion had become quite
confused. The Treasury appeared to
be developing into sort Of department
store, with counters to which various
types Of borrowers might go In their
distress, but with no one behind them
who could give them immediate relief.
Each day some new credit speciality
was advertised which was only a kind
OF substitute for another that had long
been available but not used. The haste
to provide additional facilities to Offset
the pressure for currency imitation was
bewildering. 1t gave the impression
that the administration had no clear
idea of what its monetary course
should be.
Short Debts Maturing.
Now comes a plan that is sound and
constructive. 1t gently slaps the infla-
tionlStS in the face It not only has
been essential that the bulge. be bal
anced, but that some provision be made
for the great amount Of short-te-m
debt with which the Government is
faced. Within the next year nearly
$4,000, 100000 of such debt natures in
the form of discount bills and Treasury
certificates.
The Treasury has been borrowing for
immediate requirements at only
nominal cost actually in September at
S21.774 for the use of s75,000,OOO for
three months. Still it had a callable
issue of S6,268, 100000 war bonds out
standing on which the coupon rate was
a per cent. Its experience in offering
to the public in August 3A per cent
loan at par was sufficient to guarantee
liberal support to a second issue at the
same rate after one year and at 1917.
IL has been overtimid in seeking the
aid OF individual investors. and has too
much encouraged the banks to fill their
portfolios with Government paper. To-
day the banks and the Federal Reserve
hold S7,350,000,00e of the total Gov
ernment debt outstanding of s23,OOO.-
100000.
There has not been the slightest
ootpt at any time in the past six
months that popular national loan,
properly presented, would be covered
py individual investors in spite of the
fear of the large capital class that in
fation would destroy the value of
government" and that the safe refuge
lor their money was in London or
Paris.
Relief for Depositors.
The administration this week has
also been concentrating on its plans to
relieve the depositors in closed or re-
Strlcted banks. This, too, is to be ac-
compllshed without the use of currency
inf1atlon machinery. If the program
Is expedited it should provide the great
esq new single factor in the release Of
purchasing power in the next few
months that can be developed.
The scope of the plan is not quite
clear, for in all of the announcements
concerning 1t emphasis has been placed
on releasing the frozen assets of the
banks that suspended after the March
holiday. These numbered 2,173 on
august 80. as reported in the Federal
Reserve Bulletin, and were still un-
licensed, with deposits of 81 ,909 600. .OOO
Inc banks that closed from the end
OF 1929 to March of this year and have
not reopened total over 47OO. Their
deposits amount to s2,840, 10000 Some
OF their creditors have been without
olvidends Tor two and three years. So
tnelr plight is more serious than that
OF institutions which functioned nor
mally until March. They are even
more entitled to consideration in any
program of relief than the latter
Going from these financial phases
OF the recovery program to those
identified with industry, the w,ek's
events have not been so promising
Business is obviously in a state of be-
Wlloerment. Employers are resentful
OF conditions in codes that have been
imposed on them. There Is a lag in
production and, SO far, hardly more
than seasonal response to the 'buy
row campaign, although economists
say that prices next Spring will be Is
per cent higher than at present.
Income Lags Behind.
The trouble is that comparatively
lew have received additional income
this is small compared to their needs
while the majority have had their buv-
Ing ability reduced by the fall in
wholesale prices of their products or
by smaller return on their invest
mentS. Unless there is a balancing Of
income and outgo among the producing
classes by the end Of the year, it will
be difficult to resist the demand for
some form OF currency initiation.
The coal strike has involved large.
direct losses to the mines and to the
railroads and produced a state of un-
certainty In the iron and steel trade.
where the September untitled tonnage
of the United States Steel Corpora :
ton was the lowest in its history. Power
and light production has been slightly
affected by the drop in industrial VOL
ume.. So have car loadings. Depart
ment store trade last month was ma
terlally larger in four of the Federal
reserve districts but unsatisfactory in
the other eight. The strike of me-
chanics in Detroit automobile factories
has been adjusted, which relieves q
tense labor situation.
Perhaps the most encouraging Incl
dent, from the standpoint Of capital,
was the positive way in which the citi-
zens Of Birmingham. Ala. rejected the
pan 10 munlclpdlZe tNelr pupuC utlu-
ties and bring them under the rate
basis of the Tennessee Valley Author
ity. This is the most cheering de
velopment that has come to the power
and light industry since 1929. It does
not, however. solve the growing prob
lem of how the unsound holding CON-
panies are to refund their maturing
obligations or raise new capital
(Copyrighk 1914 II
4