Evening star., 1933-10-29
NEW GOLD POLICY
BRINGS AVERAGE
RISE IN STOCKS
Moderate Decline for Week Is
Shown in High-Grade
Bonds.
RESPONSE DISAPPOINTS
IN COMMODITY PRICES
Business Commitments Deferred
as Public Seeks Clearer I'm.
derstanding.
BY CHARLES F. SPEARE.

gram Is represented by confusion grow
ing out Of inability to understand 1t and
its implications. As result, there has
been something of a halt in business
commitments whose scope cannot be de-
termined until there is clearer notion
Of what the gold purchases and the
constant rise in the gold price will do
to the dollars value.
Wall Street has interpreted the Presi-
dents message to mean that we are
moving at faster pace along the road
Of imitation. The point of uncertainty
Is the degree Of imitation and the
promptness with which commodity
prices may respond to the new and un-
tried method Of stimulating them. It
! is not surprising that markets should
be so erratic and industry so cautious
when most honest minded men. who
deal with money professionally or aca-
demically, cannot tell you what the
present scheme Of controlling the gold
value of the dollar by the new process
is all about.
Public Displays Caution.
The belief that the process may not
work Is strengthened by knowledge that
those financial advisers Of the President
with the most practical knowledge Of
money and banking do not subscribe to
1t and that majority Of economists
definitely oppose it. Yet there is enough
respect for it to excite the speculative
mind and to disturb the conservative
investor.
So far there has been comparatively
little activity by the public in exchang-
ing money or f1xed-interest securities
Tor common stocks or commodities. The
lesson OF the last imitation boom has not
been forgotten. This episode has been
denounced by the President: but if in
flation as policy is to be adopted. the
Complementary phase Of it-Specula-
tion-cannot be avoided
The thesis that Government credit
will be maintained and a sound cur
rency will accompany q rise in the
American commodity level' Is difficult
to support in the light of past expert
ence here and abroad.
Apparently investors do not feel so
certain that Government credit can be
maintained" for they have been selling
Treasury issues this week and the new
loan is at slight discount from its
subscription price. The New York State
issue cost the borrower at least one
fourth of ! per cent more than would
have been the case week ago. These
are not serious facts, but they are sug-
gestlve.
Effects Of French Crisis.
The overthrow of the French govern
lnent this week has an important bear.
ing on the American monetary policy
If a coalition cannot be formed that will
vote budget similar to that on which
Premier Daladier fell, there is every
prospect that France will go of gold
Holland and Switzerland would follow
her. It would then be difficult to es-
tablish gold price here predicated on
the world price Of gold. Thus the merit
of this scheme disappears This is one
of the possibilities that clouds the whole
project and even dampens the ardor of
the speculator for making commitments
profitable only If imitation occurs.
Next to the foreign exchanges. the
most sensitive index of public opinion
toward monetary policies is the stock
market. Prior to the announcement of
the Government gold-buying program it
had been declining and was consider
ably lower than in July. Likewise the
grain and cotton markets were de-
pressed. It is only fair to say. there
fore, that the effect Of the gold pur-
chases on these markets has been
greater than is expressed in the 10
point average rise in stocks and the 10
cent advance in wheat, for their trend
has definitely changed away from the
disturbing def1ationary one.
In stocks the gains have been re-
sponsive entirely to public buying as
distinguished from Government sup
port, which has been the main factor
in the uplift in wheat. In corn, fur
thermore, the A. A. A. has amplif1ed
its original plan and now pledges a
loan of so cents buShel to growers.
With the momentum of minimum
price-dxing for agricultural products,
it will not be long before the farmer
will have a stop on any loss he may
incur on any of his major products.
In the past four years the Farm Credit
Administration has advanced over ST.
000, 100000 to various agricultural
agencies and for whose carrying cost
the general public is taxed It is not
to be forgotten. however. that in the
same period private and public funds
in even greater sum have been ex-
pended to aid the unemployed and des-
titute of the non-agricultural class.
Industries Slow Down.
The latest statistics of business re-
fleet the slowing down that became
apparent in September. The Federal
Reserve Boards monthly review notes
some decrease in factory employment
in the first half Of this month, but the
volume of earnings was unchanged.
Industries whose output had expanded
rapidly in the Summer, as iron and
steel, automobiles, coal and oil. have
appreciably contracted. This weeks
figures of the steel trade show an
abrupt drop to about 80 per cent Of
capacity. compared with SO per cent
the middle Of August.
Another sensitive index of industrial
volume. that of electrical production.
has been falling for some weeks. While
the gains over last year are consider
able. the drop from the September level
is disappointing. 1t is only natural for
railroad car loadings to reflect the lag
in business. Comparison Of these with
the figures Of a year ago are more sat
isfying than with those Of August Or
September. ..: 80. -.