Evening star., 1933-07-09
Commodity Monetary Gauge
Is Found Difficult to
Interpret.
INDUSTRY CONTINUES
STRONG DRIVE FORWARD
Investors Warned to Study Changes
in Status of Various Securities
to Improve Portfolios.
BY CHARLES F. SPEARE.

D1 CHAhiLS r. SfEAhE.
Special Dispatch to The Star.
NEW YORK, July 8-The descent of
the dollar has been rapid again this
week. 1t is approaching a point that
will soon fix it around a 80 per cent
discount in terms of foreign cur
rencieS.
The objective of the Washington ad-
minlstration Is not known Like its gen.
eral policy since the opening of the
London Economic Conference, it seems
to be one of change and chance, un-
table and contradictory.
A new book on economics is being
written. Readers Of it are having diff
Guilty in interpreting such sentences as
The United States Of America seeks
the kind of dollar which a generation
hence will have the same purchasing
and debt-paying power as the dollar
value We hope to attain in the near
future And again: "All fetishes of
so-called international bankers are be-
ing replaced by efforts to plan national
currencies with the objective of giving
to those currencieS a continuing pur-
chasing power which does not greatly
vary in terms of the commodities and
need of modern civilization"
The implication is that for the long
established practice of the gold coun-
tries there shall be substituted the COM
modify measurements of what is at
present the most aggressive and out
spoken school of American economics.
Trade Regaining Health.
1t is an evidence of the inherently
sound condition of American business
that 1t has gone steadily ahead in spite
OF the dramatic episodes of the week
and the threat of q long suspension of
active foreign trade relations Separate
it from the excited and buoyant mar
kets for securities and commodities and
business shows a vitality and momen-
tum that could not develop if it were
not rapidly regaining its health.
There Is progress in most lines Of in
dustry; promise for the future in nearly
all others. The striking gains. of course,
are those i4l~4fon~1sfd -seeely-asotor car
production and railroad car loadings
The July output of automobiles will be
nearly double that of year ago. 1t is
not unlikely that two of the manufac-
turers that have omitted their dividends
will resume them before the end of 1888.
1t is estimated that loadings of freight
in the current quarter will be 10 per
cent in excess of the same period in
1932-the first quarterly increase prom
iSed since the December quarter of 1929.
Reports from 100 cities indicate de-
cisive trade gains in May and June over
previous months. These are being fol-
lowed by improvement in July A sequel
to this is rising trend in wages Some
corporations have restored the pay
schedules of year ago. Compensation
for skilled and unskilled labor, however,
still is barely sufficient for essential
needs and unemployment totals drop
but little.
The wholesale level rises slowly in
spite of the dominant policy of the ad-
ministration in advancing prices. 1t is
less than 10 per cent above the low of
March. Some retailers have been seek
ing advantage in the present situation.
have raised prices and been brought to
book
The most severe drought in the men,
ory of this generation has established
grain above the level to which it was to
be artiflcially pushed This being SO,
the man in the street does not relish the
idea of additional taxes to assist grow
ers who now have more than realized
their goal This is another instance
where natural forces have brought the
results Congress planned to accomplish
by artificial means.
The present level OF prices for Sec
ond and third grade corporation bonds
and for the preferred stocks of public
utility holding companies justifies seri-
Gus consideration by their owners of an
exchange into securities of a superior
quality Some of the bonds that drop
ped down into the 40s and 5Gs are now
in the 8us and COS; preferred shares
that fell into the 40s and 30s are in the
Cos and 70s. They still are funda-
mentally weak The per cent general
mortgage bond of a railroad recently
threatened by receivership is high
enough when it has crossed 80 and
preferred stock of holding company
approaching disintegration has made
ample recovery when it has more than
doubled in market price.
There are elements Of competition
and overcapitalization among the rail-
roads and factors of excessive rates,
multiplication of stock and bond issues,
and increasing taxes in the public util-
ity situation that have changed the
status of securities with good rating
five years ago. The careful investor
takes account of these conditions and
moves in step with them.
While the individual investor may
make substitutions that involve sacri-
fees, the institution is differently
placed. It cannot sell at loss without
charging this against its surplus or
reserves In this respect it is in an un-
fortunate position, for there are nu-
merous instances of banks and trust
companies that should now be improv-
ing their portfolios. when they can do
so at fair price level. but are unable
to accomplish this and conform to
banking practice.
(Copyright. 1933)