Evening star., 1933-11-05
Uncertainty Over Currency
Brings Slow Paralysis
for Business.
EARNINGS AND OTHER
FACTORS ENCOURAGING
Railroad and Industrial Reports
Show Activity Still Well Ahead
Of Year Ago.
BY CHARLES F. SPEARE.

By CHARLES F. SPEARE.
Special Dispatch to The Star.
NEW YORK, November 4.-What
may be said to be a kind Of creeping
paralysis from fear and uncertainty
has been more apparent this week in
the business world.
1t is still possible to make highly
favorable comparisons of trade and en-
ployment statistics with those of last
year. but the contrast with figures OF
few months ago is unsatisfactory.
Iron and steel production is of more
than so per cent from the August level
and automobile output is down 40 per
cent The general business index,
which rose 40 points from March to
July. has lost half its gain. Part of
llllS TtaCtl0n Is Que 10 the rush 70 buy
and anticipate higher prices. which gave
an abnormal character to Midsummer
trade and has, in consequence. left the
country's business this Autumn in a
subnormal condition
One effect of this situation is the
proposal this week to unscramble parts
OF the N. R. A. organization; TO recast
1t so that it may be more amenable
to the traditions on which American
business has been founded and pros
pered, and at the same time preserve
those features of it that have ad-
vanced business relationships. The
philosophy Of the Swope plan Is that
''on the foundation Of the national
recovery act can be built better
structure where the employer and en-
ploye will work together TO understand
the fundamentals Of their Joint prob
lens and find solutions which viii
bring greater satisfaction to both"
Skeptical of Gold Policy.
The relapse in business Is coming :,
be more and more associated with tn
efforts to depreciate the dollar and liz
the level of domestic Commodity pTicel.
1t may not be fair to appaiSe thn
value Of the gold-buying program at
this stage The best Judgment of those
most competent to anaIyze it. however.
is that it Will not work in the degFee
anticipated and that II will have I
give way to more radical measures.
France would assist it, The theory c
it is unsound and its operation i'm
practicable. None of its advocates has
yet been able 10 describe 10 q world
eager to be taught why paying highe.
price for gold arbitrarily compels rising
quotations for commodities.
The lift in commodities may come,
but only as suggestive reflex OF higher
gold. and then only if the public is III
mood to buy commodities and has
sufficient resources and the statistical
position OF such commodities favors
higher prices. Wheat has been much
moro affected by its supply and demand
position, and always will be- than by the
relation Of the gold price to its market
quotation.
The excess reserves Of the Federal
Reserve member banks this week were
S050,000.000. a figure never before ap-
preached. II any one imagineS that
there has been no credit imitation in
the last few years let him examine the
status Of bank deposits. 1t is proposed
to increase the capital-therefore the
loaning capacity-of a majority of the
banks of the country through forced
sales OF preferred stock or capital notes
to the R. F. c. Yet we are already
submerged under a mountain of credit
Tor which there is little employment.
The only channel into which this
appears to be flowing is that of Gov
erarnent securities. The fact that these
and all high-grade corporation bonds
have held comparatively firm under the
threat of initiation is partially due to
the abundance Of, and the nominal
rates for, money. There has certainly
been no evidence that investors have
been frightened into exchanging their
prime securities for common stocks.
Rail Recovery Remarkable.
The nine-month record of the rail-
roads OF the country are worth some
consideration as an evidence of the
degree to which a major industry has
recovered from the blight that had
fallen on it during 1892. In the Janu-
ary-September period the net operating
income of the class lines increased
about 65 per cent over the similar
term last year.
There are score Of important sys-
TENS that have not only earned more
In the nine months than they did in
1882, but whose operating income has
been greater than in 1881. Among
them may be mentioned the Baltimore
& Ohio. Chicago. Milwaukee, St Paul
d Pacific Erie. Great Northern, Illinois
Central. New York Central. New York,
Ch1cago & St Louis. Norfolk & West
ern. Pere Marquette. Pennsylvania.
Reading, Chicago & Alton. Bangor a.
Aroostook. Seaboard Air Line. South
ern and Wabash. There are others such
as tne chesapeake q Ohio and New
York. Ontario & Western that have
approximated similar net results.
In view of the slowing down in gen
eral business 1t Is quite possible that
the net returns Of the December quar-
ter may take away from the gains of
the first nine months, and that q few
systems that a while ago promised to
cover all Of their interest requirements
for 1888 may fall somewhat short of
this goal. The worries of the railroad
bondholder, however. are moderate to-
day compared with those at this time
last year
As a complement to the improved
railroad earnings are those for indus
trial corporations. In the September
quarter list Of over 200 showed net
profits Of about $3.50. .00o, 900 compared
with $87,000,000 In the June quarter
and deficit the year previous. Re-
lecting this Is the steady increase in
the number and dollar amount Of divi-
dends being paid.
(Copyright, 1oSS)