Evening star., 1933-08-27
Bond Purchases Are Expect
ed to Reach Weekly Rate
of 100 Millions. =
START SEEN IN CLIMB
FROM 10 TO 35 MILLIONS
Wall Street Uncertain Whether In.
flation Will Result-Europe In.
dicates Affirmative Belief.
BY CHARLES w. STORM.

Special Dispatch to The Star
NEW YORK. August 26 (N.A.NA).
The action Of the Federal Reserve
System in speeding 10 its purchases Of
United States Government bonds in
the open market to s35. 100000, COM
pared with weekly purchases Of $10,-
100000 since the first week in July, Is
accepted in the financial district as q
resumption Of the Governments deter
mination to raise commodity prices to
higher levels as well as to finance the
national industry recovery program.
This expansion, coming just when
Gen. johnson, head Of the N. r. A.,
announced the banks were not doing
their part in aiding the national pro-
gram. is believed to represent the ad-
ministration's first effort to put the
banking credit CT the whole country
behind the movement to improve gen.
eral industry through higher wages, in
creased buying power and raised COM
modify prices.
Although there is nothing oficial, the
general opinion in the financial district,
first to know of the increased open
market bond operations Of the Federal
Reserve System. is that these purchases
will be increased until they amount to
$100 100000. With this huge volume
of additional bank credit created week
ly some idea can be obtained of the
magnitude Of the banking credit that
is to be placed behind the admins
tration's program.
fiadonary Effect Talked.
Thee is considerable discussion IN
the financial district whether the larger
purchases Of United States Government
bonds by the Federal Reserve System Is
imitation or not. Some authorities
maintain this enlargement of bank
credit spells imitation. This contention
to Secretary Woodin that I'VE are not
going to initiate" In some quarters It
IS contended the result Of increased
bank credit is the same as imitation.
Irrespective of the merits Of these
contentious the action Of the foreign
exchange markets in declining sharply
following the announcement OF the
greater Government bond purchases
would seem to indicate the Europeans
regard this step as imitation because
American dollars were offered at a
steady decline in price as expressed In
terms Of exchange rates for foreign
countries on a gold basis.
The action of the stock market, which
experienced one of the sharpest and
most active sessions since the July
break, Is also accepted as indicating
that some OF the most important buyers
Of stocks believe the change Of policy
on the part Of the Federal Reserve
System reflects imitation.
Speculative bonds also responded to
this belief. while practically all the
important commodities advanced sharply.
The larger Government bond pur-
chases by the Federal Reserve Banks
may or may not be imitation but the
psychological effect on sentiment in the
financial district has been the same
Point to Retail Trade.
There is much discussion in Wall
Street whether or not the N. r. A..
campaign will succeed.
The answer to this is that partial
success has already crowned the efforts
Of the administration, in that retail
business Is showing substantial i'm
provemerlt. This is attested to by some
of the bggest merchandising execu-
tives in the country, who say expan-
sion in retail consumption has been
particularly marked in localities where
wages were lowest and where there
have been increases in compensation
received by workers.
An executive Of one Of the largest
limited price stores states the gain IN
retail sales by its chain has been par
ticularly marked In the South and
Middle West.
Moodys Investment Survey. an au-
thority on economic questions, in dis
cussing this phase Of the economic
situation saws:
IN. R. A. has already succeeded In
one very important respect. 1t has
given labor a shorter work period for
the same. or higher. pay. And modern
history does not know Of single ex-
ample of labor as a whole being de-
liberately and permanently robbed Of
the gains it had previously achieved.
nor does it know one typical example
of such gains being given up vclun-
tarilv.
"It will be a doomed government
that comes in the future with the idea
of restoring the status quo ante-Roose-
welt, so far as working hours and
minimum pay are concerned"
The increases in car loadings being
reported by the railroads following q
period Of contraction in trafic is re-
garded as another indication Of the
movement Of goods into consumers
hands.
Copyright. 1893. by North American News
paper Alliance. Inc.)