Evening star., 1933-01-22
Business Men Discouraged
by Delay in Balancing
National Budget.
BANKERS ARE DISTURBED
BY FEARS OF INITIATION
Both Domestic and Foreign Debt
Situations Are Pressing for
Solutions in Near Future.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, January 2l.-There
has been negative aspect to every
speculative and investment situation
this week, as well as to business con-
ditions and in the political affairs Of
the country. This has reflected itself
in lower prices for securities, in hesi-
tating and contracted operations on
the exchanges and in an increase in
the number Of business troubles, in
cluding an epidemic of bank suspen-
sions in Missouri, where about 325 in
stitutions, mostly all "non-members."
have closed their doors in the past
two years.
The mercantile failures have involved
a number Of chain stores that have
been crippled not only by the lower
purchasing power Of the public, but by
rentals that were contracted when
earnings were expanding and persisted
long after the period of large net profits
had gone by.
The inability, or unwillingness. of
Congress to use the interim period be-
tween the two administrations in
making laws that would bring some
relief to credit conditions has aggra-
waited the feeling of encouragement
prevailing in business circles. 1t IS
now apparent that nothing is to be
done at this session to bring the ma
tional budget to balance or to formu-
late plan for dealing with war debts.
On the other hand, this negative atti-
tude by Congress has some compensa-
ton in that 1t postpones argument on
measures that would have disuuieting
effect both here and abroad. There Is
little prospect Of the domestic allot-
ment bill reaching vote at this session.
Various measures proposed to initiate
the currency will probably be side
tracked This should give the opponents
of such legislation an opportunity to
organize their forces and be prepared
to present their case for sound money
in a convincing manner next Spring.
Imitation Battle Ahead.
The fear Of imitation has increased
In banking circles since the first Of the
year. It is strange that this has not
yet made an impression on spectators
in equities" for one of the earliest
responses to currency imitation Is rise
in stocks. A section Of Wall Street that
thinks only in terms OF commissions
would welcome imitation If it brought
about more active markets for stocks.
regardless of its ultimate consequences
to the country at large. In what will
be a bitter fight to maintain a sound
money position. the East will be ranged
against the West. for what may be of
temporary advantage to the agricultural
section Of the United States imposes
heavy penalties on those in the indus
trial and densely populated regions
east of the MissiSsippi River
Here currency imitation would almost
Immediately increase the cost OF living
and take away the compensation of
lower wages that this cost has provided.
It would not bring higher wages or
salaries It would raise the price OF
food, of clothing and of rents. 1t Is
doubtful If its benefits would be lasting
to those burdened by farm mortgages
that cannot be paid off and interest
rates and taxes that have remained
rigid. while farm incomes have de-
creased from one-half to two-thirds.
This trouble is too deep to be cor
rected by the expedient of imitation. 1t
will remain after the effects OF this
wear off.
Debt Reduction Essential.
The only way to correct the debt
question, at present the most vita! IN
the economy Of the country, is to reduce
debts to proper proportion with normal
values and normal income or earnings
This applies not only to farm mortgage
aud urban mortgage situations. but 10
those associated with corporations. "A
voluntary accommodation between credl-
tors and debtors must be reacheo
Losses must be recognized and VIII
ten off.
The figures of our foreign trade IN
1892. which were the smallest since
1905, suggest the effect on the over
seas business of the country OF the
abroad and also the effect of tariff
barriers to q free interchange Of goods.
Last year American exports decreased
one-third, compared with those in 1881,
while imports we're lower by 80 per
cent. 1t is significant that this trade
in December, the month of controversy
over war debt payments, dropped on
sharply from that of November. There
is much resistance in England to the
suggestion that the stabilization OF
sterling somewhere near the old parity
would produce more lenient attitude
on the part of this Government toward
future debt payments by Great Britain
It has again been impressive to observ-
ers in the market place to note the resist
ance securities have made to all OF the
adverse industrial, banking and political
developments of the week. This Is
further evidence of a liquidated situa-.
tion-one that would readily respond
to proof that Congress intended to
bring about a true balancing of the
Government budget and that it would
vigorously resist legislation tending to
provoke currency imitation.
tCopyright, 1933)