Evening star., 1934-06-17
Brokers and Bankers Voice
More Cheerful Opinions
on New Laws.
TRADE HOLDS UP WELL
DESPITE SOME DECLINE
Seasonal Lag, 0verproduction, La
Dor Troubles, Drought and High
Prices All Are Factors.
BY CHARLES F. SPEARE.

NEW YORK, June l6-EVentS OF
the week again prove that the ex-
treme phases of a given political or
business situation seldom develop.
Most of the alarms occasioned by the
securities exchange act already have
subsidized We see, in fact, over 100
members of the New York Stock Ex-
change publicly subscribing to the
thesis that If wisely and judiciously
administered the act will be a con-
structive measure"
Congress passes the silver purchase
measure, but rips from it the objec-
tionable full-bonus provision. Mr..
Tugwell makes DR.. Writ look ridic-
ulous and the new deal plausible to
many who had condemned it without
knowing why.
DR.. Sprague, who retired from the
Treasury in huff and saw little good
In the administration monetary pro-
gram, is convinced that serious inf1a-
ton is improbable. This also Is the
conviction that many others have long
held.
Various speakers at Springtime
bankers conventions this week have
brought to them encouraging state
mentS and points of view. The chair
man of the Federal Deposit Insurance
Corporation intimates that there may
be revision of the law to make it
more amenable to the requirements
and wishes of its members. Great
Britain has been told by the Secretary
OF State that if she cannot pay her
| debt to the United States in cash, she
may be interested in reducing it by
goods and services.
Trade Volume Substantial.
This catalogue of incidents of an
upbuilding nature indicates that we
are gradually coming out of the era of
despair into one of confidence and of
lesser preJudices, and are showing a
Willingness to cooperate with new
ideas and methods instead Of reject
ing them out of hand Along with it
| is continued proof of a substantial
volume OF business, though with a rec
ognized contraction from the level of
early Spring, due to overproduction,
| minated retail prices, the drought, la
Dor disputes and the normal lag that
peglns with the Summer season,
For one thing, the consumer is IN at
ease. His mood is beginning to be re-
spected and retail price reductions are
the result. These have stimulated
some new business. They will have to
go further and cover a wider variety
OF goods to restore the goodwill of
the buyer who has little reserve for
purchases. 1t is difficult to see how a
building construction program is To be
! successfully developed with materials
at level characterized as Scandal
GUS" There is just as much need for
correcting this as for scaling down the
interest rate. Undoubtedly, Repre-
Sentatives returning home from Wash
ington will hear considerable from
their constituents during the Summer
about the high cost of living
German Moratorium Expected.
The German credit difficulties have
come to a swift crisis through the
action of the government in declaring
moratorium on payments on both
the Young and Dawes loans. This
followed the Reichsbank's moratorium
decree affecting all medium and long
term foreign obligations between July
l and December 81.
This 6-month debt holiday was
strongly foreshadowed by Germany's
recent suspension of exchange clear
anceS for two weeks to 10 European
nations, and the drop in the gold and
exchange coverage of the mark to be-
low 3. Z per cent. 1t is of serious con-
Germ to those Americans trading with
the Reich and holders of the two gov
ernment dollar loans, now estimated
to amount to some s100,000,000 in
American hands. Both issues dropped
to new lows on the news.
1t is to be remembered that the
Dawes loan-the per cent issue-is
"a direct and unconditional obligation
of the German government, secured
by a specific first charge on all pay
ments provided under the Dawes plan
and first charge on the controlled
revenues e. i. gross revenues derived
from the customs and taxes on
tobacco, beer and sugar and the net
revenues of the spirits monopoly
While none of the eight creditor ma
tions is likely to use force to compel
the fulfillment of the bond contract
with them by taking control Of Gus
! toms, the Bank for International Set
Elements is in a position to exercise
strong pressure. The status OF the
Young loan 512S is not so clear, though
they are in effect a second lien on
revenues cited above.
The immediate conferences between
the heads of the Italian, French and
German governments may bring some
new light to many of the present be-
wildering and disturbing problems that
face Europe.
Financing Views Differ.
A wide difference of opinion prevails
as to the probability of active partici-
patton by bankers in corporation
financing during the remainder of this
year. Some believe that the new
securities act gives them fair field
in which to operate and that several
billion dollars Of bond and preferred
stock issues will be foated in the next
|, six months. Others are still reluctant
to trust themselves to the technicali-
ties of a measure that is untried and
which might involve them in litiga-
ton with their clients. Their opinion
is that only the most imperative
financing will be negotiated and that
investors will for some time center
their attention on Government and
municipal paper.
The latest success of the Treasury
with its long-term bonds and 5-year-
notes and the steady scaling down Of
| the interest rate on city and State
| obligations, however, suggests that the
| investor will soon be compelled to turn
back to the markets for corporation
A