Evening star., 1934-09-16
OBSTACLES FAIL
TOHALTFORWARD
MARCH OF TRADE
Labor Strife, Living Costs,
Fear for Profits and
Drought Cited.
SITUATION AT TREASURY
ALSO WATCHED CLOSELY
Clearings Best Since Early Au-
gust-Commercial Loans Climb
as Failures Recede.
BY CHARLES F. SPEARE.

BY CHARLES F. SPEARE.
Special Dispatch to The Star.
NEW YORK, September 15.-Busi-
ness continues to struggle against the
handicaps of the labor situation. more
acute again this week; the losses from
the drought, the rise in the cost OF
living, the fears Of merchants and
manufacturers that the day of proflts
that will make capital venturesome
is waning and the intimations from
the Maine elections that the New
Deal, which much. of the business
| world scorns. has the support Of the
masses and with renewed prestige will
be pushed to greater limits this
Winter.
The business world is also deeply
concerned over the Treasury outlook
and the failure of the tokens of Gov
ernment credit to revive following the
generous terms granted to holders Of
the Fourth Liberty Az per cent bonds
in the conversion plan effective today.
The new turn in the labor situation
| is the defiant attitude of the cotton
manufacturers, who have refused to
| arbitrate the issue with the striking
employees, thus leaving the Winant
| committee in an embarrassing posi-
| ton, and the recommendation of
| the National Association Of Manufac-
turers that its members ignore the
| Houde decision of the National Labor
Relations Board.
These are significant phases Of an
| industrial period that is passing from
the idealistic back to the realistic, as
it appears that employer and employe
do not belong in the same fold, but
must eternally quarrel with each
other.
Banking Gains Shown.
That Washington is concerned over
the effect Of this discord on its re-
covery program is evident from the
abundance of statistics pouring out
from the Capital proving that we are
much better of than we think we are
This Is commendable. 1t is good for
the Nations health that 1t be fire.
quently reminded of the change in
conditions since the days of the great
] collapse of 1888. We have moved
a long ways back from the edge Of
the precipice since then.
The head of the Federal Deposit
Insurance Corp. reported this week
that only five banks had failed In the
last year. More than 5000 had gone
down in the 1930-32 period and many
more before that. Today there is no
| such thing as public alarm over the
! status of banks or insurance COM
panies. This is probably the greatest
gain that has been effected.
One Of the accepted measures OF
business activity is that of bank
clearings. This week. in spite of the
/ dulling influence OF the textile strike,
! they were the largest since early Au-
! gust. Increases over 1888 ranged from
to IL per cent in iron and steel CEN
ters, like Pittsburgh and Cleveland, to
l6 per cent in Detroit, % and Al per
cent in drought sections represented
by ST. Louis, Kansas and Omaha; 18
| to over % per cent in Atlanta and
New Orleans, and 80 to "a per cent
in Seattle, San Francisco and Los
Angeles.
This implies that a substantial
amount Of business is being trans
acted over the country. Not all men
are folding their hands and waiting
| for the end of the world to come. If
there are 10000, 600 still unemployed,
] as the head Of the A. F. of l.. states
and which the president OF the United
| States Chamber of Commerce refutes
with his figures Of 1000, 900 or g.
| 600, ,000"-there are still 10000, 900
| others who have jobs and are inde-
| pendent of public relief.
Business Loans Increase.
Since July Is there has been an in
crease of $330,00O,00O in the CONNER
cial loans OF the Federal Reserve
Banks - $ll4,00000 reported this
week-which is an indication that
business is laying new foundations
on which to build up production and
employment. The commercial vitality
| Of the country is exhibited in the
smallest number of failures since Sep
| tember, 1920. One must not, however,
| overlook the fact that business profits
are decreasing and dividends being
reduced or passed. Two notable ex-
amples Of this appear in the financial
news reports of the week, both Sc
quels OF the textile strike.
Outwardly, the cause of the new
alarms in banking circles this week
was the heavineSs at times in Treas
| ury bonds and notes. Each group
| extended its decline until the direct
| long-term issues were an average
nearly points from the high Of two
months ago and the guaranteed obli-
| cations as much as 6 and z points
down from that date Secretary Nor
hou
thodox in his way of dealing with the
September Is financing than his sue
cessors, Mellon and Mills. Yet the cry
Of approaching imitation is again
Shrill. The timid have been selling
their Government bonds.
1t is indeed difticult to see how the
national budget is to be balanced in
the time prescribed. Col. Leonard P.
Ayres, in a convincing series of dia-
grams discussing various economic
fallacies that have wide current ac-
eeptsnce." includes one that shows the
rise in the Government debt in ratio
TO national income. After the war
the ratio was 40 per cent debt to in
come. Now it Is nearly 80 per cent.
former Undersecretary of the Treas
ury has pointed out that current in
come taxes are less than the require
ments OF Government debt service
Both statements are entitled to much
respect and to close study but neither
proves that the limit of incomes has
been reached or that the capacity of
the country to pay more taxes has
been exhausted.
Obviously, taxes must be higher.
New reservoirs of money supply may
have to be tapped. There were scores
of American corporations that ran
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