Evening star., 1934-07-01
RECOVERY POLICIES
WILL MEET TEST
IN REST OF YEAR
Continued From First Page.)

sufferer He is now realizing the
seriousness of his position and re-
belling against it. Not a small part of
the falling off in trade since April
is due to the upward march of
prices of necessities, unjustified by
the natural laws of supply and de-
mand. Purchasing power with the
general public has not been enlarged
with the raising of prices for con-
sumner goods. Wages have not kept
pace with the new cost of living
figures.
The success Of the housing and
modernizing program is seriously
compromised by the scale of material
costs, and public works projects are
proving an unexpected drain on those
treasures which must bear the bur-
den of them. Federal and State tax
levies are bound to increase, though
those imposed by municipalities
show a tendency to decrease under
more economical local administration
Fortunately. building material costs
have recently begun to decline.
Government Debt Mounts.
Since January the net Govern
ment debt has increased from S23,-
45o,00o,O00 to approximately s27.00O.-
100000. The fiscal year ending today
shows a deficit of about $4,000 900 900,
which is s3,ooo.00o.0oO under the
estimate made by President Roose-
welt in his budget message to Con-
gress. This is gratifying. However,
the appropriations in the fiscal year
to June 80. 1885. promise to equal
those set up to cover the recovery
term to which the administration has
committed itself.
Those who are firm believers in
the prospect of imitation point to
the steady pushing out of Govern
ment paper as the factor that will
eventually bring us to an era of
deprecated currency, whether or
not we resort to the traditional
method of currency initiation. The
country is not imitation conscious.
Seventy five per cent of those who
feared imitation six months ago no
longer take it into account in de-
termining their business or invest
ment policies. The high price range
of all United States Treasury loans
seems to deny the possibility of in
fiation.
BorrOws at Low Rate.
Step by step the Government has
reduced the service charge on its
debt and is at present borrowing
for a six months period at fantas-
tically low figures Specifically. it is
selling discount notes at less than
one-eiqhth of / per cent. compared
with f1ve-eighths Of l per cent in
January. All of its long-term issues
are at good premiums. Even the new
ly guaranteed home loan owners IS
and Federal farm mortgage IS are
above par.
This is due not only to the grow
ing respect for United States Treas
ury paper, but to the great abundance
of bank reserves and the scarcity OF
new corporation loans. There has
also been an entire reversal in the
attitude of the investment market
toward State and city obligations
so much that numerous issues that
went slowly six months ago at 5 and
per cent are now Immediately ao-
sorbed when offered at 3 per cent
and under Railroad equipment GER
tificates of the better sort are SELL
ing at the smallest yields in % years.
Prime railroad and public utility
mortgages have touched an average
not approached since the beginning
of this century.
The situation is one in which
the institutional and individual buy
er must soon decide whether the
current price range justifles support,
in view of possible imitation before
the end Of the year. or whether to
transfer his holdings into second
grade or more speculative bonds. 1t
is certain that the trend for the last
haf-year has been definitely away
from common stocks and into bonds,
which is only another indication that
imitation is not in the thought of
those whose business it is to ad
minister financial affairs
(Copvrieht 1874