Evening star., 1934-07-08
U. S. Has Substantial Stake
as Creditor-Threat to
Mark Feared.
DULL SUMMER FACED
BY INDUSTRIAL FIRMS
Lower Prices May Spur Steel as
Well as Auto Purchases, but
Drought Cuts Farm Buying.
BY. CHARLES F. SPEARE.
pecial DiSpatch to The Star.

Special Dispatch TO The star.
NEW YORK, July THE political
revolution in Germany has introduced
a new and disturbing factor into the
international situation, and one which
may play an important part in de-
termining the nearby trend OF domes-
tic business affairs. Obviously, it rem
ders more difficult the German credit
position. in which the United States
has a substantial stake, and carries
the threat of further disorders in
exchanges, should the mark collapse,
which would be costly to world trade.
But it is an ill wind that blows no
good With its hands full of do
meStic troubles, the Hitler regime was
the more ready to come to terms with
Great Britain, agreeing to continue
service of the Dawes and Young loans
in British hands for six months
longer, in order to avert the threat
ened trade war. British medium-term
and long-term creditors have agreed
to a funding of credits in full Or ac-
ceptance of 40 per cent in cash.
Other nations which, like Great
Britain. buy more from Germany than
they sell to her. may now avail them
selves of the same effective leverage
10 bring the Reich to temporary terms.
The position of the United States is
quite the contrary as to trade bal
ances. But America has moral
orn1ndc for pSt
against special agreements with other
creditors, who have no just claim for
preference in the bond.
Meanwhile, the present ability of
the German government to borrow
is nil, and borrowing is essential to
it's industrial progress. The gold re-
serve of the Reichsbank this week is
only per cent; so that, for practical
purposes. Germany's currency is un-
supported by gold.
The unknown quantity in the situa-
ton is the ability of the Hitler gov
ernment to stand in the face of so
much internal dissention and the
strength of the movement toward
communism. 1t serves to contract the
operations of those who deal in goods
and credits Of an international
character.
Seasonal Trade Decline.
The season is now being entered
when business naturally begins to
shrink A year ago this normal tend
ency was missing. The country had
deferred its purchases for so long
that it took months, after the lifting
of the bank moratorium, for it to
catch up with its requirements. These
have now been met. The needs OF
the future have also been anticipated
by forward purchases in order to fore
stall price advances.
The sequel is this weeks startling
decline in iron and steel production
to % per cent of capacity from nearly
AS per cent the week previous, the
sharpest drop on record. Last month
the rate was 57.4 per cent and year
ago it reached about SO per cent. haV-
ing recovered from ISIS per cent in
March, 1888. Mills have been closing
for the holiday period. Their reop-
ening next week will give more
normal aspect to the situation, though
it is evident that demand has been
satisfied for some time and that the
high figure of output last month is
not likely to be soon approximated.
The cut in steel prices from 81 to
Sc a ton should bring back into the
market buyers who withdrew from it
when the advance of SIS to So a ton
was posted in April. The automobile
manufacturers have found new busi-
ness as they made price concessions.
They are the largest consumers of
iron and steel products today. so the
revised price schedules quoted in the
Pittsburgh and other districts will be
much to their advantage.
Farmers Buying Less.
A dull Summer has been apparent
for some time. It has been accepted
as a logical phase of period of con-
valescence. Adjustments have been
made accordingly. The abrupt slump
IN the iron and steel trade, however,
has suggested the possibility of more
than the 10 per cent average decline
in the business index, and a longer
term of reaction than was considered
likely two months ago. AS the fig
ures of production in the various in
dustries are analysed, it becomes evi-
dent that there was much buying late
in the Winter and early Spring to get
in ahead of price advances and to be
fortified against threatened strikes
Consequently. inventories are in ex-
cess of the seasons requirements and
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