Evening star., 1934-03-25
Both Bonds and Stocks Beat
Time as Traders Wait
on Government.
RESISTANCE INCREASES
TO FEDERAL PROGRAM
Future of Business Linked Closely
With Public's Attitude Toward
New Deal.
BY CHARLES F. SPEARE.


NEW YORK, March 24.-The
American situation this week has quite
definitely moved from an economic
social plane to one of a polilical-so-
cial character. The effect Of this has
been to create more uncertainty over
the outlook for business without great
ly checking its momentum.
Wall Street and the Industrial
world have been thinking in terms Of
N. r. A. codes, of American Fedora
ton of Labor practice and of the fluc-
tuating wage percentages that the
railway employees and the managers
were tossing back and forth TO each
other. This has not encouraged pro-
fessionals to trade in stocks or in
vestors to extend their commitments
in bonds. AS a result, both divisions
Of the market have been at times
heavy and in reduced volume
The amended bill for the regulation
Of the stock exchanges has met with
satisfaction outside of the financial
district, but not within it. The cp-
position to it there is as vigorous as
CtCA UALlOOsAl lllC lllOOb 44dA ul 1Cd-
ture Of the original measure, the one
likely to cause heavy liquidation I'M
mediately on enactment, has been
eliminated and five-year period. in
which to square accounts, substituted.
Threat II Recovery Program.
The gradual change in public sen
timent toward the Administration
program, which includes increasing
political resistance to it, has been ap-
parent in the expressions concerning
the threatened strike in the motor in
dustry. Business has feared an ex-
plosion in this quarter that would Go
great harm to the recovery movement
Throughout the negotiations the
mass of the people have held TO their
faith in the wisdom and political
Sagacity Of President Roosevelt 10
overcome the difficulties involved in a
contest for principles, and they have
been less excited over the issue than
Wall Street or industrial interests. II
has been recognized, however, that the
economic-social philosophy of the Ad-
ministration was being called upon to
prove its worth, and that the imme-
diate future Of business was closely
tied in with the verdict.
The logic of the matter all along
has been that there must he COM
promises, in order that recovery may
continue and the Governments finan-
cial program not be endangered. It
is clear that strike in the ;utomotive
trade would unSettle all industry and
handicap the Treasury in its forth
coming refunding operations. It would
do more than this. 1t would affect
Government income, throw the budget
further out of balance and bring
closer the day when resort 70 paper
money would be necessary.
Credit Outlook Improving.
Until this week the position of Gov
ernment securities has been steadily
improving. Discount bills sold at the
low figure of 0.09 per cent. 1t has
been certain that a l0-year loan of
great size could be f1oated at or
3l4 per cent. The advance in the
Home owners Loan Corporation 4 per
cent bonds, on which principal as well
as interest is to be guaranteed by the
Treasury. has distinctly looSened up
the real estate market.
The proposed chain Of industrial
credit banks, operating under the di-
rection of the Federal Reserve Board,
Will provide capital for many small
business men who cannot negotiate
the regular bank loan, but may,
through this new agency, make five
year commitments and thereby in
crease their stats Of employees. This
may not turn out to be a profitable
deal for the lender. whose ultimate
percentage OF losses is likely to be
! heavy. but 1t is a wise political move
| and may fashion some new enter
priSeS Of merit. 1t is important that
the progress made in these several
directions be maintained and ex-
tended, for the essential thing now is
recovery. Relief will follow it in
natural order.
The abundance Of credit, if not in
timidated by such fears as have been
present this week, must lead to still
higher prices for investment securi-
ties. 1t Is interesting to compare the
| quotations for bonds today with those
IN the first years of this century, when
| money rates were much higher than
| now. Then per cent railroad mort
gage issues touched premiums of 10
to Is points. United States Govern
ment IS sold in 1901 at 1897, but the
national debt was only one-twenty-
fifth as large as this year. New York
City was able to dispose Of 3 per cent
ponds around par. The State of
North Carolina As were quoted at
ITO. 1t Is not likely that such prices
| could be duplicated in the present era
OF social and economic doctrines. but,
| with the capital market closed to cor
poration issues, the pressure to en-
ploy funds at some profit will in
crease and values for good paper will
expand unless the recovery is dished
by some miSStep by the administra-
tion, by labor or by the industrialists,
Industry Shows Caution.
While actually there has been little
evidence in trade reports this week OF
a loss in the ground gained since
November, it is nevertheless true that
industry is proceeding with more eau
ton owing to the increasing number
| OF labor troubles and the strife that i,
arising from the application of the N
r. A. program. This may slow uI
business during the Spring.
| In the capital goods industries there
has been satisfactory condition, with
the iron and steel trade maintaining
a 4Sla per cent ratio of production tc
capacity in spite of the crisis in the
automobile trade. One of the railroad
equipment companies reports the larg-
est number of orders in nearly thres
years.
(copyrisht. 1884. by the North American