The Washington times., 1934-06-05

SSSSS
~ ton was prob
Lewis Haney ably to be ex-
planned in this way. And the
gain in railway carloadings was
chiefly due to increased ship
ments of ore, coke and coal.
Certainly little significance at
taches to the small rise in the
adjusted index of automobile pro-
duction. It is too apparent that
retail sales have been tagging and
that dealer inventories are ample.
In fact, General Motors has
announced price cuts on low
priced models which show the
pressure of competition.
It has been difficult to see how,
with debts and unemployment
marking a great depression, we
could expect to ride stream.lined
to prosperity.
Retail trade continued spotty,
with hot weather and summer
clearance sales stimulating some
business, but drought and bus
mess uncertainty retarding. The
May volume of department store
sales is estimated at only per
cent over last year, although
prices average fully IS per cent
higher.
The volume of bank checks
drawn on individual accounts
now averages lower than a year
ago.
With commodity prices aver
ages again showed a small rise,
which again was entirely due to
drought (Which has not been re-
Ieved to any important extent)
as affecting grain and food
prices. Zinc, tin, hides, COCO, silk
and wool were lower.
It is notable that many fin
ished products are weak as COM
pared with the raw materials,
and that therefore profit mar
gins are under pressure. One
notable case is seen in the spread
between cotton cloth and raw
cotton, and the automobile price
cuts tell the same story. This
means that demand is weak COM
pared with supply pressure.
incidentally, we can now see
how futile is the idea of a
Commodity dollar" and the
notion of stabilizing prices &C
cording to an index of the
average. The average" is up, =
and this would call for an
increase in the value of the
dollar, according to the theory.
But whom would that help?
Grain is up because of drought,
while metals, hides, and tex.
tiles are down!
One new factor in prices is
found in the changed "code"
practices. The revised steel code
considerably weakens the steel
price monopoly and may lead to
reductions. Price fixing in the
service" codes seems to have
been abandoned. In general, the
futile attempt to create" pur-
chasing power and boost prices
seems to be breaking down.
Meanwhile, the Administrations
scheme to initiate prices by de-
preciating the dollar is in abey-
ance. In fact, the Government
is now undertaking to sell long
term bonds, and, as usual when
the debtor comes to the creditor
for more loans, it now talks con-
Servatively.
The new bond issues total
about $8OO.0OO,0oO, and as they
are tax exempt" they may be
taken by banks and institutional
investors especially as the banks
are now under the Governments
thumb and have to support its
credit. The issues are designed
to take up about $520,000,O00 in
Short-term notes and certificates,
and appear to add about $780,
100000 to the public debt.
We will remember, however,
that they are payable in "59 cent
dollars" and that the Administra-
ton which issues them has not
only repudiated bond clauses in
the past, but is now toying with
the idea of broadening the me-
tallic base" and a more equit-
able" money from the debtors
standpoint.
AS to the business outlook, it
remains cloudy, with more than
seasonal declines ahead. Huge
relief expenditures will be made.
These, however, are not business.
They are debt.
We are going to pull through,
but only by tightening our belts
and resorting to a square deal.