Evening star., 1934-08-19
BY OWEN L. SCOTT.

4CluPC4Cu OPbAlu1olu Nv tl4o blIle
best describes the attitude reflected
by those high-placed and well-in-
formed officials who have just been
assessing the country's business out
look. There Is no lack of confidence
in the future among these men who
are directing the new deal. The pes
SimiSm that now engulfS financial
centers, and that recently has spread
to some business men, is regarded by
them as largely unwarranted.
This city during the past year has
become the nerve center of American
business. Into it flow the facts and
figures and the hopes and fears Of
the country's business and of its busi-
ness men. These are winnowed and
weighed by a large number Of spe-
cialists, whose conclusions finally
form the basis Of reports to the Presi-
dent. In no other place is there the
opportunity to scan the economic pic
ture with such precision.
Right now the Nation Is hearing a
great deal about the low state of busi-
ness confidence. Industry Is said to
be slowing down because flnanciers
and industrialists lack confidence in
the Presidents plans and are uncer-
tain over the experiments that may
be in store. They want MIR. Roose-
velt to say something to give them
courage and reinsurance. But at
Green Bay, Wis, instead Of Saying
something" to cheer the financiers
and industrialists, the President
wondered about the sort Of thing
they would have him say.
What, then, is the attitude Of the
economists who must interpret these
matters for White House guidance?
Don't they see a basis for confidence?
Their attitude is this: Confidence
is very volatile quantity in business.
Just as readily as not the element
of confidence Is an effect Of some
series of developments rather than
cause of them. All during the
downward spiral Of the depression
presidential statements and express
sions Of confidence on the part of
financial leaders had slight effect in
checking the decline.
Just now, say these analysts, 1t is
not difficult to understand the reason
for the feeling Of uncertainty and
hesitation that grips business men.
In the first place, a lull Of about three
months had been expected for the
Summer. This was due to recogni-
ton Of the fact that some industries,
such as textiles and steel, had stepped
up production to levels above the i'm
mediate demand. In this way they
achieved economies of operation.
Now these industries have adjusted
their output to level below consump-
ton. This means that the next broad
move should be upward.
Next into this normal seasonal lag
fell two further disturbing factors.
One was the drought, which was
wholly unforeseen and much more Sc
we're than any one thought it could be-
The second was the development of a
critical situation in Germany. Her
inability to buy raw materials and her
loss of credit through reputation OF
private obligations portend trouble
So when all these elements are added
up they spell uncertainty and, in the
view of officials here. account for the
lapse of confidence.
What, then, is to be done? Is the
outlook dark, and must the country
sit back and allow the effects of the
present difficulties to wear of?
Not at all. Or at least so assert the
n1H Vt fy1 70 Al
say this: Not since the depression
started have the economic funda-
mentals Of the situation been so well
grounded. Some Of the widest price
differences between important groups
Of producers and consumers are rap
idly narrowing down. These dispari-
ties, particularly between the prices oi
city goods and services and the prices
of farm products, throughout the de-
preston constituted one of the biggest
barriers in the way of expanded trade
Then in industry production in
many important lines now is reported
to be running under consumption
There appear to be no excessive stocks
of manufactured goods. This means
that production soon will need to be
stepped up. 1t is through increased
production that jobs are created.
But, it is asked, how about the
drought? viii not that result in q
sharp curtailment in trade?
The answer heard here Is, Yes and
no. It may in the areas most seri-
ously affected. But, explain the econ
omists, not all the farmers, even in
the drought area, have lost all their
crops. In addition, the Federal Gov
ernment intends to do everything with
in its power to temper the blow and to
get funds to the dry districts. The
total farm income. in fact, may sur
pass that Of a year ago, with many
States, unaffected by the drought
showing fairly high degree of farm
prosperity.
II 4 r \
That Is one side of the drought
picture. There Is in addition the
world side. In all countries pro-
ducing agricultural and other raw
material products for export, the de-
preston deepened as those prices went
doa&. Now with surultlS StnckS grad