Evening star., 1934-05-06
Recovery at Slower Pace
Due to Higher Cost of
Consumer Goods.
CUT IN BUYING POWER
OF FARMER ALSO CITED
Auto, Coal and Steel Production
All Show Evidence of Con-
tinued Expansion.
BY CHARLES F. sPEARE.
Special Dispatch to The Star.

II ShhhLES :. 81 FLAhLs
| Special Dispatch to The Star.
NEW YORK, May 5.-Recovery in
business continues. but at a slower
| pace owing to the higher cost of con-
sumer goods and the lower purchasing
power of the farming communities.
Still there are many satisfying evi-
dences of a growth of volume in both
manufacturing and distributing circles.
Pittsburgh reports steel ingot output
at So per cent of capacity, having
more than doubled since November.
Detroit announces that the April pro-
duction of automobiles was approxi-
mately 400, 900, the highest in any
month in four years. with pay rolls
greater than at any time since 1929.
Bituminous coal mined is 80 per cent
above the same period in 1888.
In these three major industries the
average decline in production from
1929 to 1882 was 10 per cent Mainly
/ due TO their recovery. railroad car
loadings have expanded. In miscel-
laneous freight alone they increased
20 per cent over the third week Of
April last year In the past month
rs-Roebuck sales rose % per cent.
The electrical and equipment manu-
featuring concerns have been showing
surprising pickup this Spring.
TranSlating all this and the new
activity IN scores of smaller industries
into employment, it will be found that
nearly 100000 have been re-estab-
liShed in some kind of occupation in
the last year. the greater percentage
in manufacturing and in the various
trades. This is part of an industrial
improvement noted the world over.
Reaction in Commodities.
There is, however. a considerable
amount of hanging back on the part
OF business men who fear to venture
into the unknown worlds of codes and
Federal restraints, though the ex-
pectation Is that the administration
henceforth will be more lenient and
permit the natural forces of recovery
to operate freely. The decline in
wholesale prices has continued since
the end Of February. with quite sharp
losses in the speculative staples in the
past month. but with some recovery
in few of them recently. Silver was
at its lowest level for the year on
May l.
These reactions have affected the
stock market, which at one time this
week showed an average decline of 10
points from the high of February
and the most protracted bear move
ment in some time. In spite of it, the
average Of the bond market fell less
than a point. This was chiefly due
to weakness in lower-grade issues as
the demand for prime corporation
issues and tax exemptS continued and
showed no sign of abatement.
1t is persistently stated in Wall
Street that recovery is held in check
because of the threat to speculation
and investment, first, in the proposed
stock exchange bill, and, second. by
reason of the rigid provisions of the
securities act of 1888. If either has
the effect of restricting trade expan-
sion, it is moderate one. Compare
lively few persons in commerce or
industry today regulate their actions
by the course of the stock ticker. 1t
is we'll that this is so. Actually, the
suggested supervision of stock eX-
change practice will encourage the
public to place its funds there in the
expectation that they will be properly
managed
1t is obvious that Wall Street must
undergo a period of contraction and
readjuStment. for its present facilities
outrun future requirements, and 1929
90 commissions of S750.000.0e0 are
not to be duplicated. There is no
need for fear. however. tha tits legit-
innate features will be submerged
under popular protest of past meth
DDS. More than likely they will in
cerase in volume once the public is
convinced that it will have a square
deal when it ventures into the finan-
cial district.
Federal Tonic for All.
The contention is that. until the
capital markets are reopened in the
old free way and existing limitations
to underwritings and issues of securi-
ties are removed, business cannot
finance itself, and so it must Ian
guish.
Never in the country's history have
there been so many agencies through
which business can be placed in the
way OF recovering health or given the
capital necessary to its expansion. An
industry today must be in pretty bad
condition to be denied help from some
one of the various Government finan-
clal subsidiaries. The Glass bill now
before Congress permits the Federal
Reserve banks lin exceptional cir
cumStances, when it appears to the
satisfaction of Federal Reserve
bank that an established industrial or
commercial business located in its
district is unable to obtain requisite
financial assistance on a reasonable
basis from usual sources to
make loans to, or purchase obligations
OF such business I" for the pur-
pose Of providing it with working
capital" No commitment is to be
made with maturity exceeding five
years.
1t is asserted that there are MANY
strong corporations that would like to
expand if they could sell their bonds.
II they need capital so urgently.
why cannot they obtain it from the
recognized banking sources? The
Federal Reserve Bank of New York
IN its recent report for the year
emphasizes the feature of expanding
bank credit and the lack of increase
in commercial loans. Excess reserves
have risen from 100000, 900 at the
end Of 1888 to $1,700,000 900. Bank
investments, other than Government
bonds, have gone up only $4,000. 600
and those in Treasury issues, $l,02l,-
600.
The code of the investment bankers
governing municipal issues has recog-
nized the abuses Of the past and
reconciled future operations with O
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