Evening star., 1934-08-05
0versuppIy Of Many Kinds
of Merchandise Seen as
Demand Falls.
HIGHER LIVING COSTS
AND DROUGHT CITED
Nature and Volume Of Business
in Coming Autumn Proves
Hard to Forecast.
BY CHARLES +. SPEARE.
Special Dispatch to The star.

Special Dispatch to The star.
NEW YORK, August 4--Looking
backward over the business returns of
the first half of the year Is more sat
isfactory at the moment than looking
forward into the uncertainties OF the
months just ahead.
In the earlier period. corporation
profits we're surprisingly good. A
compilation OF $50 companies Of
diverse character shows that they
earned 81 per cent on their net
worth, respectable sum for these
times, compared with less than per
cent the year previous. In conse.
quence of this, more dividends have
been resumed, such as those recently
by Bethlehem Steel and Inland Steel,
and not few increased. The second
quarter earnings Of the United States
Steel Corporation we're the best since
1891, covering all fixed charges and
present preferred dividend payments
and providing $3,548, 900 for the
shrinking surplus OF the company.
These results we're achieved in the
Winter and early Spring when re-
covery was aided by heavy Govern
ment expenditures and a building up
Of supplies Of merchandise in antici-
patton Of higher commodity prices
and higher wages, as well as the
probability Of labor troubles.
The situation today is quite diff
ferent. There Is an oversupply of
merchandise Of many kinds and
contraction In consumer demand
owing to the increased cost Of living
and the widespread losses from the
drought. These are the elements
that have been injt ed into business
in the past so dsc-, perplexing the
administration and making 1t difficult
to forecast the nature and volume Of
trade during q season that normally
would return to the farmer, the
manufacturer, the retailer, the jobber
and the transportation lines the best
profits Of the year.
Food Prices 10 Climb.
1t Is obvious that food prices will
advance, for there has been wholesale
destruction Of essential foods by man
and by nature The Government sur
vey as Of July II indicates an ad-
vance of over II per cent since April.
1888. The relief problem. from q
numerical standpoint and from that
Of the unit cost per family. Is grow
ing more acute as the Summer wanes4
It plainly leads to heavier State and
municipal borrowing and 10 the
urgency for q more scientific and
permanent type Of of.unemployment aid.
Markets for securities have been
quieter this week, with some recovery
from the frightened selling Of the
week previous. Common stocks have
once more entered q price area where
they conform more accurately to their
actual worth than they have for some
months. It Is not unlikely that the
next forward movement In them will
be in anticipation of imitation. High
grade bonds have been softer, inelud-
ing both short and long term Treas
ury loans, with the latest Government
borrowing at slightly higher cost
than earlier In the Summer.
The war scare of a week ago has
passed, but 1t has emphasized the
turbulent condition Of European poll
ties and the handicap to world recoy-
cry OF this state Of mind. Best opin-
ion Is that there is less danger today
Va A66A C3oANC 2CtAOtA Oil tAlC GOItLlAlCQL
by Germany than there has been; for
the June episode and the identity Of
Hitler with the Austrian "putsch"
have further isolated the Reich.
However, there still is opportunity for
trouble in the central and southeast
arm area Of Europe, where bankrupt
governments find satisfaction in send
ing belhgerent notes to each other
and strut about with chips on their
shoulders. They can still buy arms
and ammunition from the armament
trust, but cannot find the where
withal to meet their obligations TO
the foreign holders Of their bonds.
U. S. Aid Opposed.
There has been a suggestion that
American bankers assist Germany out
OF her present economic distress by
advancing her further credits. This
is an insane idea, both politically and
financially. The sooner the rest OF
the world convinces Germany, by
denying her any sort Of help, that she
has been responsible for the hatred
she now has incurred, the earlier will
her people recover their proper place
in world affairs. She has repudi&ted
her contracts with the American
bondhoIder, which is SUFFICIENT reason
for refusing to deal with her until
she fulfills her agreements. This is
equally true of other European ma
tons which will probably sue for favor
here the moment any international
situation becomes acute. It applies
to Yugoslavia, In almost complete de-
fault on her dollar bonds, now show
ing defiance to Italy.
Meanwhile, excess bank reserves are
approaching the So, 900 900 900 mark.
The mutual savings banks have Just
announced gain Of 1874 per cent in
their deposits during the first half OF
the year, rejecting confidence and
improved earnings. In the same pc
riod the net imports Of gold into the
United States have been nearly $780,
0O0, 900. with an additional SOS 900 600
In gold coin and gold certificates re-
covered from hoarders since the end
Of last December. The r. F. G. has
advanced more than 81 1,O00, ,000, 600
new capital to the banks, and the ap-
probation In their investment port
folio. before the recent decline. was Of
equal amount.
There has been 81 900, ,O0o, 900 gain
in deposits this half year, the best
proof that deposition confidence has
been regained
This exhibit Of public confidence
and these evidences Of tremendous
strength in q vital part Of our econo-
my Justify a reasonable optimism,
even though the business world is
facing conditions that are unfamiliar
to it and whose effect ii cannot now
foresee.
(copyright. 1884. by the North American
Newspaper Alliance. 1ne.s
A