Evening star., 1934-08-19
New Dealers Not Discouraged
At Lack of Confidence of Business


turned and prices are moving higher.
The economists here say 1t Is hard
to overestimate the effect of this
development. They think that If the
trend Of raw material prices continues
upward, the pressure for more and
more trade and exchange restrictions
will lessen and the way may be opened
to a revival of international business.
The United States enters the new
period armed with power to negotiate
trade treaties, the first Of which Is
likely to be with Cuba.
These moves concern agriculture,
principally. AS concerns industry,
there has persisted a feeling that,
as a result of N. R. A. policies, the
industrial price structure moved UP
too quickly and now has helped to
bring q reaction in buying. What
do the analysts say Of that?
They admit that some prices did
go ahead too fast. But, so they assert,
President Roosevelt is insisting that
more competition be brought back
into trade. AS q result, price controls
in many fields gradually are to be
lessened. With farm prices rising and
industrial prices under pressure, the
spread between them should narrow
rather quickly in the months ahead.
That normally could spell trade as
millions Of farm families re-entered
markets after long absence.
\ y y "
Then, in addition, the housing pro-
gram just now has entered the pic
ture. It Is designed to give a illip to
trade in a field now largely stagnant.
Officials are hopeful of the Job
creating possibilities in home repair
and rebuilding. But they believe that
the full effect of this new law will
be years in developing. As they see
the picture, the potential credit ex-
pansion in the field Of construction is
enormous. It Is hampered by dis
organization in the building industry
and by the absence of a really modern
system Of mortgage finance. The new
housing act seeks to open the way
to scientific control of mortgage credit,
by bringing the Government into the
picture. But it only opens the way.
A period of organization lies ahead
which may be followed by a gradual
expansion of home financing over the
longer term.
However, the country scarcely can
wait for years to get back its prosper
ity. Neither can the Government 20
on spending huge sums year after
year without finally coming face to
face with a day of reckoning. Just
what Is the attitude toward the pro-
gram OF Government spending for
prosperity?
The answer is that the spending
Is inevitable. Somebody must carry
the load during period of readjust-
ment and the Federal Government is
the only agency with adequate credit.
Admittedly the outcome is a gamble,
with the Government counting on
completion Of the adjustments be-
fore its credit is affected. How soon
that will happen depends on the way
the spending is done. Much of it in
the United States now is on a basis
that brings returns. Thus the r. F.. c..
last month collected $15O, O,O0O,O 900 more
than it paid out. Other agencies,
however. paid out much llore than
they collected, and this spending con-
tinued to build up the excess reserves
in the country's banks. Eventually
those reserves can serve as a basis
of credit for business. Their poten-
tialities are enormous.
So when they size up the whole
situation the influential Government
economists are inclined to say:
"A measure of recovery is possible
in the United States through the sort
Of adjustments that now are being
undertaken. The reforms that have
been made were largely necessary If
there was to be ary rebuilding in the
midst Of world depression. Rut, when
all is said and done, real prosperity
is not coming back to this country or
any other country until international
trade is restored and barriers to the
flow of goods are broken down. The
apparent rise in world prices may now
be pointing the way toward loosen
ing Of trade restriction.
(Copyright. 103t)