The Washington times., 1934-12-11

will eventually
be used. But %l$$'l
the existing un- Lewis Haney
certainties Of the Governments
program as regards spending,
participation in business, labor
policy, and taxation, are retard-
ing their plans.
It is also realized that in many
cases, activity in production, and
even in sales, has not brought
gains in profits. The third quar-
ter of 1884 brought setback IN
earnings.
The probability seems to be
that this hesitation will con-
itnue until the Governments
budget plans and the temper OF
Congress can be appraised, but
that the country as whole has
30 much money" and so many
unsatisfied wants that sooner
or later, some sort Of expansion
in activity is bound to occur.
Perhaps the coming Of the
spring season is the logical time
to expect it.
Last week, steel production &C
tivity continued it's contra7Seasonal
gains, and is now at about 80 per
cent of capacity. For this gain, it
seems that a delayed increase in
automobile production is chiefly
responsible.
General Motors sales figures,
and unofficial estimates OF total
motor sales in December, both in
dicate that the demand for 1884
models last month was good. The
estimate Of total passenger car
sales in November is 100000,
against $4,000 last year.
The lumber industry declined
again, cotton cloth production was
little changed, and railway car
loadings showed no general i'm.
provement. But for a relatively
large movement of ore to steel
mills, livestock shipments con-
nected with FERA relief ACTIVITIES,
railway shipments probably would
have been down more than sea-
Sona1ly.
In this connection, we should
note that total production OF elec-
trical power is not a good indlca-
ton Of general business" So
large a part represents household
and other non-business consump'
ton, that electrical power produc.
ton does not vary directly with in
dustrial activity.
Perhaps the most interesting
business index just now is found
in the average of wholesale COM
modify prices. This was up again
last week. Prices do not average
as high as in September, but the
decline has been checked, and the
trend now seems to be a rising
one. Wheat, meats, lard, cotton
seed oil, sugar. fuels, silks and
steel scrap advanced. Tin, silver
and cotton showed small declines,
and there were cuts in some gaSo-
line markets.
If the existing initiation po-
tentialities are going to take
hold, prices will rise further.
And If prices rise, there will be
buying in anticipation of fur
ther rises.
RhS1Al% SC HHYhof thu Al.
ninistration is really working for.
It has lost its enthusiasm for
marking prices up by marking
the monetary dollar down (aS it
did when it was raising the
"price" of gold), but it is now
trying to get a similar result by
making the bank credit dollar
cheap.
After all, most of the nations
buying and selling is by check,
and represents bank credit. BY
piling up deposits and reserves"
in the banks, and by forcing
money rates down to nominal
levels, the Administration is
cheapening bank money
1LS neXC anu is TO 1OrCe CnlS
sort of currency into circulation,
by it's own spending and by in.
ducing people to borrow at the
banks.
1t is in this connection that
the rapidly increasing Govern
ment control over banking is
50 important. / do not think
that we are going to have a
Government central bank. But
the Government has now prac-
ticalIy taken over the Federal
Reserve System, and the recent
"OverSubscription" of the new
Government loan shows that
the Government is at last in a
position to borrow and spend
as much bank credit as it
wishes.
The banks will buy Govern
ment bonds, merely giving the
Government a deposit credit in
return. Then the Government
will spend the bank deposits, or
lend them to others to spend.
This is the game.
Whenever you wish to know the
" ~