Evening star., 1934-01-07
PUBLIC CONFIDENT
AS j. s. T|GHTENS
BUSINESS CONTROL
Social Philosophy EcIipses
Economics-Banks in
Strong Position.
ADDED CAPITAL LIKELY J
TO Benefit INDUSTRY
Load on Government May Be
Eased; Fate of Profits in New
Era Uncertain.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

BY CHARLES +. SPEARE.
Special Dispatch to The Star.
NEW YORK, January 6.-The
country this week has been getting a
clue to the kind of program under
which it must operate its business this
year. Nothing radically new has so
far been suggested; rather, old principles
have been re-emphasized.
The authority Of the Government and
Of States and the concentration of
power In city officials have been made
more positive. Social philosophy has
taken precedence over economic thought.
For the moment the managed currency
movement has been given a secondary
place, with stabilization postponed until
those who are part Of necessary inter-
| national agreements are more prepared
for it.
Meanwhile the temper of the public
| remains confident. There are additional
/ indications Of improvement in business.
| The complete cooperation Of the banks
| in the deposit guarantee plan has
welded together resources sufficient to
meet any demand on them. With the
fear of Withdrawals removed, there is
little excuse for denying legitimate busi-
| ness the accommodation it requires to
expand. With their additional capital
the banks are in a position to take
some Of the load from the Government
! and should do so. There is no reason,
| for instance, why considerable portion
J of the maturing obligations Of the rail-
roads this year should not be financed
| directly by them, for quite generally
! they show in their December 80 state
ments liquid assets ranging from so TO
| rs per cent. This can be done without
any interference from the capital is
sues act.
Investment Issues Strong.
! It is a sign of the new attitude
| toward the outlook that the investment
market this week has been strong.
while the market for speculative issues
has wavered and been sensitive to
negative conditions. Government and
municipal bonds have been steady even
with the astonishing figures presented
Of Treasury needs the net six months.
| This partly reflects the gain In con-
fidence for these credits, also the en-
| ployment Of surplus bank funds In such
| obligations.
| High grade corporation issues are ON
| an average four to fve points over the
early December range. This all sug-
gests the more moderate view Of capital
with respect to the effect Of initiation.
1t undoubtedly results, too, from the
4
ary dividend and interest disbursements,
estimated as high as $1,000, 100000.
Possibly initiation will come through
| the medium Of great issues of Govern
ment paper rather than by purchases
of gold That something of this sort
| is in prospect has become apparent
since the Presidents budget message
was delivered. The need for S6,000,-
| 000, 900 CT new money in the next six
months to carry out the relief program
raises the questions: First, how 1t is to
be raised and second, concerning the
ability of the various agencies to dis
burse it properly in that period. As
suming that it is made available, there
is no doubt that this sum will have
a pronounced effect on commodity
| prices, for it places in the hands OF
those without present buying power
the means Of stimulating trade In many
directions.
| Higher Interest Likely.
The other phase Of the question is
its effect on Government credit. II the
program of the administration Is car
ried out, the national debt on June 80
next will approximate $4,000, 900 900,
and nearly $50 600 600 900 a year later.
This would be $4,000 GOO 900 in excess
| of the debt at the end of the war. If,
however. there is a devaluation of the
| dollar to so cents, the permanent bur-
! den of the DEBT would be greatly
| eased and further modified if the in
| creased value of gold is taken by the
Treasury. However. the prospective
| buyer of new Treasury offerings under
the proposed budget plan grows cold
over the thought that what ne pays
| 100 for may shortly be subject to re-
| ,;ei0 hot %r,-iIl v,otInh lirtainiSh his
| ital invested.
The cost Of capital as the Federal
debt rises Is another fact to be con-
| sidered A debtor receives his best
| treatment from lenders when his liza
bilities are decreasing. Adding debt
at the rate proposed clearly means rails
ing the rate of interest on each new
| loan and compels more taxation to
cover the annual service charges. The
only alternative is non-interest bearing
paper. Use of this is not improbable.
One fact made certain by the langu-
age of President Roosevelt in his mes
sage, and by the review of the work
of the Senate Committee on Banking
| and Stock Exchange Practice by its
| chairman, is that it is the intention of
the administration to surround the bank
depositor and the bank stockholder, as
well as the investor, with all possible
protection against the wrongs imposed
on him in the past.
There Is little doubt that the hand
of the Government will from now ON
be plainly visible in the banking opera
tions of the country. We are surely
moving IN the direction Of bank super.
vision from Washington as IN that Of
railroad operation and control from
the same center.
Roosevelt's program goes beyond the
period of the emergency. It creates a
new social and economic order. It does
not dismiss from business the element
of profit. but it clearly inhibits many Of
the former operations by which buSi-
ness was made attractive to private
capital
(Copyright. 1894. by North American News
.aper Alliance IncD
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