Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-03-03
Relief Bill Debate Watched.
Overbuying Late in 1884
Is Technical Factor.
BALANCING OF OUTPUT
WITH DEMAND VITAL
March Outlook Held Dependent
on Observation-Disclosures Costs
Rise to New Peaks.
BY CHARLES F. SPEARE.


NEW YORK, March 2.-As the
prices of speculative stocks and bonds
have moved with the ebb and flow Of
business in the past year and a half,
it follows that they should have re-
acted this week on the indications
that industry has entered another Pc
Rod of relapse.
The vital section of the market
has been that devoted to railroad
securities, which have been under
pressure as the outlook for these issues
appeared to be less favorable than
in recent months. February ended
with the average Of all stocks lower
than in January, which month showed
a decline from the level of December
The outlook for March depends en-
tirely on how far business is able
to restore the balance between pro-
duction and consumption which was
upset by the overbuying later in 1884
and in the first six weeks of 1885.
In addition to what may be termed
the temporary technical weakness of
the business situation, the new factor
causing a suspension of commitments
is the legislative impasse in WASH
ington. How far is recovery to be
delayed by the slowing down of Fed
eral projects while the relief bill is
being debated? If the amount finally
granted to the administration to
spend for relief is whitfield to less
than half that originally requested,
will this mean another extended sea-
son of unemployment and curtailed
demand on the part of consumers?
Relief Costs at Peak.
There are still over 10000 900 men
and women in the United States out
of work. This is only a reduction
of between Is and 80 per cent from
the high level of 1888. The relief
bills of States end municipalities
during the first two months of this
year were the highest of the depres-
sion period. They will be no lower
In March. It is obvious that crisis
is approaching in this phase of the
national economy and that it bears
directly on the degree of industrial
activity during the Spring and Sum-
mer months.
Another influence making for hest
tation in business is the cloudiness Of
the entire N. R. A. code system. This
week two important decisions have
been handed down by Judges Of Fed
eral courts overthrowing the opera
ton of this Government agency in
the iron and steel and bituminous coal
trades. Together with the earlier
opinion of Judge Grub in the T. v.
A. case. they point to the growing
projecting its program, to which there
appear to be serious legal limitations.
All of these incidents are in the
nature of temporary checks to recov-
cry, for they are being interpreted in
the business world as the beginning of
a forced retreat from the management
philosophy of the New Deal. So it
will require some time for those who
are regulated under this program to
adjust their policies to change they
believe is impending.
Facing High Barriers.
The distractions placed in the way
of the administrations march toward
a new method of meeting economic
and social problems may be lkened
to the situation of an army that has
steadily pushed forward until it meets
the highly fortified barriers at the
enemy's frontier. It can adopt new
kind of warfare or it may wait and
see if those on the defense have the
ingenuity to discover and put into
effect type of armament or a style
of attack that will meet the require
ments of the day.
The discouraging fact at present is
that the capitalistic class remains
unconscious or unmindful of deep
currents of opinion that have cut new
channels in the stream of our social
and economic life and is intent on
what it considers its former
rights. The facts brought out in con-
nection with the income tax records
of former Secretary of the Treasury
Mellon instruct one in this type OF
philosophy. It is the fact that men
so highly placed are unaware Of the
existence of new social point OF view
that appals so many people.
Trade Barometer Lower.
The index of business again points
downward this week, due mainly to
the fall in iron and steel production.
to the lessened demand for electric
power and to a slowing up in the mo-
tor industry. The drop in steel out
put is now 10 per cent from the
high point a month ago. Car load
ings reflect these and other relapSes
from recent buying levels.
The January returns of the car
riers show the effect of an operating
ratio that Is difficult to bring into
balance with gross revenues on ac-
count Of steadily increasing wages
and the cost of materials. The state
ments Of half dozen systems have
shown such large deficits that rumors
of reorganization have been current.
Future adjustments in capital struc-
ture to avoid recurring periods Of
threatened insolvency are not un-
likely.
The Government has about reached
the point where it will no longer lend
its funds to those railroad systems
that appear to have a hopelessly in
volved and inflated bond account.
Some of the chronic borrowers are
even now suggesting that they will
have to obtain further Federal aid
to carry them through the next six
or nine months. A constructive event
in the railroad world this week was
the purchase of control of the long
bankrupt Minneapolis & st. Louis
Railroad by group Of eight Compel
ing lines.