The Washington times., 1935-05-21


>"'1'S'ES as whole,
Levi" Haney industrial &C.
tivity has been receding ever
since the February peak. You
will understand the general
situation better If you realize
that we are in the process of
reacting from one of those
Spurts which have characterized
New Deal attempts to Stimu-
late business, and that some
further reaction is a reason
able expectation.
Uncertainty about initiation,
and business fears concerning
radical legislation naturally do
not make a favorable business
background.
A week ago the steel industry
failed to come up to seasonal ex-
pectationS, and adjusted indices
showed a decline. Since then,
however, the automobile strike
has been settled, and some small
increase in steel production seems
probable this week.
Despite the strike settlement,
the automotive situation is rather
cloudy. Production still holds at a
high level, but the seasonal peak
has been passed, and now the in
duStry confronts a condition of
dealer stocks and a used car prob
lem which may cause trouble.
Aside from general talk about Gin
flation," the chief hopes against a
more-than-seasonal slump lie in
Government distribution of funds,
and in improvement in demand
from those farming sections which
have benefited by recent rains.
While the wool textiles are do
ing fairly well, the cotton textile
industry is undergoing one of the
regular recessionS which hit it
every other year. High cotton
and processing taxes are a great
drawback.
The West Coast strike resulted
in a sharp decline in lumber pro-
duction last week, and higher
lumber prices are talked in the
trade.
Railway carloadings gained
slightly over week ago. This was
chiefly due to heavier coal ship
ments, caused by unreasonable
weather. This same weather hurt
retail trade badly. In a good many
areas both freight shipments and
store sales are considerably under
the level of a year ago.
Merchants are naturally eau
tiOus in buying goods. Taxes
and high living costs are re-
stricting consumption, but fear
Of initiation and rising prices is
widespread. Shoes and wool
goods have been advanced, and
furniture is to be higher this
fall. The merchants problem is
thus a difficult one, and he may
well hesitate.
Although wholesale prices aver.
aged about the same, the out
standing development last week
was the general rise in t1on-fer.
rous metals. Foreign copper, lead,
zinc, tin, and silver all rose. While
cartelS and "codes" played q
monopolistic part, this is signifi-
cant of inflationary anticipations.
The legislative pot is beginning
to boil at Washington, and it con.
tains pretty bitter brew for bust.
ness men. Likely to pass with
only slight notifications are the
utility bill, the AAA amendment
bill (subjecting handlers of agri-
cultural products to controD, the
Wagner labor dispute bill, and the
social security" bill. These, and
the banking bill, all tend to re-
strict business and subject it to
political control.
With these, are mixed strong
inflationary ingredients. The
Eccles banking bill subjects the
Federal Reserve System to prac-
tically complete political control,
and enables the Administration
to force upon the banks all the
bonds it desires to issue, at the
same time deteriorating the Sc
curity back of bank notes. The
Frazier-Lemke bill will unload
So, 00O, 100000 of Governm ent
bonds on the banks, secured by
abnormally slow and low-yield
farm mortgages.
AS the politicians take control
of business, they spend to give
people the money they formerly
earned in business, and they geE
the money" to spend by 1n1lat-
ing the banks with Government
debt.