Evening star., 1935-02-17
Supply and Demand Factor.
as Well as Gold Rule,
Causes Hesitancy.
EUROPE LESS CYNICAL
OF M0RGENTHAU POLICY
Recovery Progress Still Made in
Short Spurts-Retail Pace
Called "Spotty."
BY CHARLES F. SPEARE.
Special Dispatch to The Star.


has not been a lead this week. either
in Washington or in New York. in
which business or markets could find a
reason for making fresh commit
ments. The delay of the United States
Supreme Court on the gold clause de-
cision gave the industrial world an
excuse for marking time, though the
economic laws of demand and supply
we're possibly operating to halt trade
more than other advertised factors.
The assurance by Secretary of the
Treasury Morgenthau that the stabil-
ization fund Of S2000,000,000 was
working. and that business men might
be confident of dollar rate on which
they could negotiate, had more pro-
found effect in Europe. where it was
accepted with less cynicism than IL
the United States.
The situation abroad, politically arc
economically, has grown worse. Great
Britain is beginning to realize that
the benefits of going of gold are fad
ing. Her latest unemployment figure:
show a heavy increase for January
The present government is in dan
ger Another speculative episode like
the HAIRY collapse in 1929 has once
more disturbed confidence. 1t shows
how gullible ordinarily shrewd bank
ers are before the persuasive arts OF
the adventurer.
Italy has undertaken compaign II
Africa which is likely to cost her
much more than she can afford and
if carried through. will make 1t diff
cult to maintain the position Of hel
currency.
Recovery by Spurts.
The drop of three points in domes-
tic iron and steel production this
| week was seasonal and overdue. Au-
| tomobile output was also disappoint-
| ing to those who had looked for 9
continuing rise in the index. Retail
trade is "spotty" and shows the ef-
! feet of the tremendous purchases by
| the public at holiday time. 1t seems
| to support the theory that recovery Is
| to be by short stages of three or foul
| months each. This has been the ex-
| perience of the last two years and i:
| now emphasized by lessened indus
| trial activity after the October-Jan-
] uary movement, which carried the
business index up IS points.
A moderate pause in industry neal
| the present level is not improbable
; while provisions are being made tc
, launch the relief program and the
! opening of Spring brings the norma
amount of delayed work.
While the Senate committee has
, been debating the merits of the reliej
/ bill and contrary opinions as to the
maximum monthly allowance under
! it have been advanced by the admin
istration and by the American FEEDER
| alton of Labor. the ranks of the un-
| employed do not diminish and the
cost of living continues to rise. Prices
of food at retail are now the highest
since Nav Is, 1881. They are about
Is per cent above the level of a veal
| ago.
So abrupt has been the advance ir
meats-hogs are at the best since
l930-that it has brought complaint:
to Goveryment officials, and milo
strike" among consumers. This il
one of the consequences of the
drought and of the policy Of killing
cattle and hogs to preserve an equi-
librium between supply and demand
an indefensible act. The general leve
of wholesale commodity prices Is the
highest since 1880, due mainly to the
rise in farm and food products, fol
textiles, building materials anc
chemicals are lower today than
year ago.
Relief Problem Accentuated.
Compensation for those on relief
who are to be advanced to employ
ment on public works. has both
social and an economic aspect. Both
are heightened by the steady rise II
the cost of the essentials OF living
This has been one of the anticipated
bad effects of imitation. A wage scale
of, say. $50 a month, might b
reasonable today but a year from nov
might be insufficient. If it were moi
enough to satisfy the barest demands
it would create social conditions more
serious that those so far experienced
On the other hand, there must be
maximum limit to the amount tha'
the Federal Government can AFFORD u
distribute and at the same time keer
its credit intact. This limit woulc
appear to be the S4,880, ,000,0 900 that
has been set up in the budget for the
purpose of relief.
Wage Pleas to Increase.
As the cost Of living rises the de.
mand for higher wages will become
more general 1t is more actively
agitated now by the professional ano
the service classes than by labor. In
certain trades the hourly wage scale Il
at an average that has checked ex'
pansion, as, for instance, in the build
ing industry Proponents OF a higher
price for gold argue that when Eng.
land raised the price Of gold, she die
not advance the hourly wage rat
and so greater breadth came to house
construction.
In spite of the activating agencies
of our Government, the progress Of
building is slow. Col. Leonard P
Ayres points out this week that the
most important single factor in re-
covery so far has been the automo-
bile industry and that the develop
ment most needed to stimulate trade
is large inclease in the volume Of
residence construction. 1t is doubt
| full II there Is any immediate call fol
new home building The markets are
full of offerings available at price:
lower than replacement costs. How.
ever, there is ample opportunity In
modernization and in repair Of exist
ing dwellings to create boom in the
building trade If the proper sort oi
psychology could be created and rea.
sonable rates for financing such wori