Evening star., 1935-05-26
Presidents Message Re.
VeaIs Reliance on Natural
Recovery Means.
CAUTIOUS PRICE GAINS
IN COMMODITIES CITED
Return to More Nearly Normal
Levels Not Regarded as Sign
of Monetary Trend.
BY CHARLES F. SPEARE.


NEW YORK. May 25.-There was
no faltering by President Roosevelt
in his veto of the Patman bonus bill,
and no faltering by the Senate in
sustaining that veto. Those who had
intimated that the President would
compromise with the question, in or
der to gain political favor, guessed
badly.
The veto message again emphasized
the fact that the administration is
no more committed to imitation today
than it has been in the past. This
promptly brought improvement in the
list of Treasury obligations and high
grade corporation bonds that would
have been sensitive to any suggestion
of departure from orthodox currency
measures
Those who have been insisting that
imitation is on the way and that
trustees securities should be, in part,
replaced by common stocks are hav-
ing bad time of it. And more so
that element in Congress eager to
create a large volume of unsecured
paper in order to stimulate business.
Comment on the Presidents mes
sage generally regarded it as the
strongest sound money statement he
has so far made. He is now seen as
having greater confidence in recovery
through the long-awaited "reaSsur-
ance" Of business than through the
spur of fear applied to an inflation-
ridden industrial and monetary struc-
ture.
Working on Public Fears.
The strategy of those who are op-
posing the banking bill has been to
turn the public mind to the thought
of imitation, If this measure should win
in Congress, and the calamity that
would follow unrestricted expansion Of
the currency. The public utility in
terests, on their part, emphasized the
tragic decline in securities Of holding
companies that would occur II the
| dissolution bill became law.
1t has been shown in these dis
| patches that, instead Of declining the
last few months, the common and
preferred stocks and debenture bonds
of the affected corporations had been
buoyant This week the Standard Sta
tistics Co. displays a graph indicating
that, in spite of the agitation over
utilities, there has been more OF rise
in the bonds of the power and light
companies than in those of the rail-
roads or industrials.
Obviously, the judgment Of men
like DR.. Kemmerer Of Princeton Is
entitled to respect. When he predicts
imitation, he has a respectful audience.
But he has been viewing with alarm
this possible phase of the monetary
situation for the last two years and
getting his readers and listeners into
the same state of mind. Now he
thinks initiation will reach its maxi
mum stage in two or three years" II
it is to become a menace it will be one
long before 1887 or 1898. Thus far it
has played very little part in the life
Of the average individual.
1t is worth repeating that the Amer
lean public mind is not infation-con-
scious. 1t sees no evidence of infla-
ton in the fact, so often quoted, that
wheat and corn have doubled or
trebled in price or that common stocks
| have risen several hundred per cent.
When wheat goes from below so cents
to above 81 a bushel it is only recov-
ering from a terrifically debated price
to one that has been an average for
years. Also, the 1882 quotation for
corn of Is cents a bushel is not the
figure at which to make comparisons
with its normal value. Likewise, COM
mon stocks that sold between S100 and
5000 in 1929 and declined IS to 80
per cent, are still a long way from
rejecting imitation when they sell at
an advance of 300 per cent over the
minimum level of 1882.
Commodity Rise Cautious.
Actually, the rise in commodity
prices has been remarkably cautious
one Taking the report of the United
States Department of Labor as a
measure, it will be found that a ma
iority of the commodities listed here
are below the level of last May. There
could be considerable rise this Sum-
mer and the consumer would suffer
little more inconvenience than he has
experienced since 1882. 1t is the feel
ing in some business quarters that
the public will shortly begin to buy
to anticipate a rise in prices: more
likely it will buy because it is short Of
supplies.
The investor today need not be In
fluenced by the fear of imitation in
considering a change in the type of his
securities. If he has been conserva-
tive over the last six years, he holds
bonds that give a small return and are
subject to early call. He has prob
ably realized from them all that 1t Is
possible to expect.
On the other hand, he sees oppor-
tunities for appreciation, If no early
prospect for income in dividends or
interest, in much-deflated common
stocks Of worthy corporations, in
bonds that are in default and at 10
to 20 cents on the dollar which once
were legal for savings banks, and in
real estate without bidders which, in
1929, was the priced possession of
thousands of investors. These are
the obvious hedges" against imitation.
1t is proposed here to suggest them
on their natural merit and on their
relation to class of securities that
has been advantaged by that same
ease and abundance of money that
eventually will bring appreciation
both to deprecated bonds and under
valued real estate.
Realty Outlook Brighter.
Recently there has been an awak-
ening in the market for real estate
securities. As in commodities and in
common stocks, these have doubled in
price without rejecting imitation, for
they are still 50 to so per cent below
Continued on Third Pase.)