The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1935-12-24
STILL GREATER
LEVEL IS SEEN
FOR BUSINESS
By LEWIS HANEY
Professor Of Economics, New
York University

1OTk university
Business news last week was, on
the whole, encouraging. The heavy
industries showed an activity
which is somewhat better Sus-
otained than usual at this season.
Pre-Christmas retail trade, helped
by WPA checks and an increasing
ause of credit, has been large.
While some hesitancy exists con-
corning the near-term outlook, no
important recession is indicated,
and still higher levels of business
activity are anticipated in the
FIRST half of 1886.
y
Steel production reacted a lit
:, tie last week, as usual toward
% the end of the year. This was
! mostly in crude steel, and finish.
ing mills are going strong. Con-
structiOn and railway buying
have picked up and farm equip
ment and automobile steel buy
ing is well sustained. Only the
tinplate mills have closed down
= temporarily.
Automobile producers are re-
ported to have turned out over
100000 cars last week. They are
stocking dealers for spring trade,
and current consumer buying
holds up fairly we'll, though reg
istrations of late have Jagged a
little. The accumulation Of used
cars taken in trade is a growing
problem, and the large amount OF
credit financing may possibly
cause trouble later on, but good
business next spring may take
care of all this.
Both lumber and cotton cloth
manufacturing showed gains last
week. A sharp reduction in Cali
-.fornia crude oil production tends
to strengthen the statistical posi-
ton of the oil industry.
: Even railway carloadings did a
trifle better, since the decline was
not quite as much as usual. The
loadings are only 6 per cent over
q year ago, however, which is a
small gain in comparison with in
ssdustrial production. 1t would be a
7most favorable indication if the
volume of freight moved by the
railways were to gain more de-
ysciSively.
Retail trade doomed in most
sections, while tagging in q few.
Evidently in the industrial Sec
tons some consumer resist
n ance" is still experienced. Whole
:; sale trade seems slightly hest
tant. This indication should be
= watch, but it could change very
y quickly.
=, Commodity prices at wholesale
again worked little lower. Grains
were about unchanged. but de-
clines occurred in lard, cottonseed
oil, hides, silver, tin, and foreign
copper. Steel scrap weakened lit
tie. Cotton was higher.
It IS quite evident that supplies
of most commodities are suffici-
emily ample, and political uncer-
families sufficiently great, to hold
in check for awhile the tendency
of credit initiation to cause higher
prices.
The outstanding news of the
week was the decision of the Fed
,eral Reserve authorities against
taking any action to check gen
.eral credit initiation. A promi-
'nent private banker came out in
favor Of the same position. The
idea is that they want initiation to
take hold more vigorously before
trying to control it, an attitude
that probably means no control
at all.
Another notable occurrence was
the insiStence by the RFC that
low interest rates be given on rail
way financing. This is part of
the Administrators "eaSy money"
policy, and goes along with the
decision not to check bank credit
expansion.
The whole idea is to encourage
people to borrow, and to force the
banks to lend. This means bigger
debts, and lower interest rates
two things that cannot go to-
. gether very long.
To the same general effect, a
ruling by the Federal Reserve
4: authorities will prevent business
: corporations from placing funds
in savings accounts" in member
banks after January /.
: Everything possible is being
done to make it undesirable to
save, and to drive people into
a. spending. Unfortunately, those
: who spend their savings soon
: have less to spend. At the same
time, people who have no saw
.. ings are led to spend, too, which
means credit and debt. Certain
ly the present administration,
in its own finances. has led the
way.
: With this policy definitely
established, we may confidently
expect growing initiation and
business activity"