The Washington times., 1935-01-22

or two.
It would not w
be surprising to
find the pace LOWS nancy
Of expansion becoming more mod.
crate before long. Indexes OF
business activity are nearing the
peaks attained in the preceding
New Deal boomlets, and the
squirt in automobile and steel pro-
duction is not likely to continue
% sharp.
MY P/V Line barometer has
Eurned down slightly, indicating
that the volume of goods coming
to market has become large
enough to reduce the intensity of
demand. Subject to possible in.
flationary developments, commod-
jty prices are therefore unlikely
to do much on the up side.
But for the present, the in
GuStries which have been lead
ing the industrial procession are
going strong. Last week, steel
production rose again, and now
averages around so per cent of
capacity-a level at which some
steel companies can make a
little money. Automobile pro-
ductiOn, too, continued to ex-
pand.
There seems to be some pos
sibility of labor troubles in both
of these industries, but this lies
In the background, and may
stay there.
Other industries show mixed
conditions, lumber manufacturing,
dor example, reporting a good
gain last week, while cotton man
ufacturing receded. Profit mar
gins continue very unsatisfactory
in the latter.
Railway carloadings per day
averaged lower last week, and re-
manned under a year ago. Mis-
pellaneous and forest product load
angS made good gains; but grain,
livestock, and merchandise q. C.
- loadings were very backward.
Despite some recovery toward
che end of the week, commodity
prices averaged slightly lower,
notably grains, and some gasoline
price unSettlement continued.
In the banking world, one
notes that the "exceSS reserves"
Of the member banks made a
new high record last week. This
was partly due to gold imports
and partly to Government spend
ing of profits" made through
devaluatiOn. Thus the initiation
Of bank deposits has grown
apace.
Now bank debts (checks
draWn) seem to be increasing,
and the turnover deposits has
gained little. Chicago and New
York banks last week also Dor
roWed some money from their
reserve banks. While it is too
soon to say that credit initiation
has begun to take effect, and fl
nanclal uncertainties still present
great obstacles, these facts are IN
Cerestlng reminders of what may
happen later.
For the present, the chief eff.
1ect is to make money rates"
extraordinary low, and to keep
Government securities and high
grade bonds up.
The gold-clause "jitters" passed.
AT this writing, what the court
Will decide seems likely to remain
unknown until next month, but
1t is evident that the chief effa2t
OF an adverse" decision would
be to drive the Administration to
make the existing potential in.
3Iatlon more effective.
Other developments of the week
emphasize the growing public debt
Gne 1nflationary trend of which is
OFFSET Tor the present by growing
kaxes.
Thus the incomplete and tenta-
Five social insurance" scheme
NW1th billion or so for an old
age pension the one sure thing in
at), the four billion dollar PWA
program, the growing indications
or a large advance payment to
veterans, the proposed increase in
lending activity by RFC, and in.
creased seed grants to farmers
all suggest larger debt. The moves
IN New Jersey for new taxes on
scales and income, and the Su.
prene Court decision unfolding
V1rg1n1a's chain store tax as ap-
piled to gasoline stations, reflect
the trend to growing burdens on
taxpayers.
So the big question is, "Win
the Government stop increased
gpending?" If the answer be,
''NO," the next question is, "How
much more taxes can we stand?"
If the answer to that be, "Not
much," then there remains no
thin but Debt, which eventually
means either further devalua-
tiOn, or more deprecated credit
currency.