The Washington times., 1935-03-18

%3%#$ Ihe decllneS
A%Z= - in security
Lewis Haney prices came
mostly on Monday and Tuesday,
leaving the markets in a condition
of numb uncertainty during the
balance of the week.
Business prospects in the visible
future-which is not very far
ahead-are not favorable. I doubt,
however, that this is the main
factor Certainly the leading stocks
have not been selling on a yield
or earnings basis. There has
been little indication in the past
year that stocks have been bought
in anticipation of any sustained
recovery in business.
The security market has long
been, and still is, chiefly a mat
ter of politics, with the political
manipulation of money and
credit the main factor. COnSe-
quently, when the President
Joined the ranks of the share
Other-people'S-wealth club, in
his message on the utilities bill,
a blow was dealt to security
values.
And when the old game Of
"soft pedaling" initiation was re-
sumeo, and intensified by under
taking extensive Government bond
conversions, the basis Of specula-
ton for a rise was weakened.
Pessimism on this score was in
creased by the decline of COM
modify prices.
No one can tell what the i'm
mediate future will bring. Fur
ther blows may be dealt. The
foreign situation is critical. The
confusion of thought and policy
at Washington is lamentable. ut
is barely conceivable, I suppose,
that something unforeseen might
even break down our half-inflated
structure, and force deflation).
But one young man at Wash.
ington goes ahead with calm con-
viction and single purpose. He
is M. S. Eccles. He is busy sell
ing Congress the idea that (D
the Government must replace
business as a spender, that (2)
a fantastic peace-time increase in
public debt is 20. K.," and that
(3) monetary socialism, achieved
by Government-controlled bank
ing system based on the gen
eral assets of the Nation," will
enable us to pay all bills.
Eccles' notion is that the
worse business gets, the more
the Government must spend.
(He fails to see that the more
the Government spends, the
worse business will get).
Probably the New Deal politi-
clans want to hold back their
inflationary engine until the
1886 campaign period is nearer.
You can figure that out by put
ting yourself in their place.)
But they are building the engine,
and (barring complete collapse)
they will use it in due time.
Doubtless Imitation" will con.
tinue to be soft pedaled until
the June conversion of Liberty
bonds is effected. Then the gold
clause debt will have been re.
duced. More room will have
been made for silver certificates
and Federal Reserve notes. The
low-money-rate policy will have
been made effective in killing
private saving and investment.
Then the Governments "nest
egg" or profit on gold seizure
and devaluation may be hatched,
and over 20 billion dollars Of
currency be "made available
to say nothing of the silver nest
egg now being laid.
So watch Eccles and his
banking operations. We are
not likely to have greenback
initiation. That form 1s out
of date. But some form of
Federal bank note based on
general assets" will do as
well.
The New Dealers still have
got to make their devaluation
and their $35 price for gold good,
or fail completely. That must
mean a cheapened dollar and
higher average commodity prices.
I don't think initiation is out
of the picture. Stocks which.
carry earnings to initiate, and.
are not being bounded by New
Deal reforms" are likely to
show initiation by 1886, and I
would not want to be short Of
the market much longer.
Stores of Cotton