Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-08-18
RECOVERY W|DENS
DESPITE THREAT
OF HIGHER TAXES
Persistent Rise in Markets
and Trade Also Ignores
War Talk Abroad.
STOCKS MOVE CALMLY;
SELECTIVITY REQUIRED
Liquidated Status and Sharp
Press of Idle Money Continue
to Drive Prices Up.
BY CHARLES F. SPEARE.

BY CHARLES F. SPEARE.
Special Dispatch to The Star.
NEW YORK, August 17.-As ac-
tivity in one line of business in this
country serves to stimulate and propel
expansion in other branches OF manu-
facture and distribution, we have to-
day the pleasing picture Of steady
broadening Of the zones OF industrial
recovery.
The pickup in the durable trades.
for instance, brings improvement into
the markets for consumers goods and
lends itself to more employment.
The response Of the markets for
securities to larger earnings and more
generous corporation dividends adver-
tises to those who note such matters
that business is on the upgrade, for
Wall Street has always been the
earliest discoverer of industrial change
and the shrewdest judge Of what this
means to the national economy.
Then there are the facts Of recovery
that keep piling up from week to
week, such as the continued growth
in iron and steel production. now at
nearly so per cent of mill capacity;
the largest output of electric power
since 1929; the so per cent gain in
building construction in July over the
same period last year; fourfold ex-
pansion in group insurance. last month
compared with 1894: department
stores sales from 10 to Is per cent
higher than last Summer, and the
start OF q season of rising railroad
car loadings.
Upttrn Persistent.
The effect Of these various kinds OF
recovery is to raise the general aver
age of business activity to the highest
point since the Autumn Of 1888. The
significant thing about 1t all is that
this is the first Of the many swings
in business in the last three years
that has held long enough to justify
belief in its permanently. It persists in
spite Of political and legislative bar
riers in the way of its continuance.
It is natural and not forced. 1t prom
Uses to go on through the Fall months
and to carry the stock market along
with it.
1t has blossomed out while Con-
gress has been discussing a tax bill
that, sentimentally or actually. is in
imlcal to big business" and is sup
posed to curb that adventurous
spirit among the well-to-do that leads
to industrial expansion and to profits
In spite of Congress. business has
moved steadily forward since the end
Of June. The adjournment of Con-
gress, therefore, will not have the
same force for recovery it might have
had earlier in the Summer.
In any forecast Of business and Of
markets, one cannot overlook the pos
sible effect on both of the impending
war between Italy and Abyssinia. This
situation is too serious for Americans
to ignore. The collateral effects are
more dangerous than those Identify
ing themselves with the narrow zone
Of the conflict. They include the po-
litical and economic life Of all the
great powers of Europe. to whose
fortunes the United States is more
sensitive than it was in 1914.
Selectivity Necessary.
The stock market this week has
been moving naturally and sanely
That some sections of it are too high
and that more discrimination in pur-
chases must now be exercised by buy
ers is admitted. The fundamental
causes of its strength and its allure
ment are, first, its liquidated position,
which has its counterpart in nearly
all directions, including commodities,
merchandise inventories, real estate,
antiques, rare books, objects of art,
etc, and second, the great mass Of
money seeking attractive employment.
When these two factors are present
in any speculative or investment sit
uation, there will always be a
tendency to drive up prices beyond
their apparent or current worth.
The Senate Finance Committee at
the end Of last week undertook to free
the Federal tax issue from politics
and to suggest a bill that might be
based on sound business principles
and effect what taxes are supposed to
do-balance a budget.
But politics interferred and the
committee reversed itself on the
question Of lowering exemptions on
small incomes. So the debate has
concerned almost entirely the rates
which those with large incomes are
to pay and what to do with the
estates of the wealthy when they
cease to administer them.
Regarded as BLACK jack"
Whether or not one believes the
rich should pay an increasing pro-
portion of the cost of government or
that the accumulation of great for
tunes is socially wrong, it is no time,
in the closing days of Congress. to
rush through bill for which there
is no urgent necessity. as the returns
estimated from the promised measure
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