Evening star., 1935-01-20
Business Also Is Affected;
Grains, Foodstuffs and
Textiles React.
CONFUSION is RESULT
IN FOREIGN EXCHANGES
Treasury Issues With Payment
Clause in Demand and U. S.
Buying Protects Others.
BY CHARLES F. sPEARE.

Special Dispatch to The Star.
NEW YORK, January l9.-The
gold clause cases now before the
United States Supreme Court already
have had visible effect in the mar
kets for securities and for commodities
and have had a certain influence in
the field of commerce.
Those United States Treasury issues
payable i'll gold, and amounting
roughly to S13,500,000,00 have been
in demand on the speculative notion
that they may be paid off at 81 SO for
each 81 OF par value, while others
not so mdentured have been sold but
protected against decline by Govern
ment buying agents. The threat
against corporation bonds with the
gold clause has been impressed on
holders and at times these have been
definitely weak; also corporation
common stocks.
The gold shares have had a bad
time of it, as the shadow of coming
events suggested that Tightening Of
commitments in them would be wise
policy, though in the sharp decline
during the week in the commodity
index the group Of metals held
steady while prices of grains, food
StuffS and textiles reacted
The week has also witnessed the
lowest figures for sterling and the
French franc in year and general
unsettlement in all foreign exchanges.
Some gold has been engaged for i'm
port into the United States.
Gold Clause Views Vary.
What disposition the Supreme
Court may make of the gold clause
cases no one knows. The subject has
been reduced to the level of
guessing contest. Opinion is divided
between the optimism of those who
believe the court will recognize the
existence Of both national and an
international emergency and will sup
port the Government, and the legal
lists or constitutionalists, who expect
the court, by divided opinion, to
declare for the sanctity of contracts,
whatever the outward circumstances
may be.
There is third view-namely, that
the judges will declare for the
validity of the gold clause in the in
stance of the Liberty bonds, but will
not enforce it in the case of CORPORA
tions whose mortgages are also pay
able in gold. Such reasoning does
not appear to the layman to make
sense, but it is being widely sug-
gested
1t Is futile to speculate on the pos
slble legal philosophy of the Supreme
Court in the cases now before it. On
the other hand, it may be worth
while to point out what this group
OF judges said just a year ago when
it sustained the Minnesota law
establishing moratorium on FORE
closures of mortgages.
At that time the Financial Chron.
icle, which is critical of the admin
istration, said of the decision: ut
furnishes. in our estimation, full war
rant for the conclusion that the Su-
preme Court is likely to uphold most
Of the legislation passed by Congress
as part Of the program for carrying
out the New Deal on the theory that,
like the Minnesota law, it Is emer-
gency legislation and must be liber-
ally construed" In this decree Chief
Justice Hughes voted with the ma
jority, which included the acknowl-
edged liberals, Justices Brandeis,
Stone. Roberts and Cardoza Justice
Sutherland wrote a vigorous minority
opinion.
The uncertainty caused by the gold
clause cases and natural postpone
ment Of commitments in January
have slightly tempered the recent
buoyant sentiment regarding business.
Still, there are many evidences of
expansion beyond the expectations Of
a few months ago. If we accept the
statistics of the iron and steel trade,
Of the power industry, Of railroad
car loadingS and of bank clearings
as proof of the flow or ebb of COM
mercial and financial operations, we
may find in them corroboration Of
national pickup.
This week iron and steel produc-
ton has advanced to nearly so per
cent of capacity. At that point it
has always been held that the steel
plants could make a profit. The
United States Steel Corporation Is
sufficiently impressed by the trade
outlook to restore certain pay cuts
to a section of its employees. Again
the figures of output by the power
and light companies show the largest
total since January, 1880. This rep
resents not only the growth Of domes-
tic consumption, but more activity In
manufacturing centers. In one in
stance the gain in production Is due
to the sale of power to several Gov
ernment projects which ultimately
will be competitors Of the now ia
vored privately owned plants.
Car loadings show more volume.
Were 1t not for the loss Of coal traf1c,
both anthracite and bituminous. to
the motor truck, which is stiff COM
petitor Of the steam roads all along
the Atlantic Seaboard, the showing Of
gross revenues would be moderately
good.
Trade Gains Widespread.
Turning to the reports of trade in
the IL Federal Reserve districts, these
are found to emphasize the degree Of
improvement over a year ago. The
story is about the same from Boston
to San Francisco and from Richmond
and Atlanta to Dallas. Chicago and
Cleveland report turnover well in
excess Of this period in 1884. Detroit
figures of employment are the best
since 1880. Bank clearings, which in
the full year 1884, were over per cent
larger than In 1933-the first gain
after a four-year average annual loss
of % per cent-showed an increase Of
about 10 per cent in the second week
of January over the like period last
year. The index Of business Is today
the highest since last May and about
equals that Of August, 1888.
(Copyright. 1895. by North American