The Washington times., 1935-01-29

Steel produc-
tion reached
new high level .n%
for this up ~A \ %s<z*S*
swing, at better Lewis Haney
than so per cent of ingot cap.
acity. This is almost SO per cent
larger than in the same week a
year ago.
The chief factor in steel-mak-
ing continues to be automobile
production. The motor output
as reported last week was prac-
tically unchanged, after allow.
anceS for seasonal variations, but
was more than double the output
of year ago.
Lumber and cotton cloth pro-
duction both declined a little.
Railway carloadings, however,
held up well, gains in coal and
miscellaneous loadings more than
offsetting the backwardneSs of
merchandise q. C. Id, grain,
and livestock shipments. There
was slightly larger number of
cars 10. led than a year ago.
One should note that a very
large part of the recent sharp rise
in the indexes of industrial activity
is caused by automobile produc'
ton, which in turn is the chief
factor in steel production.
1t is a bit queer to find a
poverty stricken nation which is
struggling to raise billions to
feed and clOthe its needy mil
lions land is forced to borrow
for that purpOSe) going in so
strongly for "the latest models"
] would say that if we can af-
ford SO many automobiles, some
thing is wrong with all the talk
about the needy"
Be that as it may, there are
indications that the automobile
squirt will become less pro-
nOunced in the course of few
weeks, and that already steel
makers are expecting some let
up in the demand for steel. My
guess is that the curve of in
duStrial activity will have begun
to round off by the middle of
March.
Commodity prices averaged
higher last week, probably touch.
ing new high since inflationary
moves began under the New Deal.
1t is by no means clear that in
flation is the cause, however, for
the chief gains occurred in foods
and fuels, which may be attributed
directly to the current cold snap.
Such paint materials as linseed oil
and turpentine we're also higher,
as was pine lumber.
But metals of all kinds we're
little changed, and zinc and steel
scrap were actually weaker.
Probably the most interesting
price movement was the declin-
ing tendency of commodities
which have international mar.
kets. Thus rubber, tin, and
wheat were a little lower. OF
course, the gold clause and the
higher exchange rate of the dol
lar, was a factor.
But in the background, credit
initiation is obviously prepar-
ing. Last week the sO-caIIed
"excess reserves" of the mem
ber banks touched a new high
record level. This means po-
tentiaI credit expansion, and
puts pressure on banks to make
loans. AS yet, we find bank
loans actually declining while
deposits grow. Probably this
is one reason why the Presi-
dent is now considering new
banking legislation. Press re-
ports indicate the scheme is to
centraliZe control over Reserve
Banks and to loosen the re-
strictiOns on loans.
The Administration demon.
Stlated its control over Congress
by forcing through the four billion
dollar work relief bill with prac.
ticaly no discussion or amend.
1He11C. Ills measure Will prODa-
bly, add about billion dollars to
the Federal annual expenditures
incidentally, the direct infla.
zionist elements lost their first
EkirmiShes designed to add green
back amendments to various
pending bills.
Other important developments
ut Washington were steps taken
toward regulating holding com.
.panies,' and toward liberalizing
the lending policies of the RFC,
(These. by the way, illustrate the
usual New Deal technique-while
they operate on the patient, they
give him gasO