Evening star., 1935-06-30
TRENDS AFFECTED
BY NEW DEAL AND
COURT DECISIONS
Fate of Banks, Railroads,
Utilities and Tax Plans
to Be Determined.
MONEY STERILIZATION
HELD VITAL PROBLEM
Attitude of Labor on N. r. A. Is
Sues and Size and Value Of Crops
Also Leading Factors.
BY CHARLES F. SPEARE.


NEW YORK, June 29.-As in pre-
vious years, so in the first six months
of 1895, it has been the policies OF
the administration at Washington and
the acts of Congress and OF courts
that seem likely to determine the
course of business and of security
markets in the second half Of the
year.
In the early part Of 1882 the Re-
construction Finance Corp. began
functioning actively. In March, 1888,
the banking crisis came to a head
and was followed by spurt in in
dustry and in securities when the
banks were reopened and banking de-
posits were guaranteed.
In January, 1884, came the radical
monetary policies that had their effect
throughout the remainder of that
year, with the sequel a practical sta
bilization of the dollar at discount
of 40 per cent from the old valua-
ton.
Last February the United States
Supreme Court handed down its de-
cision in the gold clause" case and
in May it declared unconstitutional
the working Of the N. r. A. Each
one of these incidents is today either
an active or latent factor in deter
mining the attitude Of business men
and of investors or spectators toward
future commitments, and from time
to time some aspect Of them Is bound
-. iv1 he
tory of American economic affairs.
Important Factors Cited.
Looking into the future We find
other prospective developments that
will likewise establish the degree Of
recovery or relapse before the end Of
December. Among these are the bank
ing bill; the act to change the status
of public utility holding companies;
the capital requirements of the rail-
roads and the progress made in the
reorganization Of those now in re-
ceivership; Federal taxation; the at
titude of labor with respect to the
annulment of codes favorable to labor
under the N. r. A; currency stabiliza-
ton. and the size and value Of this
years crops. In each Of these there
are elements that may make for
greater confidence on the part OF the
public, If they are properly handled,
or may cause further delay in re-
covery IL they fashioned contrary to
good practice or are based on political
considerations rather than on sound
economics.
It may be stated at once that the
present outlook for this years harvest
is quite satisfactory. for where there
was excessive drought last year in
the Northwest, in the Rocky Noun
tain section and in the North Atlantic
States. including New England, there
has been abundant moisture this
Spring. In all these sections a season
of plenty is promised in contrast to
the poverty Of the soil Of 1884. Larger
crops will balance smaller cash prices,
so farm income should be about the
same as year ago.
Government Bonds Improve.
The history of the market for
United States Government bonds and
notes and for the guaranteed obliga-
tions that have become part OF this
general group in the last 18 months
is one of rising prices, of constant re-
funding of old issues at better rate
of interest to the borrower and con-
siderably less of an increase in the
total amount of such issues outstand-
ing than had been predicted at the
first of this year. AS a matter Of fact.
the fiscal year ending tomorrow will
show that the public debt is S2,250.-
when President Roosevelt announced
his budget in January.
The Treasury deficit for the IL
months ending June 80 will be ST.
500, 600, 900 below the earlier predic-
ton. This is due in part to larger
revenues than were anticipated,
smaller demands from corporations on
the r. F. C. than had been expected,
as we'll as larger repayments to it
all of which is a healthy sign-but
primarily it Is due to the slowness
with which projects calling for public
moneys have been completed and
started on their way.
The monetary situation of the Gov
ernment is indeed better at the end
of the fiscal year than it had been
supposed would be the case. 1t is not,
however, comfortable or satisfactory.
This fact may to some extent excuse
the new tax proposals, for the amount
of revenue which these will bring into
the Treasury will ease the situation
been anxious about the Government
debt and who have feared imitation
have been demanding.
The vulnerable point in the whole
tax program is not the emphasis 1t
places on large fortunes and on the
profits of large corporations, but the
continued exemption of millions of in
dividuals with moderate incomes who
should be paying their part of Gov
ernment expense in the form Of an
income tax. While 1t Is important
that beginning be made toward re-
moving the exemption on Federal and
municipal securities, 1t Is much more
necessary to suspend the privilege of
thousands Of civil servants and Of
persons with incomes from $500 up
to 50, 500 Of avoiding Federal taxation.
If there is a political motive in per-
mitting such exemptions. 1t is a most
sinister one and should be opposed
by every good citizen.
The leading problem before the