Evening star., 1936-07-12
Situation Serious Enough
to Produce Nationwide
Effect Later.
JULY SALES EXPECTED
TO REFLECT INFLUENCE
Mail Order and Chain Volumes,
Implements. Loadings and
Auto Demand Watched.
BY CHARLES F. SPEARE.

CptCidl bioPatSh " AhS ShoA-
NEW YORK, July 1l.-Outside OF
the drought area there has as yet been
no curtailment of merchandise de-
mand BY the consuming public. Con-
seouently, no important break has
occurred in the business recovery
movement.
The situation, however, Is serious
enough to later produce a national
rather than a local effect on IN
dustry. 1t will doubtless reflect In
the July sales of the mail order and
chain stores, of the farm implement
and motor manufacturers and in the
car loadings of the railroads. 1t is
already influencing decided rise IN
commodity prices which may soon
operate to advance the cost OF living.
The Dun's index Of average COM
modify quotations was, on July !, the
highest since 1929. 1t has since moved
higher. A duplication of food con-
ditions in the Summer of 1884 is pend
ing.
May Affect Election.
This will not be so serious on the
mass of the public as then. for there
is now greater financial ability to abb
sorb it. 1t, however, creates economic
and political aspects that were not
present two years ago and may this
time prove to be important factors In
the November election.
President Roosevelt appears conf
dent that there will be no wheat short
age in spite of the blight on the crops
in the Northwest.
The serious phase of the crop situa-
ton Is the outlook for corn and live
stock.
Another shortage In cereal crops and
the necessity for again slaughtering
cattle because Of lack Of forage quite
naturally projects the much-debated
policies OF the administration in such
a crisis into the forum of politics.
Bad Break for Roosevelt.
Would there have been threatened
scarcity in wheat and corn If acreage
had not been reduced on order from
WASHINGTON or q cattle deficiency If
a less ruthless policy of slaughter
had been observed in 1884? There
seems to be nothing in this situation
to promote the election prospects Of
the President; rather for him it is an
unlucky episode at psychologically
important period in his campaign.
With the tide of business recovery
likely to recede somewhat as the pro-
portions of the Northwestern calamity
expand, and in view of the serious
labor controversy involving the iron
and steel trade, it was to be expected
that reaction would occur in the stock
market. This has been most promi-
nent in steel, equipment, automobile,
mail order and railroad shares-a log
ical response by these groups to the
current developments. Technically,
1t may be desirable, as 1t had been
among these issues that the most con-
spicuous manifestation of the 1929
type of price exaggeration had oc-
CURED.
Bonus Boom Missing.
The business boom that was antici-
pated with the cashing of the soldiers
bonus bonds has not taken place.
It is significant that the proceeds
from these bonds have been used in
such large measure to pay debts.
From this it may be argued that an
important section of the American
public has confidence in the stability
of the American dollar; otherwise II
would be spending freely and convert
ing its new dollars into commodities in
anticipation of imitation.
1t is also worth nothing that the
life insurance companies in the first
half of 1896 bought 20 per cent more
of the type of bonds that would be
expected to depreciate under imitation
than they did in a similar period in
1885.
They will in this calendar year in
vest more in securities than ever be-
fore.
Banks Reduce Obligations.
The movement on the part Of the
banks to retire obligations which at
tach them to the Federal Government
is of interest from more than one
point of view. The total amount dis
bursed by the r. F. c. in 1933-34 to
strengthen the capital structure of the
banks, was l,066, 900, 900. This has
now been reduced to about $757 ,000,-
900.
This action is in line with the move
ment Of debtors to the Government to
cancel or reduce their obligations and
1t supplies the Treasury with funds
which otherwise 1t would be compelled
to borrow
It also attests to the worth Of these
indirect obligations Of the Treasury
and Of the Importance they bear to the
direct Government debt of $4,000
100000 and its partial liquidation in
the future.
The so-called recoverable assets" of
the Government amount to $4, 4,000, ,000,-
600. II they pay out at so cents on
the dollar, and this Is a conservative
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