Evening star. [volume] (Washington, D.C.) 1854-1972, 1936-10-11
GOLD CUT PROVES
BOON TOMARKETS,
NEW PEAKS SET
Dealers Abroad Continue
to Buy U. S. Securities
as Earnings Rise.
RECOVERY IN FOREIGN
TRADE is ANTICIPATED
Averages for Stocks and Corporate
Bonds Climb Into New
High Ground.
BY CHARLES F. SPEARE.

Spfcia! DlSpetcn 10 Inc otaI'
NEW YORK, october 10-In its
stimulating effect on speculative mar
kets and in the awakening it has pro-
duced in the slumbering business cir
cles devoted to, foreign trade. the de-
valuation OF the currencies of France,
Switzerland, Holland and Italy has
proved one of the most notable events
Of the postwar period.
The chaotic conditions that had
been feared. as sequel of devalua-
ton, have not occurred. Transfers of
gold on a large scale have taken place
between European financial centers,
but there is yet no evidence that gold
is to be returned to Europe from the
United States in proportion to the sum
of our past two years imports.
Instead of liquidating American Sc
curities, foreign dealers in them have
been enlarging their commitments on
the exhibit of corporation earnings in
the recent past and those promised by
the unchecked business recovery here.
Transactions on the New York Ex-
change have expanded to the size OF
last Winters brisk market. The stock
averages are at new high, also
that OF bonds in the corporation group.
Political Implications.
Even an unprecedented observer can
not fail to remark the likely effect on
the election results of this comb.na-
ton of great industrial momentum.
steady and substantial appreciation,
month by month, in the security hold
ings and in the real estate investments
of the American people and the slim
ulating nature of the agreements just
entered into between countries long
attempting to trade behind tariff walls
and now daily pulling these barriers
down and so permitting much freer
relations with the United States than
have obtained in years.
The Hull reciprocity plan for en-
couraging commercial and political
peace has become vital part Of our
economic philosophy.
Its acceptance would seem to rem
der ineffective the arguments of poll
ticians who seek to repudiate this most
constructive effort toward interna.
tional harmony proposed in years.
There Is also a feeling of relief over
the fact that the war fever has
dropped perceptibly.
Into this new situation there has
entered the prospect Of further credit
expansion. Devalution promotes it;
the release of sterile" gold seques-
tered in the United States and in Eng
land, and privately boarded on a
large scale on the continent of Eu-
rope, accentuates it. After Belgium
devalued in the Spring of 1885. an
immense amount Of currency returned
to her banks. France is now having
a similar experience with repatriation.
Higher Living Costs Faced.
The immediate and most delicate
problem that the countries now de-
valuing their currencies are forced
to meet is that of protecting their
people against the increase in living
costs. This normally follows currency
reform. France took steps to meet
this contingency. She went so far
that her entire devaluation program
was threatened.
Subsequently. Italy, in devaluing the
Ira by Al per cent, imposed on her
merchants a regulation by which food
prices may not be lifted above present
levels and extracted from landlords
a promise not to increase rents during
the next two years.
There has been less advance in the
living cost in the United States in
the last three years than was to have
been expected when the dollar was
devalued by 40 per cent. BY this is
meant that the various items enter
ing into the index of living costs have
not greatly increased.
Comparing September, 1888, with
September, 1886, it will be found that
the wholesale price of commodities
has advanced only IA per cent. How
ever, foods have gone up 26 per cent.
All commodities, other than farm
products and foods, have risen from
765 to 1875 per cent of the 1926 aver
age OF 100.
Inasmuch as the item on food has
most influence on the cost of living
index and bears most heavily on the
average householder's budget, it is
the natural point from which dis
cussion Of the present-day relation
between income and outgo starts.
This week, according to the Dun g.
Bradstreet chart, the food index stands
just where it did on July IA, though
meanwhile it has been considerably
higher.
Governments may by decree set
Tcno 1EApYETC peoa C-aI