Evening star., 1936-08-16
STOCKS HES|TANT
AS DROUGHT CASTS
WIDENING SHADOW
Average Advance Smaller,
With Gains Limited to
Few Shares.
SPREAD IN DRY AREAS
CRIPPLES INDUSTRIES
Atlantic States Facing Water
Shortage-Sharp Climb in
Living Costs Due.
BY CHARLES F. SPEARE.
ST. ecial Dispatch 10 The Star.

NEW YORK, August lo.-Wltn lne
month half gone, August is making
poor showing in the stock market,
compared with that Of July. While
there has been a net average ad-
been on the increase. The trading
area has contracted. Gains have
been confined to limited number OF
shares.
All Of which is not unnatural, con-
sidering the facts that in only one
of the last IL months has an aver
age decline been registered, and that
this week the average Of the market
was IS per cent higher than a year
ago.
1t would have been surprising, too,
II eventually the speculative market
had not taken account of the serious
ness Of the drought and Of the Gov
ernment figures showing what this
had meant to the grain crops to Au-
gust !.
Drought Damage Grows.
Unfortunately, the damage is pro-
gressive The extent of the dry area
is growing, so that today the Atlantic
States also are facing a water short
age that will cripple industries and
lead to a rise in the costs to the con-
Sumer of staple articles Of food. All
sorts of economic, social and politi-
cal problems are tied in with the
drought. Therefore, it cannot be
passed over as an unfavorable phase
out difficulty, to be absorbed by rea-
son Of the great momentum estab-
liShed in the field of industrial out
put as well as in the distribution and
sale Of consumers goods.
The magnitude and national scope
Of the recovery are indicated in re-
ports from the IL Federal Reserve
districts. In general. these place the
volume Of wholesale buying at the
highest level in seven years.
From each center there is some
specific proof of an uplift in business
paralleling that Of 1929 or 1880. In
New York and Philadelphia it is re-
flected in the dry goods trade: in
Boston, in q diversity Of manufac-
lures and a record-breaking tourist
throughout New England;
in Chicago, by crowds Of buyers in
attendance at sales; likewise in
Kansas City, st. Louis and Min
neapolis, where the dollar value Of
advance orders corresponds to those
of 1929; in Cleveland, in higher en-
ployment and the reopening of in
dustries identified with the building
trade; in Richmond and IN Atlanta.
in textile mill capacity production
and heavy merchandise buying for
later delivery.
Some Adversely Affected.
There are some offsets to this in
the agricultural implement trade,
where orders have been Cancelled and
unemployment has increased. Signs
of it are developing in automobile
centers and to some degree in the
field of national distribution of mer-
chandise.
1t is certain that the railroads in
the drought-stricken parts of the Mid
west and Northwest will witness .
shrinkage in traffic on which they
depend to bring up their net op-
Grating income in the final quarter
Of the calendar year. This may delay
their successful promotion on average
crops during 1886 and purchasing
power by the agricultural communi-
ties equal to that in 1885.
The figures made public Monday by
the Department Of Agriculture on the
condition of the grain crops on August
1 revealed the tragedy of the drought.
Corn will be less than in any year
since 1881 and 852, 100000 bushels
smaller than year ago. This Is
the major calamity.
The increase in Winter wheat more
than offsets the decrease in Spring
wheat. However, the loss has to be
borne by the States of smallest re-
sources, which have never recovered
from the 1884 drought.
The oats crop is about third less
than last year. Fruits and vegetables
have made a scant return to growers.
Dairy products are reduced in guam
tity by insufficient moisture.
Higher Prices Certain.
That the food bill of the Nation
will go up sharply in the next six
months is certain. How will this
affect the presidential election? Prob
ably by throwing more consumer votes
to Gov. Landon or to the third party
and by increasing the Republican
strength in Congress. What Will be
its relation to the Nations finances?
It may produce larger total of dol
lars in farm wealth, but, at the same
time. create the necessity for greater
grants for relief and so delay progress
toward a decided reduction in the
Treasury deficit. And there may be
more Unemployment in industrial
and railroad centers because Of it.
On the other hand, it does not
promise to produce any change in
the rate of interest, on which the
past, and probably the future, Of the
investment market is predicated. The
Government will be able to borrow
during the remainder of this year at
terms which make the private in
yestor,s heart bleed. More or less
refunding will be undertaken by cor
porations at the going rates Of 3h to
334 per cent.
The new regulations of the Fed
eral Reserve Board as to reserve re-
ouirements Of member institutions
90 into effect today. It will be some
time before they appear to have any
influence on the money market. One
satisfying phase Of this is the growth
of commercial loans reported by
member banks.
(copyrigft, 1885. BY the North American
Newspsper Alliance. Ine)