The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1936-01-02

industrial advances" and the
small loan business. Brokers
loans have also increased.
This suggests the prolonged rise
in the stock market that began in
March, 1885. Based on "eaSy
money" this rise promises to hold
for some time, and promotes conf
dence.
We should add that farm in
comes, factory payrolls, and corpo-
rate profits, have all gained in
1885, and seem likely to increase
further.
1t is thus apparent that, but for
several remaining uncertainties,
the potential credit initiation
might become effective very soon.
These other uncertainties are:
Cd European politics and war
possibilities, (2) threatened labor
disturbances, CD possible radical
third party developments in our
politics, "a possible repercuSsionS
Of Supreme Court decisions, and
60 possible soak-the-rich taxation.
The depression Of foreign trade,
and the difficulty Of overcoming
Embellishments among prices and
wages at home, also will remain
as actually existing limitations.
On the other hand, the proba-
bility of soldiers bonus" bill
being passed tends to encourage
inflationary ideas.
Considering these various fac
tors, / am inclined to think that
(1) there will remain sufficient
uncertainty to hold initiation
still in check during 1886, but
that ~ further progress toward
its eventual outbreak will be
made, and that ~ 1t Is barely
possible that growing "cOnfi-
dence" may start the ball roll
ing before the end Of the year.
This confidence would have to
come from the apparent defeat
Of radicaliSm.
Ny conclusion is that 1885 will
probably begin with lull in bust
ness, but that this will not 60 far
or last long. Renewed expansion
would follow, with increasingly ef-
fective initiation. AS the election
draws near, increased hesitation
would be natural-mleSS the out
ooVoa hos ooopwIoi1a hannrnn aSyi
dent. The general effect should
be one of an underlying tendency
to expand, somewhat restrained
by consumer resistance to higher
living costs, and checked now and
then by political fears.
One point to note in this con-
nection, is the fact that the un-
certainty and hesitation Of the
past month have meant little buy.
ing, and that inventories of ma
terialS are fairly low. The pending
court decisions or the passage Of
a bonus" bill might, therefore,
touch off a sharp rise in buying
and prices.
Probably the 1885 averages Of
industrial production and COM
modify prices will be higher than
those for 1885. (ThiS, however, Is
a guess that might go wrong on
account of political factorsO
Some long-range weather fore
casters are predicting serious
droughts in 1886. I doubt that
such things can be foreseen, but
the matter is worthy of mention,
since it reminds us of the limits
of social planning" as well as
the possible error in a business
forecast which assumes increased
farm income.
The general attitude of the
business man should be one of
caution, but of alertneSs to take
advantage Of inflationary spurts.
High grade bonds are likely to
be held close to recent levels, dur
ing the first half of the year, at
least.
The stock market will natur-
ally be irreguIr in view of eco
nOmic and political uncertain
ties. A serious withdrawal Of
foreign funds Is a contingency
to be reckOned with, although
it does not seem to me to be
highly probable. But the under
lying force Of initiation will
probably tend to produce
periods Of buOyancy and some
what higher average prices
than in 1885.
In this connection, 1t should be
recalled that the party in power
will want optimistic sentiment,
and the stock market is an i'm
portant factor in this respect. No
drastic restriction of stock mar
ket activity, therefore, is likely
When all is said, however, we
should bear in mind the fact
that fundamental conditions
are not sound. Such prosperity
as we may have is built too
largely upon the sands of pub
lie debt to endure. Something
is wrong when over One-third Of
our people are recipients of dis
tributiOns from the Federal
Government, and some 10 mil
lion la.bOrers are unemployed.
A bureaucratic army of Govern
ment clerks, thanked on one
side by the demOralized millions
Of the futile WPA, and on the
other hand by the millions Of
bOnus-t a king ex-farmerS-alI
these may be marching to re.
form, but not to recovery.