Evening star., 1936-06-30
BUSINESS INDEX
IS HIGHEST SINCE
|. 1929 DURING JUNE
Exceeds Many Estimates,
Appears to Reflect Per.
manent Trend.
BY CHARLES r. SPEARE.
.pecial Qispstch TO The Star.

O1hkSLLC OEEhnEs
Special Dispatch to The Star.
NEW YORK, June 30.-If the pres
ent index of business production Is
compared with either that of or IL
months ago 1t will be found to have
advanced sharply In both periods.
The rise in the first half Of 1886
has not been so striking as that in
the last half of 1885, nor could it
have been expected to be in view of
the recovery that had gone before.
However, it has exceeded the esti-
mates of many and appears to be
rejecting rather permanent trend.
1t is significant, for instance, that
during the sharp decline in the price
of speculative securities in March and
April there was no suggestion that
this was retarding the volume Of dis
tribution in either retail or wholesale
| trades
During June the business index
touched the highest figure since 1929,
in spite of the fact that, in several
important directions, such as iron and
steel, railroad carloadings and building
| construction, the lag was conspicuous
when compared with that of the auto
mobile, the electric power, the retail
trades, including department stores,
chain stores and national distributors.
However, one of the best features
Of the current situation Is the steady
regaining of position by the durable
goods trades, for with it there Is the
prospect Of reducing unemployment.
and thereby bettering that phase of
the national economic and social sit
uation which involves the greatest
problem before the country.
See Era of Recovery.
In the past six months there has
been gradual merging Of the
opinions of people toward the convic-
tion that business is in line for a
considerable era Of recovery. This Is
due somewhat to the fact Of recovery
itself and to the absence of apprecia-
BILE response to conditions here and
abroad that might be expected to
cause either a decline in industry or
less inclination on the part Of indus
trial leaders TO make commitments.
The distribution of the soldiers
bonus money has. of course, been a
factor making for activity in business
This, however, is passing phase; not
one on which judgment of the future
Of industry is to be based. The
fundamental fact in the recovery
seems to be that Of an untitled de-
mand for goods that have been with
held from the consuming public for
long period of time and which the
public now has the ability to buy or
is willing to buy after being satisfied
that there is no further danger from
national economic crisis.
1t has been the history OF the ma
jority of presidential years that husi-
| ness is but moderately affected by
the campaigns and platforms Of those
years. There have been intervals
in many presidential years when vital
political or economic questions have
led to acute disturbances in industry
and in speculative and investment
markets. This may reoccur for a time
within the next four months.
However. confidence prevails that,
after the election, regardless of which
party prevails, there will be a steady
broadening out in the field of industry
with sections of it that have been back
ward becoming more active, banks
giving greater credit accommodations
and, with it all, rising average of
security prices.
he TTnknarrw.
The unknown quantity in this sit
uation is that of European politics
and European credit conditions. Po-
litically, the outlook abroad Is rather
more pacific than it was at the end
of 1885. On the other hand, the
growth of radical political factions
on the continent of Europe, with ex-
amples of it in France, Spain and
Belgium, does not make for financial
stability.
In the last three months France
has lost Is per cent of her gold re-
serves, following q heavy reduction
in 1t during 1885. She is close to
the point Of a devaluation of the
franc. This naturally would endanger
Holland and Switzerland. Unless
Great Britain and the United States
arrive at some point of agreement
on stabilization, there is bound to
be a period of currency chaos which
would temporarily affect all foreign
trade, including that of the United
States. From this angle the European
situation is bearish toward American
business, though not conspicuously so.
Federal Debt Debated.
The central point at which most
national problems meet is that which
surrounds Government financing.
From this also there radiate the coll
lateral aspects of the national Situa-
ton, which invites so much controversy
today. The Nations debt at the end
of the 1886 fiscal year approaches
$35, ,000. .000, 900.
The appropriation for the fiscal year
1887, together with the probable deficit
in that year, will bring it close to
sac, 900, ,000,000
This figure has been regarded as the
danger point to Government credit. 1t
has been claimed that when and If the
debt reaches this sum, present buyers
of United States Treasury paper will
cease to buy and will begin to sell
out their holdings. There is not much
logic in this contention.
For, if at around $4,000 ,000. 900 the
institutions which now hold As per cent
of the Government debt are willing to
subscribe to the limit of their capacity
for "a per cent long-term bonds at
par, they are not likely to be intensely
bearish on Government credit because
the debt had been increased by an
other $4,000, ,oo0, 900.
What is more likely to happen is that