Milford chronicle., 1937-12-10
ECONOMIC HICHLICHTS
Happenings That Aneet the Dinner
Pals, Dividend Checks and Tax Bills
of Every Individual; National and
international Problems inseparabie
from Local Welfare

q divergence between the state o
business as revealed by earnings re
ports and the level of stock prices
Measured by third-quarter earnings
industry and trade are almost boom
ing in this country; measured b.
stock prices, business is definitel.
in the doldrums."
With the exception of auto, aut'
parts and food products companies
which showed moderate declines ii
earnings for the first nine months
OF this year as compared with thu
same period in 1886, the earnings
picture is very good. A representa-
tive group of chemical companies
earnings are up 2S.5 per cent
building material makers up "a pei
cent; oils up 1873 per cent; steel:
up 263 per cent; utilities up 4S.8 pei
cent; a miscellaneous group of big
companies, including such strange
bedfellows as A. T. G T., Gillette
and National Distillers, up 24.6 pei
cent.
With earnings at these high levels,
why, then, are stock prices sagging'
along with business confidence
that psychological factor which is
sometimes more important than the
hard, unimaginative production fig
ures? There are number of rea-
sons.
In the first place, it appears GER
tain that fourth-quarter industrial
earnings will be substantially below
both third-quarter of 1887 and
fourth-quarter of 1886 earnings.
Reason: Industrial production has
been dropping, led by one of the
most important industries. steel,
whose production touched Al per
cent of capacity in a recent week as
against 80 per cent in April and II
per cent in 1882. Consumer indus
tries have been going slow on plac-
ing orders with heavy industry. be-
cause as to future conditions ana
the trend of prices.
In the second place, the tax prob-
lem is more involved now than ever.
business feels that such taxes as the
Undistributed Profits levy and the
Capital Gains levy are decisive det-
riments. The proponents of these
taxes feel that they are necessary
to protect us against another innd-
tionary boom of the 1928 variety.
Decisive factor in the dispute is the
Administration, which has had little
TO say, and championed these taxes
in the past. Hopeful sign. from bus
mess point of view, is the unqheS-
tionable increase in Congressional
sentiment for repeal or radical re-
vision of the taxes-if this goes lar
enough, some think Mr.. Roosevelt
will take the lead and advocate
changes.
In the third place, the thought OF
another depression, even minor
ore. is sufficient to send chills run
ming up and down the spines OF both
business leaders and government
officials. Reason: The country is in
no shape TO withstand a sharp drop |
in income, production and earnings.
In 1929, the government debt was /
low, and business reserves were !
high. Today the government debt
is at its all-time record hish anu /
business reserves are low. having /
been spent during the bad years 10 !
keen concerns alive. III other words. !
in 1929 we were economically pre- !
pared for Il depression; to-day we !
are not.
In the fourth place "A large per-
,entage of executives and big inves- /
.nrs are convinced, rightly or I
\ Toncly. that this Administration Is I
ollowing the wrong track in rela- .
ion TO private industry is tending
oward Dictatorship. has unspok-
IN ambitions TO make the [. :. into
/, COllectivist state. Whether this
,oint of view is mistaken or not, it
:annot help but be a Oppressive
actor.
III the fifth place. the foreign sit
lation, coupled with the feeling that
his country must inevitably be-
,ome involved in any major foreign
no matter how wise
v the Administrations leadership.
s an uncertain the frightening ele-
.sent.
This does not exhaust the list of
actors contributing to the present
confused outlook. but it gives the
most important. Forecast is an en-
remedy hazardous undertaking to-
lay, and the fOrecaster is liable TO
md himself out on limb before
ong. However, summing up the
Jews of most economists and in
ustrial journalists: The concensus
f opinion is that industry will he
elatively quiet for few months TO
ome, with security prices moving
radically in a narrow range; that
93S will bring a lower national in
cme than 1887; and that conditions
ill be "slow" this winter.
BY the time this sees print, the
pecial Congressional session will
G underway. Chances are that the
assion will run into January, when
,e regular session begins.
There will be bitterly opposed
Jews involving both of the special
.ssion's objeetives - farm aid and
ages and hours legislation. The
wants a farm plan
lat will embrace crop control in
me form.
Wages and hours will cause even
ore talk. Administration plan
ould set up a board with powers 10
|, wages and hours for all indus
y, within certain limits. However,