Evening star., 1938-04-23
BUSINESS COOL
.T0SPE|ND|NGPLAN
Initial Upward Trend in
Stocks and Staples
Fails to Hold.
Special Dispa tch TO The Star.


NEW YORK, April 23.-This week
the country has been disestans the
new spending program OF the admin
istration without any great enthu.
siasm says Business Week today. An
initial upward movement in stock and
commodity prices was followed by .
sell-o1. It is now accepted in most
quarters that Government spending
will Be neither speedy nor overwnslm-
Ing. While some improvement In ac-
tvity l. likely to result In the late
summer and fall. there appears to be
no rush to anticipate these results.
Meanwhile, the business indexes are
holding their own, with little change
In either direction. Steel activity con-
tinues constant for the third week,
after reacting from the abortive spring
rise which was cut OF at the beginning
Of April.
Automobile production Is still run
ming. as 1t has all year. At about co.
900 cars . week. Electric power output
last week dropped to Z new low point
for the current depression, but on .
seasonally adjusted basis h no differ
ent from two and three weeks ago.
Freight car loadings have risen slightly.
Industrial activity. In short, Is hold
Ing the base line it established ut the
turn Of the year. There have been
movements up and down in the various
indexes, but seen from the vantage
point Of today. 1t appears that they
were not significant.
Little Change Expected.
Looking forward through the second
quarter, no important changes appear
likely. Reports from Detroit indicate
that a rise in automobile output may
have to await the new models to be pro-
duced next fall Steel trade observ-
ers see little prospect for An improve
ment IN the second quarter, although
unexpected developments may still
change this forecast for the better.
In that event. second-quarter out
put could average 40 per cent Of ca
pacity. but hardly more Consumer
goods output In some instances is tall
ins OF. matching the cases in which It
has been picking up. No further
drop IN general activity Il anticipated
during the second quarter, but . rise
Is not in the cards 20 far a thew are
IN view at the present time.
Despite the best efforts Of the ad-
ministration to help out with . little
pump priming before election day, 1t
h unlikely that the -, SOC, 900 900
program" will be going at anything
like the clip desired by the President
this summer and fall.
There Is every reason to expect de.
lay even after July before the
pump Is actually being primed. Loans
oy the r. T. c. and loans and grants
by P. w. A. have q history Of de.
liberation and red tape which Is the
only safeguard against extreme waste
OF funds. but which inevitably slows
down the translation Of lending ana
spending into employment ana pro.
duction.
FAN Revival Likely.
One Is inclined to think that in.
dustrtal activity and commodity prices
VIII show some response to public
spending in midsummer and q bet.
ter response In the early fall. It IL
doubtful that enough will be spent to
contribute . marked lift to industry
or prices. On the other hand. two
quite different factors may lend 4
hand IN the autumn months.
One Is improvement in confidence
on the part Of private capitalists. II
the recent defeats Of the administra.
ton IN congressional battles continue
and eventuate In . retreat Of the poll
Ing booth. The other Is renewed buy
ing due eventually In these lines
where production is still running be-
low current consumption-and these
lines are many. some natural rebound
Is likely IN the fall from this cause
alone. Government money will doubt
less aid, but will not be the main
factor.
The Treasury has abolished the in
active gold fund and the Federal Re-
serve Board has reversed one of it,
three increases in bank reserve re-
quirements. These two steps, once
they are fully effective (which may take
some time), could easily double ex.
cess reserves Of member banks. This
VIII put intense pressure on the banks
to Use some Of the Idle cash, and the
effect will be bullish for bank invest
ments, deposits, and eventually COM
modify prices.