Henderson daily dispatch. (Henderson, N.C.) 1914-1995, 1938-08-29
Spending Will
Not Produce
Real Recovery

New York, Aug. 29.-Never has a
genuine recovery been built on the
foundation of actual or prospective
currency depreciation or the artificial
stimulus of governmental borrowing
and spending, states the Guaranty
Trust Company of New York in dis
cussing business depressions and re-
coveries in the current issue of The
Guartny Survey, it's monthly review
of business and financial conditions
in the United States and abroad, pub
lished today.
"On the contrary, the primary eff
fort of the Government was formerly
to bolster confidence in its own credit
and in the soundness of the currency.
In repeated instances the success of
this effort marked the beginning OF
recovery" The Survey continues.
"The decline in business activity
that began last summer and, more re-
Gently. the question whether the mod
crate revival of the last few months
marks the beginning of substantial
advance have lent renewed interest to
the study of depressions, with parti-
cular reference to their causes and
to the conditions that have led to re-
covery. Comparisons and contrasts
with past experience are exception
ally interesting in the present in
stance because of the rather unusual
character of the current movement.
Manv of the conditions that or
dinarily precede major trade recess
sions-such as sustained high level
of business activity swift industrial
and credit strain-were absent at the
beginning of the recent slump. AS a
result. the seriousness of the recess
sion seems to have been generally
underestimate during its early stages
"A long-range view of business fluc-
tuations in the United States suggests
several conclusions regarding the
causes and the general nature of de-
pressions In the first place, it is evil
dent that major recessiOns in business
have occurred at rather frequent in
tervals throughout our history and
that in numerous cases the ensuing
depressions have lasted for several
wears, so that business has been in
more or less depressed state about
half the time. The factors underlying
business fluctuations are as bewilder-
inely varied as their manifestations
and those who strive to reduce these
fluctuations to set of rules and for
naulas must be satisfied with very
limited success.
A General View.
"a broad view of past depressions
emphasizes almost equally their SINH
larities and their differences. Ger
tainly they were far from uniform in
severity duration, and some outstand-
ing characteristics. Nevertheless, I'M
DERIVING these differences a general
pattern is discernible. Recession was
almost preceded by great business
activity large profits, excessive OPP
timism, speculation, and heavy ac-
emulation of debt. Often the collapse
was apparently precipitated by some
spectacular event, such as large
failure; but in retrospect it appears
as an inevitable consequence of the
preceding excuses. An exception must
be made for the outbreak of war,
which overshadows all other influ-
ences and breaks up whatever re-
gularity of movement might other
wise exist.
"The depressions themselves were
essentially periods of liquidation of
top-heavy debt structures and in
many cases involved also price defla-
ton and inventory reduction. The
hardships suffered in these periods