Evening star., 1938-06-26
PESS|M|SM FADES
At M|DYEAR WITH.
PRICES ON MEND
Gains of Both Securities
and Commodities Chase
Business Gloom.
WHOLESALERS STOCKS
ARE REDUCED SHARPLY
Drop of IA Per Cent From Levels
of Year Ago Regarded as
Important Clue.
BY CLAUDE A. JAEGER,

Associated fIeSS FINANCIAL Editor.
NEW YORK, June 25. - Midyear
finds higher prices for securities and
staples chasing gloom from the busi-
ness arena.
New Years prophets of a spring
recovery from the abrupt slump of last
autumn had red faces when May
rolled around and business was flat
statistical barometers showing in
dustrial production the slowest in
nearly four years.
But things began to happen in
June. Stirrings-not very brisk, to
be sure-appeared in several quarters.
The volume of merchandise moving
over the railroads increased a little.
Steel and cotton mills accelerated q
bit.
There were series Of price in
creases in such raw materials as lead,
zinc, export copper, rubber. hides.
In the third week of June sudden
wave Of bullishness swept over the
stock market
Dull Summer Expected.
What was happening? An extreme
ly dull summer had been anticipated
in many business quarters. General
Motors announced its summer shut
downs for model changes would be
three weeks longer than usual.
Some saw an important clue in an
announcement by the Department of
Commerce that wholesalers stocks of
nIz, a
cent under a year previously.
Heavy building up of inventoriesH
manufacturing more goods than could
be sold-in the earlier months of
1887 was recognized last autumn as
basic cause of the slump. What sur
prised many was how slowly they were
worked Off
Once excessive inventories are recog-
nized, they are likely to work off SLOW
ly, because buyers wait for price con-
cessions, and business slows up gen.
orally. 1t took we'll over a year in the
1921 postwar slump, which was re-
garded as an inventory situation.
Recently, stocks of goods have been
brought to a level which has prompted
fresh trickles Of buying.
Spending q Factor.
A second major factor underlying
the business situation at the moment
is the recently enacted So. .750, ,000, 900
Government spend-lend program. and
the prospect that dirt will soon fly on
P. w. A. projects. A year ago, the
c,,ytoi ilirn cy1oni-
ing. hoping the pump had been primed.
Most business barometers, aside from
residential building. have not come
back very far The seasonally ad-
justed index of freight movement for
the latest week was SIT per cent of
the 1929-30 average, up only per-
centage points from the years low.
So many analysts, in surveying the
first half of 1888, say the recent i'm
provement can only be taken as a
hopeful indicator.
Also. the resumption Of pump
printing brought no uniform chorus of
applause, skeptics complaining that the
previous experience with it failed to
bring lasting recovery. Nevertheless,
regardless of its possible effects upon
debt and taxes later on, businessmen
waited eagerly for the new orders
which might result from it.
The controversy between big busi-
ness and the New Deal over the causes
of the slump waxed recurrently warm,
with each seemingly determined to
boot it to the others door step.
Two Sides to the Question.
New Deal spokesmen attributed the
slump to highly undesirable prac-
tices" accompanying the rapid recov-
cry in 1896 and 1887. including excess
sive and speculative manufacturing
for inventory. unwarranted price boost
ing, "monopolistic practices" The
administration planned an exhaustive
study of monopoly.
Industrialists continued to complain
of New Deal controls, insisting that
they inhibited business enterprise.
blocked the flow of capital. imposed
cost rigidity. kept business in a state
Of uncertainty.
Progress toward composing differ
ences was made on some fronts.
Federal tax laws, on which many
business leaders jumped as a major
cause of depression last autumn, were
sharply modified. President Roosevelt
thought the new measure let the big
fellows off too easily, but permitted it
to become law without his signature,
and called for fresh revision in 1899.
The New York Stock Exchange, with
S. E. c. Chairman Douglas warning
(See MIDYEAR, Page ED