Evening Star Newspaper, January 3, 1932, Page 25

IN THE WORLD OF FINANCE he Sunday St WASHINGTON, D. €, BUNDAY MORNING, JANUARY 3, 1932. — LARE YEAREHD NDEND CHEES RECEVED IND. . Final Disbursements on Local Securities Add to Funds for 1932 Investment. RESERVE BANK REPORTS GAIN IN EARNING ASSETS Building, Debits and Deposits A"i Also Reviewed in the Fifth District. BY EDWARD C. STONE. Nearly 40 different stocks and many bonds listed on the Washington Stock Exchange paid semi-annual or quar- terly dividends yesterday, it being esti- mated that total disbursements amount- ed to more than $1,500,000. Added to this were innumerable checks from all parts of the United States bringing re- turns on Investments which have no connection with Washington securitiea but which give a tremendous boost to funds for reinvestment or deposit in the banks here. Some of this money will be used for household or other expenses, but much of it will be invested soon. Now that selling to establish tax losses is over, Yuletide demands are past and count- less other calls for money have been temporarily satisfied, it is anticipated that the investment markets will get more attention, particularly on the buy- ing side In the past this new demand | has made itself felt in a substantial | way and local bankers, brokers and in-'j vestment dealers believe it will do so again this year. Pirst trading in 1932 was recorded on the local exchange yesterday. ‘Transactions were too light to indicate any trend. Washington Railway & Electric preferred sold at 86, Federal Storage preferred at 100, Mergenthaler Linotype at 55 and Columbia Sand and Gravel preferred at 99';. This latter stock 1is expected to be called shortly due to move now on foot to dissolve the Columbia Sand and Gravel Co. and redeem the preferred stock at par. Bond trading yesterday was confined to Washington Gas 6s, series B, which moved at 100':. The weekly checking of quotations in the unlisted department revealed but one change, the bid on Mayflower Hotel 6s being raised from 11 to 13 and the asked price from 15 to 17 Richmond Bank Assets Gain. A comparison of the figures on the statement for December 15, 1931, with the figures for December 15, 1930, shows an increase of $12,238,000 in the Federal Reserve Bank of -Richmond'’s total earning assets this year, due to an | increase of $12,764,000 in holdings of Government securities. There was also an increase of $700,000 in miscellane- ous earning assets, but rediscounts held declined by $958,000 and the portfolio | of open markét paper decreased by $268,000 during the year Federal Reserve notes in_circulation | on December 15, 1931, totaled $7,195,- | 000 less than notes in circulation a year earlier, and member banks re- serve deposits at the Federal Reserve Bank of Richmond declined by $5,197,- 000 during the year. Lower circulation figures this year are partly due to un- | usually high figures in December, 1930, | when several serious bank failures had | caused member banks to accumulate | currency in their vaults. The reduction in member bank re. serve deposits this year is due in part | to lower deposits against which re- | serves are carried. These changes in | the statement, with others, resulted in | a decrease of $24,904,000 in the Rich- | mond bank's cash reserves, and a de- cline of 12.25 points in the ratio of cash reserves to note and deposit lia- | bilities combined | Debits to Individual Accounts. Further detalls from the Reserve Bank of Richmond's report, made yes- covering debits to individual accounts, show that among the 24 re- rting cities in the fifth district, 9 ailed to have the usual seasonal increase. Portsmouth, Va, showed the great- est percentage increase, 27.7 per cent; Roanoke ranking second with an' in- crease of per cent. Richmond | gained 5.1 r cent during the later | period, but Baltimore and Washington | figures both declined a small fraction of 1 per cent | comparison with debits totaling | 8,000 reported for the four ended December 10, 1930, the total for the correspcnding four weeks in 1931 showed a decrease of $233,150,- 000. or 13.3 per cent. A part of the | reduction is to lower price levels in some lines this year, but a generally lower level of business activity probably accounted for most of the decline. Only one city reported a high for the 1931 period, Raleigh reporting | A gain of 127 per cent. The three | largest cities reported materially lower | figures this year, Baltimore declining | 29.0 per cent, Richmond declining 16.1 | t cent, and Washington declining 7.0 per cent, the report states | Building inspec in 32 fifth dis- trict cities issue permits in No- | vember this year, compared with 2,371 | permits issued in November last year. Estimated val last month totaled $4.122 ase of 31.2 | per cent in comparison with $5.990,074 | valuation for November, 1930 Nine of the 32 cities reported higher valuation | figures for the 1931 month, Raleigh | making the best record of the month in | proportion to population. Contracts awarded in November for struction work in the fifth district, | uding both rural and urban pro- taled $19,644,097. compared November ovember, 929, according to figures collected by the F. W. Dodge Corporation. Of the awards in November this year, $3,791.- 522 was for residential work, compared with §: 1,005 for this type of work | in 1930, the review stows. er figure | Savings and Time Deposits. Time deposits in 50 regulary report- | ing member banks in this district totaled $231769,000 on December 9, | 1931, in comparison with time deposits aggregating $238.204.000 on November 11 this year and $245375,000 on De- cember 10, 1930. Some decline. in savings and time deposits occurs in most years during November and December, due chiefly to with- drawals for holiday shopping, but the decrease reportcd for member banks between November 11 and - December ® was somewhat larger than usual Twelve mutual gs banks in Bal- timore reported deposits at_the close of business November 30. 1931, amounting to $212,948,740, a slightly lower figure than $213,710,081 of de- posits at the end of October this year but & higher figure than $198,623 483 reported for November 30, 1930, the bulletin announces, G. Clifford Howard, who for the past 30 years has been with the Washington t | Vice president of E. P. Schwartz, Inc., | has been elected president of the In-| | funds to New York and that there are | had been paid. Insurance Leader CLUB ELECTS E. L. MANTZ NEW PRESIDENT. ELMER L. MANTZ, surance Club of Washington, succeed- ing Aubrey J. Voorhees, manager of the Aetna Affiliated Cos, who served the club Jast year. Other officers elected at the annual| meeting include Hubbert R. Quinter, vice president: F. Douglas Sears, secre- tary, and Willlam T. Reed, jr., treas- | urer, The club’s information director | is Edgar K. Legg The club is made up of men engaged in" all the insurance fields but life underwriting. It was organized in No- | vember, 1922, and has enjoyed a most successful career since that time. Monthly luncheons, at which all mat- ters pertaining to fire insurance, bond- ing and a host of other allied prob- lems are given full discussion, are the features of the club’s activities. Nations in Effort To Meet Service On Loans by U. S. Latin American Countries Show Desire to Pay Obli- gations Promptly. By the Associated Press. NEW YORK, January 2—Several bankers said today that South Ameri- can countries and states are making strong efforts to maintain prompt debt service on American bonds, but in some cases are throttled by extraordinary foreign exchange difficulties. Dillon, Read & Co. announced re- ceipt, after enforced delay, of funds to pay the December 1 interest coupon | on the City of Montevideo, Uruguay, 7 per cent bonds of 1952. The city ex- plained that delay was due to shortage in supply of dollar exchange. It ad- vised that sufficient money in terms of Uurguayan pesos had been deposited in Montevideo before December 1, but it was possible to make transfer to New York in small amounts only, this was done during December until enough had | been shipped here to cover the pay- | ments. The National Bank of Argentina ar- ranged to meet New York payments for some of its accounts by shipping $3 515,000 gold which arrived in New ¥ today on the S. S. Western Prince. The | shipment was consigned to the National | City Bank. Through Speyer & Co. and J. Henry Schroder Banking Corporation, the government of the state of San Paulo announced that it had deposited funds | with the Banco do Commercio e In- | dustria, San Paulo, to take care of a | half year's interest on the state’s 40- | year 6 per cent bonds of 1928, but “Te- grets that owing to exchange difficulties | it has been unable *n remit any of these | no funds available in New York for the service due January 1, 1932" The bankers stated that January 1 coupons | of two other state of San Paulo loans FINE CROPS RAISED IN FIFTH DISTRICT Low Prices Were Main Drawback During 1931, Reserve Bank Report States. Special Dispatch to The Star. RICHMOND, January 2—The Fed- eral Reserve Bank of Richmond says to- day that farm work for 1931 has been completed except for some late har- vesting, but final figures on crop pro- cuction are not yet available. In the next Review a table will be printed con- taining production figures for the 1 ing crops of the fifth district for 1931, | 1930 and 1929. | In contrast to 1930, which was one of the poorest years on record for farming because of the very severe drought, 1931 conditions were excellent for nearly all crops and large per acre yields were made In the district’s chief money crops, cot- tor and tobacco, acreages were mate- rially reduced this year, but unusually favorable weather produced a larger | cotton crop than that of 1930 Both cotton and tobacco prices were lewer this year than in any recent year | and many other farm products were | scld at low prices. As a result, the De- partment of Agriculture estimates the | {otal value of 1931 crops in the fifth | trict at $352.113,000, a decrease of per cent under $483,051.000 for the short crops of 1930 and 46 per cent be- low $649.480.000 for 1929 crops. Farmers in the district raised large feed and food crops this year and are therefore in_better position to live at home than they were last year, in spite of the lower cash returns on this year's cperations. { office of the National City Co., has be- come associated with Y. E. Booker & Co., investment bankers, effective Jan- uary 1. Mr. Howard is well known in local financial circles and carries with him the good wishes of a host of friends. He is & native of Washington, was edu- | cated in the public schools here, is a graduate of the Georgetown Law School, class of 1913, and is a member | of the District bar. He began his financial career with the Union Trust Co., where he worked up through the ranks to the position of teller, resigning from that post in 1922 to join the sales organization of the National City Co. He is & member of the Columbia Country Club and the W Bond €luby - | commodities and | the, DUTLOOK N STOCK MARKET IMPROVED BY CREDIT AID MOVE Technical Bars to Recovery, Like Tax Selling, Have Been Removed. PROTECTIVE MEASURES WILL SOON BE IN FORCE American Financial Fabric to Be Shielded From Any Further Unsettling Attacks. BY CHARLES F. SPEARE. Special Dispatch to The Star. NEW YORK, January 2—What is to happen to business and to securities in 1932 will depend upon what is done in the next 60 days to restore international credit and to shield the credit of our own Government, and with it the in- tegrity of our financial institutions and corporations, from further attack. If the leaders in Europe and in the United States prove to be statesmen and not politicians and if national patriotism is put ahead of political advantage, we may expect to see a more satisfactory set of conditions and one permanently encouraging to industry and to invest- ment markets. During the next two months a solu- tion must be found for the German economic situation. Within this same period the American Congress must adopt a policy that will permit aid to banks and to corporations through some such agency as the Reconstruction PFinance Corporation. Congress must also formulate a program to meet the Gov- ernment deficits for the fiscal years 1932 and 1933. The matter of railroad wages that are to apply during the coming year must likewise be deter- mined. Inasmuch as in thes€ months most of the States and municipalities make up their budgets and fix the tax rate for the year, their primary con- cern should be that of economy of ad- ministration and the sacrifice of politi- cal advantage to the common good. Reperations Settlement Sought. The report of the Basel Committee is sufficient _groundwork on which to build up the case for a radical modifi- cation of the German reparations pay- ments. The next chapter will deal with the political espects of the case, which, unfortunately, have always had prefer- ence over the economic ones. As it looks today, the outcome rests mainly with France and Great Britain. Our Senators and Congressmen may talk about what they will or will not do con- cerning debt cancellation. If Germany cannot pay France, or Great Britain, or Italy, two of the three cannot pay the United States. The third will not. We might as well accept this at once and adjust our affairs to it. We may maintain a sacred political tradition. That does not influence a situation where ‘debtors are without means of satisfying their creditors. Recently attention has been shifted from the international credit status to the unsatisfactory surroundings of our own Government finances, We passed successfully through the acute stage of the “fiight from the dollar” in Oc- tober. Now we are dealing With a considerable amount of propaganda in! favor of cheapening the dollar; in other words, for inflation. The school of moderate inflationists is rapidly gaining followers. There is consicera- ble merit in their thesis, which is that deflation has gone as far as it should go; so long as deflation continues in in the various evi- dences of debt it is hopeless to ex- pect a revival in business. Inflation | | is possible through the functioning of a concern like the Reconstruction Finance Corporation, if the Federal Reserve Board is given authority to rediscount its bonds. It is obvious that we cannot continue much longer to let all forms of wealth join in an end- less sag. Loans vs. Higher Taxes. Involved in the protection of Gov- ernment credit is the congressional program of taxation. This boils down to the proposition whether it is best to cover the deficit with additional loans or meet the greater part of it with higher taxes. Some lessons should be learned by the action this week of United States bonds and Treasury cer tificates, which have been under gr pressure, in contrast to indications of recovery in_corporation bonds. The argument of those who are least in | sympathy with the plight of European nations is that they have been profli-| gate in their borrowings and have erected a financial structure that is toppling from its weight. Too late they have enforced a ratio of taxes to incomes that is imposing tremendous burdens on their nationals and leading | to_revolutionary political tendencies, Politically, it s expedient to exempt a large portion of the public from tax burdens. From the standpoint of Gov- ernment credit, it is dangerous. As Acting Secretary Mills of the Treasury Department points out this week, there is no good reason why a man with an income of $5,000 cannot aford to pay an annual Federal tax of $31.50. He might have gone further and applied the same argument in proper ratio to all income producers above $3,000. The list of those who make no contribution to the Government in the form of taxes though able to do so, is an astonishingly long one. There is no argument against placing the heaviest tax burdens on those with the largest incomes. The arithmetic of the situation is that this produces but a small portion of the amount required to cover existing Gov- ernment deficits. ‘The emergency com- pelling higher income tax schedules and the introduction of other forms of taxation is even greater today than it was in the years following the end of war. Call for Leadership. What the business men and the in- vestors of the United States today want to see is evidence of leadership in Washington and in banking and cor- poration circles in New York that, first of all, considers the restoration of sound economic conditions rather than po- litical opportunity or group advantage. They do not care a great deal whether this develops under a Republican or & Democratic administration. Looking at it from an unprejudiced standpoint, it would seem to the layman that the best way for the present majority in Con- gress to gain political strength would be to move quickly and sensibly in mat- ters concerning the credit of the Gov- ernment and of American_institutions nd corporations and, through the enactment of constructive measures, permit & gradual development of con- fidence with which American business could proceed at a better pace even chould " the cutcome of the approach- ing European conferences prove un- satisfactory. Some of the technical hindrances to recovery in the markets, such as selling to_establish income tax losses and to (Continued en Second Page.) - of the carriers within DON'T LET US DETAIN YOU GOOD RIDDANCE OF BAD RUBBISH I cAusIT &///o S IRAVNT SLEPT. A WINK SINCE — SI¥,SEVEN EIGHT-NINE— —ITS A WONDER, WE HAVE ANYTHING fl\"§ cerr ! P~ ,(1-3 i =Y PROMPT BANK LOAN ACTION PROMISED BY CREDIT HEAD By the Assoclated Press. RICHMOND, Va., January 2—John M. Miller, jr.. director of the National Credit Corporation for the fifth Fed- eral Reserve district, today urged banks desiring assistance to make application promptly and before an emergency to facilitate the work of the corporation “The National Credit Corporation has assets of half a billion dollars and | is prepared and anxious to place its funds wherever needed, Mr. Miller said Miller's Statement. Mr. Miller, who is also president of the First and Merchants Bank of Rich- mond, issued the following statement “The National Credit Corporation has been loaning freely to the People's State Bank of Charleston, S. C, with its 40-odd branches, and was prepared last night to furnish additional cash this morning to carry on, it only being necessary for the National Credit Asso- ciation No. 6 of South Carolina to ap- prove the collateral and assume its proper liability. “John M. Miller, director of the fifth Federal Reserve district of the National Credit Corporation, was in touch over the telephcne last night with officials of the National Credit Association of TIGHT MONEY RATES EXPECTED IN WEST Conservatism in Buying Is Looked for During Remainder of This Winter. Special Dispatch to The Star. KA S CITY, Mo, Entering the new ye: t extraorainary twelvemonth in its his- tory, the interior is secking to deter- mine just what is to be the history of Winter and early Spring. For "one thing, it anticipates a continued tight money market, loans kept to a mini- mum, conservatism in buying and a waiting attitude as_to expansion of nearly every sort. That this will be nlnl: situation until Spring seems prob- able. The loss in the dollar aggregate in the sale of commodities due to relative- ly lower price levels for both commodi- ties and products, the narrowing of profits for retailers and the static situ tion on the farms due to the storage of grain and the determination to waft as long as possible in hope of higher markets, all contribute to the =ity January t most er the | tion. On the other side are physical as- sets—growing wheat with a reduction of acreage and not too favorable condi- tion—both pointing to higher prices— grain and live stock on hand, the for- mer in excess of normal, giving hope of translation into constructive busi- ness force when domestic and foreign distribution is accelerated. In no year has the farm country opened the year with more material resources or great- er productive capacity, both of which should have their effect when a market upturn arrives. ; xAnn\ml meetings of interior banks will hear reports of the lowest earn- ings in a decade. The necessity of charging off frozen loans, the sm: return on reserves, losses in bond ac- counts for many, have absorbed the income, and fortunte are those that do not pass the dividend. The feeling is strong that the proper course of the rural bank is to &\fi{}l\lflc;‘i ns‘g:g::fucrb ofits for the present. and forget B srient, 1632 IMPROVEMENT SEEN IN BOND MARKET Railroad bond outlook is no longer down but distinctly up, in the opinion of J H. Lewis of Goodbody & Co., who cites three factors that place the rail- road industry in a favored position for the current year. They are (1) the emergency freight rate increase which becomes _effective Monday; (2) the “Reconstruction Finance Corporation, which will probably be made a work- able unit to make loans to railroads to meet maturities within the next month; and (3) the m“r‘;s:.‘cg:u‘b;om%:{ al cent reduction in ety South Carolina, and it appeared that the -officers of the People's State Bank of Charleston were unable to get to- gether promptly the collateral necessary to make additional advances. The Peo- ple’s State Bank, with its 40-odd branches, is scattered over the entire State of South Carolina, which made it difficult, if not impossible, to get to- gether promptly the securities necessary for additional large sums, which would be necessary to carry on the business | of its 40-odd branches. “The National Credit Corporation has assets of half a billion dollars and is prepared and anxious to place its funds wherever needed. Necessarily, the borrowing banks should look ahead and apply assistance promptly rather than wait until the eleventh hour. When applying banks delay until the eleventh hour and fifty-ninth minute it is sometimes impossible to render as- sistance in time to meet the emergency. Urges Co-operation. “The officers of the National Credit Corporation are working night and day, ising the wires without hesitation in ers of cases. The co-operation of eparate banks must be had and should not wait until the last minute.” 'BALTIMORE CUSTOM RECEIPTS DECLINE Drop of $1,064,670 for Year Is | Estimated by Collector Holtzman, Special Dispatch to The Star. BALTIMORE, January 2.—Customs collections at the port of Baltimore for 1931 were $1,064,670 under those of 1930, according to an estimate by Charles H. Holtzman, collector, ‘The figures were $12,137,583 for 1931 and $13,21 3 for the previous year. ‘The difference was attributed to the heavy withdrawal of merchandise from warehouses before the tariff law went into effect, July 1, 1930. Mr. Holtzman's report shows a marked decrease in shipping for the year, In 1930 1,670 vessels, American and foreign, in both ocean and coast- wise_trade, brought 5,302,659 tons to the local port. In 1931 the number of vessels dropped to 1,386 and the ton- nage to 4,380.909. Last year 1,384 vessels cleared Bal- timore with 4,393,364 tons, compared to 1679 ships and 5271442 tons in 1931 In domestic trade last year 70 American ships entered with 99,616 tons, while 1,644 cleared with 2,983,554 tons. In 1930 the entries were 1,347 with 2,760,021 tons and the clearances were 1,741 with 3,312,883 tons Imports last year were valued at $77,772,150, against $103,720,786 for the' previous year. Exports, excluding Porto Rico, were $34,353514, against $53,536,008. NEW YORK BANK STOCKS NEW YORK, January 2 (Special) — Soft from the start, as traders learned of two big bank failures, today's bank and trust share market finished lower. The market was largely influenced by 1 the closing of a large Hartford, Conn,, | | bank. | ,, Bankers Trust at 57 was off 6 points, though the company, after setting up a contingency fund of $12,000,000 from undivided profits, equal to $3.05 & share on its capital stock, reported a deficit | of $4,367,000, or $1.75 & share, whicn | compares with earnings of $4.70 a share in 1930, Chemical Bank & Trust Co. was off ‘% at 24'4, as it showed profits of $2.44 a share in 1931, against $2.25 a share in 1930. Brooklyn Trust at 158 was off 4; Central Hanover, 130, off 7; Chase National, 2812, off 1:; Chatham- Phenix, 171, off 1i; ional City, 36%, off 1%; Commercial, 135, off 1 Continental, 1313, off ; Corn E: change, 58, off 3; Empire, 24, up 14; First National, 1,870, off 30; Guaranty, 1252, off 9; Irving, 16%, off Ja; Man- hattan, 28%, off 1%; Manufacturers, 275, off %; New York Trust, 69, off 314 Public, 1915, off 1%, and Guarantes Title & Trust, 54, unchanged. . . INVESTMENT BOND MARKET IMPROVES Rebound in United States Is- sues Gives Better Tone to Other Securities. By the Associated Press. NEW YORK, January 2.—The in- vestment market wound up the last week of the year in a much better frame of mind than it had the previous week. While prices were not a great deal better, when the long decline of September, October, November and De- cember is considered, the large volume | of oppressive liquidation seemed to have dried up. United States Government bonds, after sliding swiftly down to their low- | est levels in a decade, rebounded sharp- |ly when the close of business on | Wednesday removed the last chance for showing capital losses in these is- sues on the 1931 income tax return, except to those willing to accept the expensive medium of cash sales on Thursday. In regard to Government bonds, a curious situation existed at the end of the week. The average price of 3.25 per cent which the Treasury was forc- ed to pay on Monday for $100,000,000 for 91 deys was the highest of the year and compared with the low of less than half of 1 per cent earlier in 1931. It was thought at the time to presage a period of sharply higher money rates, a year end money squeeze that might force bond prices much lower. Ordinary common sense might have dictated that a time when commercial demand for | money was at the lowest ebb in 10 | years, the year end squeeze would be much under normal, but there was a considerable volume of tax selling go- | ing on, tcgether with corporation bal- | ance-sheet dressing, and the result was | heavy pressure on Government bonds. As a matter of fact, the tightening. of money rates was hardly perceptible. ‘Time money was only slightly higher and by no means justified the yields of 410 to 4.37 per cent for Govern- ment bonds and the 6 per cent basis on which many prime municipals were selling. The result was that the very men who sold their Government issue. in such a hurry bought them back even more hurriedly and there was a sharp | recovery that was, to a great extent, | reflected in corporation bonds, foreign |and domestic, and in foreign govern- ment descriptions. Railroad bonds had some reason for | recovery in the voluntary wage reduc- tions accepted by the shop employes of the Southern Pacific and those of a few other roads and in the slightly better earnings reports anticipated for December. But many of them were still under pressure of forced liquida- tion and could not get far from their lows. Virtually the same thing applied,{ to junior industrials and utilities. The prime corporation list followed govern- ments. As the new year opens It is increas- ingly apparent that the crucial factor in the whole investment situation here and abroad is the foreign situation. Wall Street, Is convinced that nothing short of cancellation of reparations and war debts or, failing that, a five-year moratorium, which would be auto- matically renewed in the absence of ability to pay, will revive international confidence to the point needed for trade recovery. (Copyright, 1832) Huge i)ividend Payment. NEW YORK, January 2 (Special) . — | Dividends and’ iInterest payable today | approximates $1,000,000,000. They are from 10 to 12 per cent less than in Jan- uary, 1931. One compilation shows & decrese n dividends declared in Decem- ber, many of them not payable for a month or two, to about $200,000,000 less than the amount declared in the same | month in 1930. Part of the disburse- ments now being made will go back into securities, another part will be deposited in savings banks and the remainder will follow the normal course of employment covering the regular bu of those to whom they are due, ECONOMIG UNREST TRACED 0 LOSSES FROM WORLD WAR Other Causes for Unsettle- ment in Trade Given by Economist. COST OF CONFLICT PUT AT 80 BILLION DOLLARS Continuance of Rivalries Among Nations Has Retarded Recov- ery in Business. BY DR. MAX WINKLER. Special Dispatch to The Star. NEW YORK, January 2—Economic phenomenas do not always lend them- selves to reliable diagnosis. The num- ber of intangible elements is usually too great to justify one’s implicit faith in prophecies, irrespective of the repute of the prophet. The remedies prescribed may, there- fore, prove beneficial or futile. They will—except by pure accident—in all probability prove of little or no value it they are based solely upon the va- rious mechanical devices and imple- ments manufactured in the countless economic laboratories and workshops. An honest economist can, therefore, do nothing except state what has been and what, in his opinion, continues to be wrong, and suggest that inasmuch as similar occurrences have been over- come on previous occasions, the dis- turbances of today will also be sur- mounted. Chief among the causes— real and imaginary—of the present economic unrest, one finds the fol- lowing: Losses Resulting From War. According to careful estimates pre- pared by an American economist, the war cost over $80,000,000,000, gold. To grasp the significance of this sum, we need but point out that it represents 25 per cent of the total wealth of the United States. Although'this huge sum was consumed within the relatively short period of four years, it may take decades before the actual damage is made good, to say nothing of the spir- itual and moral damage, which is ir- reparable. Major catastrophies have in the past resulted in the creation of large debts, which those involved were obliged to assume toward their neighbors. In other words, the vanquished was con- demned to indemnify the victor. To the defeated, however, indemnity was tantamount to tribute, which few na- tions are willing to discharge. As re- gards the victor, large payments often make for excessive speculation, reck- less spending and inexcusable extrava- gance. Continuance of rivalries and hatreds among nations, with the resulting lack of confidence in each other, is ap- peased by huge military expenditure. Even the United States, avowedly a peaceful and peace-loving nation, spends & very considerable part of her total revenue for the Army and Navy. That such expenditure by the United States, as well as by the rest of the world, constitutes an unpardonable eco- nomic waste, is manifest. Disarma- ment conferences are held regularly, and the desirability of disarming is freely admitted. Each nation, however, expects the other to lead, and another conference is the inevitable result. High Tariffs. The war has resulted in the estab- lishment of a large number of new states and “statelets” on the European continent. Each of these new creations, many of which have been made independent long betore they were ready for such step, has its own ambitions and de- sires. It aims at economic and finan- cial independence, having already been given political independence by the treaties of Versailles, St. Germain, Neuilly, Sevres, etc. We need only recall the Austro-Hun- garian monarchy, which, prior to the war, constituted a rather perfect eco- nomic unit, even though, politically, the dual monarchy was distinctly unstable. By ‘“virtue” of the provisions of the treaty of St. Germain-en-Laye, the country was divided into countless in- dependent_units. Whatever little was left was also condemned to independ- ence. To aggravate an already difficult situation, the most powerful creditor nations enacted most extravagant tariff laws—a policy which is being emulated by other nations to a greater or lesser degree. Commercial history is replete with instances to the effect that low tariffs or even free trade need not necessarily impair or destroy the economic self- sufficiency of nations. Genuine com- petition is beneficial, is conducive to greater progress, and is, in consequence, not to ‘be feared. Artificially-created competition, on the other hand, is ad- mittedly a serlous cause of market dis- organization, and often leads to con- flicts between natlons. Unsettled Affairs. Examination of conditions obtaining ' abroad does not reveal much that is encouraging. Latin America has just gone through a number of revolutions but the situation is still far from satis- factory. Wholesale defaults on con- tractual obligations have occurred. In- dia is restless. Chaos reigns in China. Australia’s finances are precarious. Economic conditions in Japan leave & good deal to be desired. Russia con- tinues the great enigma: she is both feared and ignored. England and the Scandinavian countries have abandoned | the gold standard. In Germany, Hit- lerism and Fascism are regarded as a enace to the peace of the world; their protagonists’ cause is helped greatly by the unsetiled reparations problem. A new war is pzmphesied. Ludendorf, er: leader of Ger- man soldiers, has even ixed the date of the outbreak of hostilitles—May 1, 1932, Why not April 17 The venerable prophet-general would seem to be pre- cisely one month late. ‘The gold scare has been with us since time immemorial. It affords a rela- tively simple way of explaining certain economic phenomena. It may be said to have its counterpart in “Russian dumping” or “European selling” or “bear raids.” The “Institut Fuer Konjunturfors- chung,” a branch of the German gov- ernment Bureau of Statistics, for ex- ample, is definitely of the opinion that “while examination of the various gold theories establishes a certain similarity in the movement of gold reserves and price levels, there still is no incontest- able proof that gold supplies are the cause of price fluctuations.” The main difficulty—if it may be termed such—seems to reside in the maldistribution rather than the threat- ened diminution of gold. The total amount of yellow metal approximates $10,700,000,000, of which th> United States'and Prance hold sub- (Continued on Seventh Page.) | i since October $22,000,000. FOREIGN BUSINESS AGTIVITY REMAINS OW DURING WEEK Bright Spot in Picture Is Drop in Unemployment for England. COMMODITY PRICE INDEX HOLDS AT RECENT LEVEL Values of Securities Begin Year With Slight Gain—Wage Cuts Numerous. Special Dispatch to The Star. NEW YORK, January 2—Cable and radio dispatches to the Business Week give the following survey of business abroad for the week ending today: Europe—The year is closing with activity at the lowest point yet reached, except for the degree of inflationary activity in England reflected in the substantial drop in unemployment, which is in striking contrast to record levels in all other countries. Commod- ity prices are stubbornly holding to levels of recent months. In fact, the current period of price stability is the longest since the depression began—— with jute alone showing an appreciable recent decline, while tin and copper have substantially advanced. Security values are slightly above the year’s lowest. Exchanges are rela- tively steady; sterling is benefiting from India’s unprecedented gold ship- ments, reflecting liquidation of India's hoard as natives cash in at the higher | purchasing power obtained since gold is at a premium. Berlin.—The all-around price and wage cuts are proceeding in accordance with schedules in the last emergency decree. In spite of favorable public reaction and of the loyal support of Bruening’s action by business, doubts are increasing as to whether a final price adjustment downward of only 10 per cent'is sufficient to meet currency depreciations among competitors, and whether Germany finally will not be forced to devaluate the mark to a basis of 80, possible, 70, pfennings, in spite of all the sacrifices imposed in the de- cree and met by business. Business Quiet. Business since Christmas is reflecting a greater than ordinary lull. Christ- mas trade, in spite of foreseeable fur- ther price cuts after New Year, was generally above expectations, notably for clothing and shoes. The number of unemployed in mid-December was 5,349,000, an increase of 290,000 for the half month. To labor observers this sug- gests that the Winter peak may sur- | pass the 6,000,000 total onwhich finan- cial relief calculations were based. Paris.—Domestically, conditions are steadily going from bad to worse. Christmas week brought another 13 per cent increase in unemployment, which is estimated now to total 3,000,000 when unregistered part-timers are in- cluded. Metallurgical and coal con- sumption are down 23 per cent: rail receipts are off 13 per cent. The Bank of France's dividend of 385 francs com- pares with 630 francs last year. London.—Business was more slack than usual during the Christmas sea- son this year but the better stock mar- ket tone, despite the small volume, is encouraging. The firmness of ster- ling confounds the prophets but they believe it is due to the large influx of Indian gold, which between December 13 and January 9, will average nearly £2,500,000 per week, with the aggregate ‘There is in- | creasing prospect that employers and weavers will come to no agreement be- fore the present hours and wages con- tract terminates at the end of the year. This means stoppage in the tex- tile industry, which will react badly on general industrial morale, already slid- ing from recent buoyant heights. Conditions in Italy. Milan.—Apart from the transient Christmas stimulus, conditions continue to be severly depressed and prospects are uncertain, but, comparatively, Italy is better off than many other European countries. Briefly summarized, the sta- tus of the principal indicators near the end of the year is as follows: (1) Stock Exchange—Weak and dull, notwitbstanding the recent financial reorganization; year end prices may be expected to average 20 per cent below last year. (2) Industry — Consumer industries are feeling the usual slackness following the termination of seasonal activity during the two previous months. Basic industry is dull, though less depressed than elsewhere. (3) Unemployment—The increase of 64 per cent over last year to 878,000 at the end of November is relatively unrepresentative since it far exceeds the degree of business decline which caused it. 'CANADA’S BUILDING OUTLOOK IMPROVES New Construction Permits In- creased as 1931 Neared Business Close. Special Dispatch to The Star. MONTREAL, January 2.—Canada's building outlook continues favorable and gives promise of a decided upturn in 1932, says a bulletin just made public by the department of immigration and colonization of the Canadian Pacific Railway. “Proposed new construction through- out Canada during November amounted o $42,545,100, as compared to $41,348,- 800 during the préceding month,” the bulletin pointed out, “and comfortable gains in the building industry are an- ticipated this year. “‘Actual contracts awarded during the first 11 months of 1931 totaled $304,- 224,760, & decline of approximately 25 per cent from the figures for the cor- responding period of 1930, but leaders in_the building industry point out that a large amount of this decline can be attributed directly to lower costs of building materials. That proportion of the decline which cannot b attributed to lower building costs is relatively small and is easily balanced by the fact proposed new construction was on the increase as the year neared its end.” Stock Questionnaire. NEW YORK, January 2 (®).—The Stock Exhange Committee on Business Conduct has requested members of the exchange to furnish a list of all trans- actions in Eitingon-Schild Co. preferred stock between November 16 and Decem- of the question-