Evening Star Newspaper, February 28, 1932, Page 59

News of Markets Pages 1 to 4 FINANCIAL AND CLASSIFIED he Sunday Sk Classified Ads Pages S to 12 Part 6—12 Pages WASHINGTON, D. C, SUNDAY MORNING, FEBRUARY 28, 1932. BANKERS CHEERED BY RECENT CHECK UPON SUSPENSIONS Onlv Eight Institutions U. S. Were Closed During Last Week. in REOPENINGS REPORTED FROM SIX LOCALITIES Glass-Steagall Legislation Is Ex- pected to Prove Stabilizing Influence. BY EDWARD C. STONE. Decline in the rate of bank suspen- sions throughout the United States continued during the week just passed, according to the American Barker, which lists but eight closings during that period. At the same time six banks were re-opened. Furthermore, no national bank failures have been re- ported since February 19. The declining trend in bank suspen- sions in February is reported as fol- lows: For the week ending February there were 66 failures, for that ending on the 11th 32 were noted, for the week ending the 18th there were 27 and for the past week but 8. Local bankers said yesterday that they considered the change in trend in bank suspensions as one of the most vital developments in many months. ‘The sudden decrease in suspensions and voluntary _ liquidations from the late months of*1931, and even in January of this year, is most encouraging, as it means a great deal less money is now being tied up in banks with closed doors. The Glass-Steagall legislation is cer- tain to mean a still further clarifying of the atmosphere, in the opinion of banking leaders in this city. Loans from the Reconstruction Pinance Cor- porgtion will thaw out assets and put vast sums of money back into circula- tion at a time when it is most needed. It looks as if the “bank panic” which has swept other sections of the coun- try so vigorously is practically ended, District bankers asserted yesterday. More D. C. Convention Plans. The prominent place that women are taking in public affairs is again in evi- dence in connection with the four- teenth apnual convention of the Dis- tr of Columbia Bankers’ Association. | Fach year shows an increased attend- ance of the wives and daughters of bank officials, as well as of women engaged in the banking business itself. Many of them attend the business sessions of the convention, and, of course, make its social features an attractive part of the general program. Selection of Hot Springs, Va. this year has been highly commended by the feminine contingent and General Chairman Claude H. Woodward has appointed a women's committee to be headed by Mrs. Christopher H. Pope, ‘wife of the acting president of the asso- oiaticn, as chairman. She will be as- sisted by Mrs. George O. Vass as vice chairman. The other members of the committee are Mrs. Frederick H. Cox, Mrs. Charles H. Doing, Mrs. Albert S. Gatley, Mrs. Edward L. Hillyer, Mrs. Lanier P. McLachlen, Mrs. Frederick P. T. Siddons, Mrs. Sidney F. Talia- ferro, Mrs. Eliot H. Thomson and Mrs. Claude H. Woodward. Mrs. Pope is sending her committee notice of their appointment and inviting them to a meeting for planning a pro- gram of interesting events to feature their stay in the Virginia mountains next June. Last year it included golf tournaments, bridge parties, teas, swim- ming contests and automobile trips through many of the beautiful moun- tain resorts, besides the usual dancing after dinner. Insurance Men Hold Conference. ‘The Crowley & Marr agency of the Penn Mutual Life Insurance Co. held an all-day sales conference in this city yesterday, conducted by E. Paul Hut- tinger, manager cf the training depart- ment, and James E. Preston, both from the home office in Philadelphia. Local agents took an active part in the morn- ing program, after which the entire organization ' went to the Shoreham H:tel for luncheon. The afternoon pro- gram was held in the hotel. The Penn Mutual is recognized as having an unusually well organized training department for the selling of insurance. This fact is proved by the increase in sales in recent years. One of the interesting statements made yesterday showed gains in new business in the Washington agency in both January and February as com- | pared with 1931. Pennsy Dividend Held Uncertain. Calling attention to the fact that net Income for 1931 was insufficient to pay the year's dividends, which aggregate 6': per cent, W. W. Atterbury, presi dent of the Pennsylvania Railroad. d ared in a message to stockholders ye: torday that “quarterly dividends can- not be continued unless there is a ma- terial increase in the company's in- | come.” The message accompanied a quarterly dividend of 50 cents per share, equal to 1 per cent. This dividend brings the ! total for the year to $3.25 per share, | “the greater portion of which was charged against the surplus of previous years,” President Atterbury said. I Despite a_reduction in operating ex- penses of $74,317,250, or 17.4 per cent, in 1931, the statement pointed out, the | 1ailroad’s net income equaled only $19,- 545,194, or 2.97 per cent, on the capital | stock. In 1930 the net income equaled 10.55 (per cent of the capital stock. (3@:;3; Fevenues for 193] decreased $122,- | 7 , or 1.5 er With 1930 pe cent, compared “Notwithstanding the low level of current business activity,” President Atterbury said, “several important rac-‘ tors are developing which give the fu- | ture a more constructivé and perspective.” sty Trading Confined to Bonds. Trading on the Washington Stock | Exchange yesterday was confined to Washington Gas Light 6s, series A. The market opened with a small bond sell- ing at 993. Three more $1,000 trans- actions were recorded at 100, the same quotation as noted on Friday, when there were 10 separate $1000 sales. These gas bonds have recently been more active than any other issue on the exchange. After the regular trading yesterday the unlisted securities were called off, but no changes were noted n the quotations. Of interest locally were two bank divi- dends just declared in New York. The Irving Trust Co. will pay 40 cents per share on April 1 and the Continental i {of banks amounted to approximately | deposits to increase, but the start of Urges Thrift A. B. A. HEAD POINTS WAY TO PROSPERITY. | HARRY J. HAAS, Leader of the country's largest organi- zation, declares that nothing has taken place during the present economic situ- ation to replace the old habit of per- sonal saving. Looking at the past, let us learn something for the future, is| his plea to bank depositors. PRACTICAL SAVINGS Head of Bankers’ Association Calls for Return of Thrifty Habits. Harry J. Haas, president of the Amer- ican Bankers’ Association, has issued a new call to thrift, in which he makes a practical plea to bank depositors to follow the old roads to prosperity. Thrift is a word to conjure with, he declares in the Bankers’ Journal, add- ing that “its workings are an open book to those who have practiced its teach- ings, but a mystery to those who know it not. Thrift must be the economic corner stone in the era of financial reconstruction that we are now enter- ing. I use thrift not merely as a catchword of prudence, but as a con- crete financial fact of importance in business stability. There is no general economic panacea for prosperity which can replace the good old-fashioned habit of personal thrift,” the banker asserts. “Make & budget to cover your expenses and allow a fair share of your income to be laid aside for the rainy day. Make a will, so that when you die your savings shall be distributed as you de- sire and not wholly accor to intestate laws. Provide out of your in- come an ameant according to your ability for the ;"ament of life insurance premiums as a sure means of savings and providing $r your family when you have pashf®l away. Build your air castles if you like for a future home and they will most likely come true if you approach them along the safe highway of thrift. Bound to Prosper. “If you will do these things constantly and persistently you are bound to. get | ahead financially. Then when the time arrives that you have funds for invest- ment, be sure to make your inquiries before you buy. Your banker will be glad to assist you. He is interested in your prosperity because as you progress so does his bank. “You may feel that the amount ybu have in your savings account is not of any great importance, but those who have savings in a bank to fall back en in the event of unemployment will tefl you differently. “Too many people fail to save as they should during prosperous times and when reverses come they are unpre- pared to bridge over the lean period until good times come again. Answers Attacks on Banks, “Some people seem to have the idea that banks are overburdened with money and that if they would loan it more freely to finance construction and other projects that it would be| the way to give business the needed stimulant and decrease unemployment. While the total of deposits in all classes i $53,000,000,000, and large as these fig- ures seem, they are $3,000,000,000 less than they were four years ago. “To meet this reduction banks have had to reduce their loans and invest- | ments accordingly. After all, the | money in banks does not belong to the | banks or bankers, as such, nor coes it originate with them. It belongs to the | depositors of the banks and only as| the deposits increase are banks able to extend new loans to their customers. It is true that loans themselves cause | this upward movement must first come | from the deposits. “Looking back at the past, let us learn something for the future.” DULL BUT FIRM MARKET EXPECTED BY TRADERS Special Dispatch to The Star NEW YORK, February 27.—Over 75| per cent of the current stock market trading, which has averaged around 900,000 shares a day since Tuesday, represents the operations of profes- sional traders. They have no fixed po- sition on the market and devote their time to scalping small profits. Direct commission house business is insuffi- clent to pay even the minor items in overhead costs. ‘The general impression is the market | will continue dull for some time, but steady, and tha! this is the way the substantial interests in the Street would have it. They are anxiods to give the Reconstruction Finance Corporation and the new banking bill an oppor- tunity to justify themselves before en- couraging ‘the public back into securi- es. charges, amounted to $366,708, com- pared with net operating loss of $84,- 142 in 1930. Loft, Inc., owns about 71 per cent of the capital stock of the Happiness Candy Stores, Inc., which in 1931 operated at a net loss of $73,899, allocable to Lof! as its proportion in the total loss resulting from Happiness Candy. The level of industrial and commer- Bank & Trust Co. will pay 30 cents per share on March 15. : Loft, Inc., operator of restaurants and confectionery stores, one in Washing- , ton, yesterday reported that net operat- ing profit for 1931, after interest, de- preciation, amortization and other cial activity is still slowly subsiding, but a belated and possibly brisk Spring PN IS NDDRSED STOCK PRICE GAINS LAID T0 IMPROVED BUSINESS QUTLOOK Securities Markets Are Re- flecting More Cheerful Trade Sentiment. INDUSTRY FINDS HOPE IN CREDIT RELIEF WORK Gradual Recovery From Financial Stringency Is Now Gen- erally Expected. BY CHARLES F. SPEARE. Spectal Dispatch to The Star. NEW YORK, February 27.—To those in whom pessimism has become in- grained the past two years and who re- act only to the movements in stocks, the first two months of 1932 represent a net loss. On the other hand, where there | is a willingness to acknowledge the ulti- mate benefits of remedial measures, it 15 possible to see the distinct change in sentiment that has developed through- out the business world and to locate the points at which improvement has becn established in investments and in bank- g. If it is true that stocks have not re- sponded with enthusiasm to the cron- structive program for credit relief, it is also a fact that we have enjoved, since the middle of December, the long- est period of freedom from deeply dis- turbed security markets in a year and a half. Apparently a level has been reached, both in stocks and in bonds, where intrinsic values are being recog- nized. The average investor is thinking more in terms of what he should buy than in how much of his portfolio he should reduce to cash or replace with Governments. Bank liquidation is no longer a source of anxiety. Where it is necessary. it is being regulated to the current absorbing capacity of the market. For over two weeks the bond average has shown a steady daily advance. The additional gain this week in all Treasury issues is one of the most accurate sigus of a new attitude on the part of the public to- ward its investments. Most of it oc- curred before the rediscount rate in New York was reduced to 3 per cent on ‘Thursday. Credit Relief in Operation. Beginning with the creation of the National Credit Corporation last Octo- ber, the past four and one-half months have brought into action a group of credit relieving agencles that will, in time, leaven business affairs. It is only fair that they should be given a chance to function before they are condemned as inept. If, however, 60 or 90 days hence, loans to banks, to railroads and to other companies by the Reconstruc- tion Finance Cerporation have not put the borrowers on their feet, and if the more liberal discounting opportunities to member banks in the Federal Reserve System and to their correspondents, have not lifted them to a higher credit status, it will be time to condemn these agencles as ineffective and go back to burying gold in the ground. No one expects that they will, sepa- rately or together, work miracles. The troubles that have arisen since October, | 1929 are too numerous, too deep-rooted and so widespread that they cannot be cured by a sudden transfusion from a new-born credit agency to some debili- tated corporate body. Their whole pur- pose is to check the ravages of a disease and then gradually to rebuild the invalid to health. Most of this year is likely to be occupied in a process of slow con- valescence in security markets and in| industry. Furthermore, this recovery will not be uniform. There are businesses so far gone that they cannot live, however herofc the rescue work may be. There are others that will be compelled to dis- continue dividends. Their securities will fall behind in any general upward | movement. From _present indications there will be many more dividend ad- {justments in the next three months, eflecting falling profits during the past year and a half and the unwillingness of boards of directors to encroach fur- ther on their cash reserves. This week has brought a radical change in the dividend status of such prominent con- cerns as Aluminum ®Co. of America, American Bank Note, Commercial Sol- vents, National Surety, Worthington Pump & Machinery, United Corpo- ration, Union Carbide & Carbon, Hud- son Motors, Commercial Credit, General Railway Signal and New York Transit. At no period of the depression has there been a sharper downward trend in the average of corporation dividends than since the first of January. Conditions in Business. Such adjustments in profit sharing always increase in momentum toward the end of a depression. They coincide naturally with what is now being wit- nessed—sharply declining railroad earn- ings, a fall in iron and steel production, weakness in metals and, notably this week, in silk and in rubber, a 15 per cent drop in retail trade, stagnation in building construction and suspended animation in the motor industry. In each one of these different lines of busi- ness, however, there is the belief that prices of securities and of commodities have gone through a natural liquidation and today represent intrinsic values, or values under the cost of production, and that they are now in a position to re- spond to a moderate degree of artificial stimulation. Where there were 10 peo- ple two months ago worrying about deflation, one may be found today who is concerned with the possibility of in- flation. The question is frequently asked. if there is to be recovery, where will it start? It is argued that the rebound from the 1921 panic was promoted by tne boom in building, but that now the country is overbuilt. It is further stated that the automobile industry has ex- panded beyond reasonable proportions; that it will be some time before neces- sary replacements or the purchasing power of the public can develop another era of production to stimulate the iron and steel trade and return to carriers that prospered from automobile traf- fic their former revenugs. A likely source from which the busi- ness world will Tegain its health is from a rise in agricultural products, for until toe farming communities of the coun- try are able to sell their products at a profit the distribution of goods and the mcvement of high-revenue freight will be of relatively small proportions. The history of other panic periods has been that industry improved when farm products stopped going down and began to point to a higher level. Investors Hold Key. Whether this will happen again re- mains to be seen. Actually or indi- vectly, the unwillingness to consume spurt is still expected as soon as the effect of the administration’s financial measures is felt and low-price automo- bile production gets under way, says the Business Week. » [} goods ot the normal rate has been in- fluenced by the tremendous decline in securities and by the fall in the income from them. More investors have been disturbed by the depreciation in their THAT RELIABLE LOCATION MARKER TRADERS WATCHIN SHORT SALE PROBE Market Followers Also Await Result of Government Credit Aid Program. BY GEORGE T. HUGHES. Special Dispatch to The Star. NEW YORK, February 27.—Seldom if ever during the long bear market have professional operators been more reluctant to take a stand on either side than they are today. The outside in- trest is non-existent, so far as actual trading goes. Undoubtedly the quota- tions are carefully followed and un- doubtedly there is a potential interest in the market, but it is not productive of commissions nor does it increase the | volume of transactions. One- cause of the inactivity is_the controversy over the part short selling plays in the economics of the market. Needless to say, the majority of active traders are on the side of President Whitney of the exchange, and indorse his defense of the practice made before a .congressional committee. It is fait to say that there is a minority in the Street, but until it is apparent just what action Congress will take, if any, both buying and selling are restricted. The efforts of the administration to bring_deflation to a halt and to turn the business tide are viewed sym- pathetically and hopefully, but until signs of business activity, and in in- is disappointingly small. been too many false starts to allow of any discounting marketwise of trade revival. In no one quarter would improvement railway field. The January earning statements proved a bitter pill even for speculators and investors, who have taken so much unpleasant medicine in the past two or three years. Earnings ou~ht to be a little better in the Peb- ruary reports, if only because they will refloct the wage reduction; and yet whet is wanted is increased traffic. | When that comes, it is a safe guess that the market response will be im- mediate and emphatic. ‘The most hopeful feature of the trad- ing this week has been the fact that various industrial stocks, of the type generally designated as specialties, which have been able to report larger earnings than in the corresponding period a year ago, have moved ahead regardless of the trend in the general list. There are not many of these, but there are some prominent ones. Strangely enough, stocks have not t been helped materiaily by the improve- ment in bonds. It may be that the rise in the fixed interest obligations has not been emphatic enough to influence the buying of equities, or it may be that the movement in the senior securities is dis- trusted as “artificial,” but whatever the cause, the fact remains. (Copyright, 1932.) C May End Radio Contract. NEW YORK, February 27 (P.—A Wall Street report is to the effect that ration of America, General Electric Co. manufactured radio sets since 1929, may be terminated on April 30. It is said that ending of the contract will remove one of the principal objections of the United States Department of Justice to the relationships of Radio Corporation with other leading manu- facturers of radio equipment. capital than by the decline in_their dividends, so it is reasonable to expect that if prices, after stabilization, show a tendency gradually to advance, Own- ers will spend with more freedom. The wide distribution of securities in the past 10 years has created a force and a body of opinion- that may have a stronger effect in promoting trade ac- tivity than that previously exercised by agriculturists. To a large extent, how- ever, any benefit to the one class will be participated in gy the other, (Copyrilfat, 1932.) these efforts bear® fruit in tangible | come statements, the market stimulus | There have | be made more welcome than in the | the contract between the Radio Corpo- | and General Motors Corporation, under | which the automobile company has/| D. C. Retail Food | | Prices Now Show | 20 Per Cent Drop |Sharp Cut in January Brings Cost Below That ' of Last Year. Retail food prices in Washington are 20 per cent lower than during the corresponding period of last year, the Labor Department’s Bureau of tistics reported. During the 30- period ending January 15 prices for ‘;reull food dropped a total of 6 per | cent. | An average drop of 4!; per cent was noted by the bureau throughout the country, based on reports received from 51 principal cities. The yearly decline | for the Nation averaged 172-3 per cent, according to the report. Strictly fresh eggs, the bureau’s sta- tistics show, have taken the greatest | drop of any single commodity, declin- ing during the past 12 months 23 per cent, At some Washington retail stores eggs were selling yesterday at 18 cents |a dozen. The onion market was re- | ported to be up 27 per cent, in com- parison with the figures made public | during the corresponding period of last ear. " Norfolk, Va., was the only city re- porting an increase in prices, the mar- ket there being up 1 per cent! Washington was 2 per cent higher |in its prices than Birmingham, De- troft, Little Rock and Springfield, IIL, which revealed a record decline of 22 per cent during the year. $46,717,367 LIKELY IN OIL DIVIDENDS Estimate for First Quarter Not Far Below Last Quarter of 1931. - Special Dispatch to The Star. i NEW YORK, February 27.—Cash dividend payments by the companies of the Standarq Oil group in the first quarter of 1932 are estimated at $46.- 717,367 compared with $48,530,230 in the fourth quarter of 1931 and $63,- 101,997 in the first quarter of 1931, ac- cording to records compiled by Carl H. Pforzheimer & Co. Two companies have not yet taken action’on their divi- dends for the first quarter, but in the present compilation regular payments are assumed. ‘The decline in payments in the first quarter of this year compared With the same period of 1931 reflects in part | the passing of the dividend by Prairie Pipe Line Co., which paid $3,037,000 in the 1931 quarter, and a reduction in payments by several other companies. Standard Ofl Co. of California re- duced the quarter dividend rate from 621, cents to 50 cents a share in the current quarter, while Standard OIl} Co. of Indiana reduced the rate from | 50 cents to 25 cents quarterly in.the | third quarter of 1931. Food Stocks. NEW YORK, February 27 (Special). | —While not depression-proof and show- ing decreasing earnings toward the end of 1931, the stocks of the food com- panies have stood out in contrast with those of most other industrials. ~Two of them, National Daily Products and United Biscuit common, have this week touched the best prices of the year. General Foods is within a_fraction of its 1932 high. National Biscuit and Borden are still several points lower than in January. The dividend record of this group so far has been most satisfactory to shareholders, though it may not be maintained indefinitely. 7L gy State and City Financing. NEW YORK, February 27 (#).— State and municipal financing sched- uled for next week totals oply $7,357,- 864, according to the Daily Bond Buyer. This compares with $24,684,672 as the past week's total, and a weekly aver- age for the year to date of $17,033,732. | in order COVERNMENTBOND BUYINEINGREASES U. S. List Features Trading of Week, With Sharply Rising Trend. Special Dispatch to The Star. NEW YORK, February 27.—While the average level of the list of corpo- ration bonds still lingers a shade under its January high, United States Gov- ernment long-term bonds have recov- ered more than half of the ground lost in the terrific liquidation of 1931 and are at new 1932 tops in virtually every case. With such leadership and a rec- ord of 12 successive days of a rising trend, the immediate prospects of the bond market are considered better today than they have been for many months. The surface factor in the week’s sharp advances, of course, was found in the cutting of the rediscount rate of the New York Federal Reserve Bank from 31, to 3 per cent. This followed closely similar reductions by the Cen- tral Banks of England, Swéden and other European countries. It indicated a basic trend toward a cheap money market which cannot be entirely as- cribed to the emergency measures taken by President Hoover and his cabinet to check deflation. As a matter of fact, it the only in- fluences in ' this_direction were those resulting from administrative action at Washington, there is little doubt but that the market would have adopted a waiting attitude—having in mind the falure of artificial stimulants in the cotton and wheat markets in the past two years. 1t can further be deduced, from the movements of the bond list, that there is a sound basis for the present upturn other than the prospects that the Re- construction Finance Corporation and the Glass-Steagall banking bill will aid finance and industry. The very situa- tions with which these mildly infla- tionary measures were instituted to cope have been the slowest to respond. Rail- road bonds maturing this vear, and which, if not met, would precipitate the | roads concerned into receiverships, have not had any large degree of improve- ment. The one exception to this is the Cot- ton Belt road, whose conselidation mort- gage 4 per cent bonds. jumped about 7 points on Friday following an announce- | ment that the road had applied to the Interstate Commerce Commission for authority to issue nearly $40,000,000 of general and refunding mortgage bonds to pledge them as collateral with the Reconstruction Finance Cor- poration, to_which the casrier has ap- plied for a loan sufficient to take care of the June 1 maturity of the $20,757,- 750 Consolidated 4s. But the Cotton Belt has, in addition to the expected Federal aid, the probability of its ac- quisition by the Southern Pacific as & cogent reason why its bonds should be selling closer to an investment basis. The municipal market, while it pro- gressed somewhat because of its in- clination to follow Government bonds, was still not much better. A great deal more trimming of budgets and expen- sive refunding of issues optimistically placed to pay for the extravagances of the years of prosperity will have to be done all over the United States before municipal bonds will again assume their former favor in the eyes of in- vestors. | GERMANY'S CREDIT STATUS HINGES ON REPARATIONS PLAN Economic Expert Doubts Na-| tion’s Ability to Pay Public and Private Debts. REVIEWS LONG EFFORTS TO DEAL WITH PROBLEM Declares Insistance Upon Prompt Remittances Will Cause Suspen- sion of All Payments, BY DR. MAX WINKLER. Special Dispatch to The Star. NEW YORK, February 27—The world of finance was neither surprised nor alarmed at the statement by Dr. Heinrich Bruening, chancellor of Ger- many. The Reich, said Dr. Bruening, can no longer pay reparations. He is- sued no further explanations. He felt apparently that he was merely voicing the views held by a group of notable experts assembled at Basel to study Germany's capacity to pay. For almost 13 years, Germany's creditors have been struggling with the problem of reparations. From the out- set they have been dealing with theories rather than facts. They naively believed that Germany could pay for all the damage that was said to have been caused by the war, and much | more. Whence the funds would come, no one seemed to care. Germany's cred- itors merely knew that article 231 of the Versailles treaty fixes upon Ger- many the responsibility for the damages suffered by the allied governments and their nationals resulting from the war. They also knew that, by virtue of article 232, a reparations commission would be created to fix the amount and the conditions of payment. They fur- ther knew that, by virtue of article 234, the commission has the right to examine from time to time Germany's resources and capacity to pay, to ex- tend the period or modify the method of payment, the right of complete in- vestigation and control, as well as to adopt such measures, in the event of Germany's default, as may seem ex- pedient, without these measures being | considered by Germany as hostile acts. Spa Conferences. In July, 1920, a conference was con- vened at Spa, where the amount was fixed which each creditor was to re- celve. France was to get the lion's share, 52 per cent. Great Britain was to follow with 22 per cent, Italy 10 per cent, Belgium 7 per cent, Portugal and Japan three-quarters of 1 per cent each. In June, 1921, Sebria was listed as a future recipient to the extent of 5 5 cent and Rumania also was award- a t. In K;rnl. 1921, reparations were fixed at $132000,000,000 gold marks, or about $33,000,000,000 gold. This is sev- eral times the total available supply of the yellow metal, but no one seemed to care about that. Of course, the amount was not to be paid at once. Bonds were to be created to the amount, bearing interest at the rate of 5 per cent, with a sinking fund of 1 per cent, or a total of 6 per cent. bonds were to bear no maturity. Germany was to pay on forever. Annual payments were to comprise & fixed amount of 2,000,000,000 marks (gold) and an additional sum equiva- lent to 26 per cent of the value of Ger- many’s exports. The agreement, which is dated May 5, 1921, provides for pay- ment either in cash or in kind. Germany continued to make pay- ments in accordance with these ar- rangements. Funds were derived from the sale of German paper known at the time as government, state, city and corporation bonds and German cur- rency. The decline in the mark was in direct proportion to the promptnesg,of payments. Again, no one cared. v The toboggan of the mark continued. It declined to an infinitesimal fraction of its pre-war value. Cost of printing exceeded the price it fetched. safis ~of marks ceased and so did reparg ggs Germany defaulted in November, 1922. The allies decided to act. In January, 1923, France and Belghum marched triumphantly into and took possession of the Ruhr. Germany'’s col- lapse was complete, and the collapse of France, the victor, also was threatened. A rescue party was organized in Novem- ber, 1923. In fact, two—one headed by Reginald McKenna, and one directed by Gen. Charles G. Dawes. Dawes Committee. The McKenna Committee was charged with ascertaining the amount of German capital abroad and with devising means of repatriating it. The Dawes Committee was charged with seeking means of balancing Germany’s budget and stabilizing hLer currency. As might have been suspected, the McKenna group achieved little. The Dawes Committee was eminently suc- cessful. The results were embodied in a document known as the Dawes plan. Tt provided for reparaticns payments beginning with 1,000,020,000 gold marks per annum,<and rising to 2,500,000,000 in '.hegnh year, the so-called standard year. /Subsequent payments were sub- ject to increase according to variations as expressed in an index of prosperity constructed for such purpose. ‘The plan gave representatives of Ger- many's creditors the right to partizipate in the management of the Reichs Bank and the state railways. The Reich's finances were to be inspected and su- pervised by an agent of the Reparations Commission, with headquarters in Berlin. By virtue of the provisions of the Dawes plan, Germany was reduced to & vassalage of the victorious allies. She now took her place in the realm of finance with Haiti, Santo Domingo and Nicaragua. Once more, the amount to be paid by Germany was left in On August 30, 1924, the Dawes, plan went into effect. Germany’s borrowing on a large scale began. The first trans- action involved a loan of 800,000,000 gold marks, or $200,000.000. Thus she obtained funds with which to carry out the provisions of the plan. The latter was a huge success, largely because Germany succeeded in borrowing. She secured funds from Peter to pay Paul. During the first four yéars in which The foreign list was singularly color- | the Dawes plan was in operation Ger- less. Japanese bonds dropped daily to| many borrowed about $1.84 for each | pric new lows as yen exchange gave ground | dollar paid in reparations. This process rapidly before Japan’s increasing ad-|could not go on. verse trade balance. In 1929, a committee of The German chancellor announced | experts headed by Owen D. Young con- that Germany would take care of all|vened at Paris. Germany, for the first private debts during 1932, ane after | time, participated in the hearings. In that if at all able, and German 'bonds | June, or four months after the confer- stiffened somewhat. firmed with commodities, but the only real advance in the Yoreign list was in Great Britain’s foreign obligations, South Americans| ence first met, a new plan was an- Thi which ran up to new highs on the re-|of affecting other factors in the near covery as sterling quotations improved | future. The American dollar, which in the face of heavy withdrawals by the | recently brought a premium of as much Bank of France. as 20 per cent in Canada, is now worth Canadian affairs continued to show'only about 12'; cents more than the improvement, chiefly in foreign trady figures, with the promise the matter of Canadian dollar. (Copyright. 1932.) FOREIGN BUSINESS IS HANDICAPPED BY FAREAST FIGHTING Hostilities at Shanghal Are Causing Concern in Trade Centers. REDISCOUNT RATE CUT PROVES HELP IN BRITAIN French Conditions Serious—Ger- many Makes Test of Trend by Reopening Exchange. Special Dispatch to The Star. NEW YORK, February 27.—Cable |and radio dispatches to the Business | Week give the following survey of busi- | ness abroad for the week ending today: Far East—Japan's temporary miii- tary reverses in the Far East and the increasingly delicate situation on both sides_make the whole prospect in the Far East—both political and economic —more unfavorable. Business at Shanghai is not at a standstill, but the volume seriously curtailed, with its effects fek through- out the Yangtze Valley. In the Tien- tein-Peiping area there is the lack of buying of Japanese goods, but other- wise business is moving more or less normally. What business effects Japan’s hurry- up move to set up & new “independent” government in Manchuria will have cannot yet be determined. Political Factors. At home the Japanese situation is bad. In the elections the Seiyukai, or government, party carried a good ma- jority, but the unfavorable reports from the Shanghai front, plus the mounting realization that Japan is now involved in a major crisis with world favor turning against her, has prompted rumors that the Seiyukai will ask for A coalition cabinet in order to have maximum national backing for policies as they are made. If this plan is car- ried out, it is probable that former Premier Wakatsuki will be one of the important members of the opposition to be drafted into the coalition cabinet. London.—Reduction of the rediscount rate by a full 1 per cent, instead of the usual 1% per cent, is already having & i stimulating cflect on industry, has en- couraged more extensive trading in gilt edges, and is generally being accepted as an official confession that Britain's actual financial crisis has ended. Ex- change restrictions will be removed any day, and this is expected to aug- ment already growing cptimism. The Bank of England and the treasury evi- dently regard the unfavorable balance of trade as less menacing than they did previously. London is becoming increasingly conceffied over hostilities at Shanghai. Not a few authorities are speculating on the effect tréaty commitments may have on Britain. Opinion widely favors the prospeet of joint action by Britain and America, in co-operation with the League, in bringing economic pressure to bear on Tokio. The public is definitely “anti-wi but it is suspected that certain states- men are ready to approve hostilities because they see in this move one way of postponing the “yellow threat” to Pacific dominions, and at that time the transfer of Canada and Australia from the empire to a “pan-American’ white group” to combat the threat. Paris Bourse Higher. It is their contention that a Sino- Japanese war now would so completely exhaust both powers that it would greatly retard further chauvinism. Business men are frankly baffled over the immediate outcome for Britain. Paris.—The Bourse, notwithstanding a 40 per cent climb from December iows, and In spite of the manifest de- terioration of local economic conditions, is still buoyant. Except for a very slight revival in textiles, all other industries are operating on a hand-to-mouth basis. The increase in unemployment shows no sign of slackening. January revenues are significantly below December. Piscal conditions are now definitely expected to become acute before the year end. Berlin.—The outstanding event of the German business week is the carrying out of the long postponed bank reor- ganizatios Actually it is the paying of the bill—nearly $200,000,000—which Germpns must Toot for the liquidation of the bank crisis last July. But just as truly it s a gallant effort fo make a fresh start toward restoring public confidence, and putting the country’s largest banks on a basis, ‘The- easier tone on the money market, with the private discount !> per cent belaw the official bank rate, stimulates. and to a certain extent justifies, the demands of business that the Reichs Bank follow the lead of the Bank of England and cut the bank rate, but tre uncertain political outlook and exchange situation support the Reichs Bank's opposition. Decision to reopen the Berlin Stock Exchange premises, which have been closed since last September, is a tenta- tive test step in the trend back to normalization. Official quotations will not at first be allowed, and publication of prices is prohibited. The government will follow prices closely before agreeing to full return to normal trading. POUND STERLING GAINS. Demand Increases During Week, Strengthening British Currency. BY LEONARD J. REID, Associate Editor of the London Economist. Special Cable to The Star. LONDON, February 27.—The new, of the week illustrates the capacity ot public psychology to influence capital movements without material change in situation. Though there has been little visible betterment in economic conditions in Great Britain and a progressive dete- rioration elsewhere in Europe, the re- duction in our bank rate, following upon a growing appreciation of the sta- bility of the British budget and British banks and also what is now believed to be a favorable turn in our balance of payments, stimulated rather than dis- couraged the foreign demand for sterling. Many abroad regard the pound as undervalued in view of the comparative levels of gold and sterling ces. Liquidation of what proved s sub- stantial bear position in sterling was accelerated by a temporary cessation of withdrawals of London balances by the Banque de France. This prompted some speculative buying of ex on hopes for appreciation of the pound notwithstanding the marked decline in London open market rates for money. A i PARIS BOURSE PRICES. PARIS, February 27 (#).—Thres per cent rentes, 79 francs 65 centimes. Five per cent loan, 100 francs 85 centimes. E;h:n:m London, 88 francs 63 m es. dollar was quoted af francefdl centimes. " i