Evening Star Newspaper, December 31, 1936, Page 15

—_— » ¢ DEPOSITS CLINB TONEW ALL-TIME , PEAK N CAPITAL Clearings Also Up Sharply; Store Sales 10 to 20 Per Cent Above 1935. , BANKS SHOW GAINS DESPITE LOW RATES Phones Total, Power Production, Postal Receipts and Other Barometers Jump. BY EDWARD C. STONE. ‘Washington witnessed astonishing progress in businéss and finance in 1936, notable records of 1935 being eclipsed and in some instances the abnormal condi- ... tions of memor- able 1929 being exceeded. Bank deposits Tose to an all- time peak, bank clearings s u r- passed the 1935 } totals by a huge amount and re- tail trade climbed between 10 and 20 per cent above last year's sales volume, Christ- mas trade in some stores being reported as the best in eight years. The year 1936 moved the Capital still further away from the depression, which really ended here in 1934 if comparisons were made with situa- tions in other cities in the United Btates. During the last 12 months there has been an unprecedented rush of money to the 22 Washington banks. Aggregate deposits now are reported as the highest on record. The Igst bank call by the Controller of the Currency found the banks here with total deposits of well over $306,000,- 000. Since then deposits have stepped up some $20,000,000 in the aggregate. ‘The controller will issue a call in a few days dated December 31, and the :lxna‘:c figures will be disclosed at that / Edward C. Stone. Banking Conditions Improved. Banks in the Capital generally re- ported steadily improving conditions in their 1936 business. Bank officials are always pleased with increases in deposits, as they reveal public con- fidence and the financial arrow point- ing upward. At present, however, the deposit growth is tempered by the lack of demand for money which makes difficult investment of the add- ed funds. Despite low interest rates, it has been a significant year for the banks, better than 1935. Regular dividends, increased and extra dividends and many bonuses testify to this. Bankers make no secret of it. Service charges, better management and watching of costs marked improvement in the real-estate field, demands for housing loans for remodeling and alterations, have all contributed to the upswing in bank earnings. Perhaps best of | all, bankers say, has been the upturn | in the demand for commercial loans, | 80 far very modest, yet highly impor- tant and encouraging as a trend. Interest rates on savings have re- mained very low, to the regret of bank | patrons. Yet a bank cannot pay out in interest more than it obtains in terest on loans. When the money ket turns upward, savings inter- est will be increased, but when that time will come remains uncertain, as the curtain rings down on 1936. In spite of the low interest rates residents of the Capital have displayed & striking thrift complex in the amount of money they have placed in the banks in time and demand de- posits and in their Christmas Savings Club subscriptions. More than $6,000,- 000 was saved during the year and returned to the members on Decem- ber 1, in time for the holiday shop- ping rush. Another vital factor in the Capital's mounting bank deposits is the safety and confidence afforded by the Federal Deposit Insurance Corp. The sweeping upturn in bank ‘de- posits in 1936 has been participated in by all classes of banks, national, sav- ings, State and trust companies. The gains show faith in the future, re- flect the present business upswing and indicate that the days of so-called hoarded money have long been over. Clearings Reveal Trade Gains. Bank clearings in the Capital in 1036 furnish one of the best barome- ters of business advancement. Figures -‘yr the Washington Clearing House “are most impressive. For the first 11 months of the year canceled checks aggregated $1,018,382,559, as compared With buying power boosted he WASHINGTON, D. C, THURSDAY, DECEMBER 31, 1936. hemt WITH SUNDAY MORNING EDITION ARMS RACE CASTS by bonuses and wage increases, workers throng department stores for holiday purchases. ST[][}KSQ[}[]NHNUE | STEADY ADVANCE AT G-YEAR PEAKS Values—Selling at Year End Restrained. BY CLAUDE A. JAGGER. Associated Press Financial Editor. NEW YORK, December 31.—The stock market swung farther up the recovery train with business in 1936 reaching the highest levels in five years and adding many billions of dol- lars to quoted values. The pace of the advance slowed, however, after carrying well into the Spring under momentum of the sus- tained 1935 rise. Another spurt to new peaks for the major bull movement in Midsummer and after the November presidential election were followed by a minor let~ down in the final weeks of the year. But year-end selling, in comparison with other years, was restrained. For markets had the benefit of a bright business background, a spectacular shower of extra dividends, bonuses and wage increases and booming holi- day trade before the curtain fell on the old year. Control Plans Watched. With the approach of the new year Wall Street became increasingly ab- sorbed in discussion of moves by Fed- | eral authorities to cortrol credit ex- pansion to prevent another volatile speculative boom. Speculation, however, seemed to| have veered from securities toward commodities. Wheai, rubber, indus- | trjal metals and other basic staples took the spotlight from stocks with | sharp advances in the final stretch of | 1936, while share prices dragged in quiet trading. N Under increased margin require- ments ordered by the Federal Reserve Board early in the year, the stock market had to get up steam for fur- ther advances without aid of much credit. Some traders, in fact, got in the habit of calling it a “cash and carry market” because the 1936 spurts ‘were accompanied by little expansion in loans against securities. On the other hand, it was fed by a heavy flow of cash from abroad, dubbed “hot money” in Washington because Federal authorities feared it might complicate their problems of credit control and leave markets open to sudden withdrawal of foreign cap- ital sent here for speculation and in- vestment. Commodity Issues Climb. Soaring quotations for copper, rub- ber, wheat and other commodities turned attention in trading circles to stocks in line to benefit from rising demand for raw materials. As an off- set, the share market faced a succes- |Many Billions Are Added to; sion of labor controversies in the auto- mobile and allied industries and threats of strikes in st®el and else- where. Moreover, war alarms continued to sound late in the year and to divert in some measure attention from do- mestic revival in buying of industrial equipment and forecasts of broadening improvement in construction and heavy industries in the new year. . with $848,077,978 in the same period in 1935, or an increase of more than $170,000,000, An average rise in December clear- ings over December, 1935, will bring bank clearing totals close to $180,- 060,000 ahead of last year. Further- more, it should be recalled that this increase follows an advance in 1935 of almost an equal amount. During the last year the monthly clearings crossed the $100,000,000 mark tumnmumemmew of the now ending. In postal there was a gain of $546,755 in the with the like months in 1935. Trade Gains Sensational. te di period in 1935 by 9.8 per cent. At this writing, with complete December trade figures mot yet reported, it is Nevertheless, the stock market rode through the year-end liquidation with little damage to the gains amassed on the prolonged 1935-36 upswing. Rails Have Setback. fusal of the Interstate Commerce Com- mission to continue emergency freight rate increases. Along with utilities, they also were confronted with pos- nhu‘m!cr‘::m in operating costs as result of rising trend of commodity wlw;.ed» Against these, however, bulls cember bulletin market in the last STOOKS STEADY, Page B-,), " STORE SALES RISE TOHGHESTLEVE OF LAST 6 YEARS Employment Gains, Farm Income and Wage Boosts Speed Upturn. BY SMITH REAVIS, Associated Press Financial Writer. NEW YORK, December 31.—Farm- ers, workers and coupon clippers, with the expanding revenues of the indus- trial upturn in their pockets, hoisted the 1936 volume of retail trade to more than $36,000,000,000, the best level since 1930. Rising employment, augmented farm income and fatter wages for city work- ers played their part in the buying movement. The soldiers’ bonus and increased dividends paid out by hun- dreds of industrial corporations were credited with a “pump priming” share. South Sets Pace. ‘The South, with its expanded indus- try and 12-cent cotton, led in per« centage of inereased purchasing. Fol- lowing closely came the Middle West, where farm income was some 8 per cent higher than last year. The Pa- cific Coast, New England and, finally, the Midde Atlantic States ranked next in that order. ‘The 1936 total of $36,680,000,000, es- timated by the National Retail Dry- goods Association in conjunction with other research organizations, repre- sents a 12 per cent increase over last year's aggregate and is 15 per cent under 1930 and 26 per cent under 1929. In 1929, with prices at a sub- stantially higher level than in 1936, retail business reached a peak of $49,- 114,000,000. Buyers in 1936 favored automobiles, apparel and furniture, sales for those articles running between 20 and 25 per cent better than last year. Mail order dollar volume was up about 23 per cent. Department store purchases were some 11 per cent higher. Luxuries Show Gain. Luxury articles—furs, jewelry and the more expensive novelties—had a far wider public than in any of the post-depression years. - In the face of considerably higher prices, sales of fur coats and trimmings, Dun & Brad- street estimated, jumped more than 30 per cent over last year. Jewelry dis- tribution rose sharply. Pre-Christmas buying was brisk and well above last year's mark. Analysts pointed out that the flood of year-end corporation dividends be- came available only during the last month or so and expressed the opinion that much of the money so acquired would be spent in January and Feb- ruary. BUSINESS FACES SOCIAL CHALLENGE McInnerney Believes New Poli- cies for General Welfare ‘Will Come. By the Associated Press. NEW YORK, December 31.—“Nine- teen-thirty-six may well serve in the future as the signpost of a permanent change in the course of American 7@ business policy,” says Thomas H. McInnerney, president of Na- tional Dairy ESE { SIWSTER SHADON ONWORLDUPTURN |Further Progress Indicated Unless Tension Brings War or Breakdowns. U. S. RECOVERY SPREADS RAPIDLY DURING YEAR Industrial Production in Many Cases Near 1929 Levels—Labor Issue Holds Spotlight. BY CHARLES F. SPEARE. Special Dispatch to The Star. NEW YORK, December 31 (NANA)—Were it not for the troubled political situation in Europe and in the Far East, one might pre- dict with confidence for 1937 another year of increasing prosperity and a general recovery of ground lost throughout the world during the long depression. The unanswerable question, how- ever, is whether war will break out in either or both areas where present tensions are so severe, or how far na- tions, weak economically and finan- cially, can avoid a breakdown. The increased pace of the arma- | ment race has most sinister aspects. | With the devaluation of the cur- rencies of France, Holland and Switz- erland last Autumn, a form of money stabilization was developed out of which came, in the last quarter of 1936, a general improvement in com- modity prices and the substitution, of natural for artificial methods of reg- ulating the exchanges. This stop to the process of deflation in parts of the continent of Europe has given greater health to markets elsewhere. It constitutes one of the great gains of the past years. It is associated with greater em- ployment and expansion in basic in- dustries, the reinvestment of hoarded funds, and, for internal politics, a more conservative trend. Recovery Accelerated. * From a strictly domestic standpoint, the year 1936 was notable for the rapidity with which the recovery gained momentum and the many ap- proaches in industrial production to the high records of 1929. It is sig- nificant also that there has been very little wavering of the business index since recovery became an established fact and not a subject for argu- ment. Probably the real turning point in the depression came in May, 1935, after the United States Supreme Court dissolved the N. R. A. This decision had the effect of substituting for a sentiment, which was passively for business expansion, a vigorous pol- icy of action on the part of American business leaders. In all charts of business activity, there will be found & positive upward trend after the Spring of 1935, with gains to the end of 1936 ranging from 40 to 60 per cent and bringing up the general average to approximately that in the Spring of 1930. It is well recognized, however, that these high averages reflect the un- paralleled prosperity of some indus- tries in which consumers’ goods are | manufactured. Others, identified with the capital goods market, still lag well behind normal production. At the extremes in the two groups are the automobile industry and the building industry. Federal Cash a Factor. ‘The great distribution of Govern- ment funds for relief and for Fed- eral projects and the payment of the soldier bonus have stimulated de- mand for consumers’ goods. Contrari- wise, the slow recovery of the rail- roads and the prolonged reaction in real estate values have held back, until recently, important units in the capital goods trade depending on the railroads and on building construc- tions for their profits. In the closing weeks of 1936, and anticipated as probable this coming year, was the tendency to level off the variations in the business charts and to bring some of those averages, which have been down to the low basis of 1920, nearer to others now above any previously known in Amer- ican business history. Progress will be made this coming year in restoring business to an ap- proximation of normal because there is an abundance of money to finance all legitimate enterprises, because the mood of the general public is ons of optimism, and because there is an entirely different attitude among busi- ness leaders toward the Roosevelt ad- ministration with respect to their so- (See ARMS RACE, Page B-3). n Staf *. NATION-WIDE RECOVERY BECOMES REALITY FOR MILLIONS L3 Broadly grinfiing employes oi tne American Steel & Wire Co. shout their thanks for an average 10 per cent wage increase. Workers in many another line got fatter pay envelopes in 1936. New Faces Join Veteran Pilots At Wheel of Big Business in ‘36 Herbert Fitzpatrick. Benjamin F. Fairless, L] Henry Morgenthau. Leon Fraser. Here are a few of the major personalities who made news in the business world of 1936: Herbert Fitzpatrick, commander of a rail empire; Benjamin F. Fairless, steel leader; Henry Mor- genthau, Secretary of the Treasury, and Leon Fraser, bank head. AUTO CHIEFS HAIL B0OM DEVELOPS 4BIO0D VOLUVE | INCOTION TRADE Efforts to Stabilize Sales and Jobs Continue to Show Progress. BY DAVID J. WILKIE, Associated Press Writer. DETROIT, December 31.—The as- sembly and sale of 4,600.000 cars and trucks, distribution of bonuses to work- ers and extra dividends to stockhold- ers and progress in the movemeént to level off employment and distribution peaks and valleys are the motor car industry’s outstanding accomplish- ments for 1936. To the manufacturers and distrib- utors these accomplishments mean the recovery movement has reached the level of an approximate *“normal,” in 80 far as the assembling and merchan- dising of motor vehicles is concerned. 1936 Models All Sold. A sharp stimulus to production vol- ume has been given again by the | November introduction of new models, and if the year-end recapitulation should show the total assemblies to have reached 4,602,000 units, it will be the biggest production year in the industry’s history excepting the boom period of 1929. In that year the ag- gregate production exceeded 5,600,000 cars and trucks. ‘There are the other factors, however, that bring 1936 into the brighter pages of the industry’s history. Most signifi- cant is that when 1937 models were placed on view at the annual automo- bile shows in New York and elsewhere, it was virtually impossible to buy an unused 1936 type from any dealer. The clean-up was more thorough than any other since volume production created a difficult merchandising problem. * 200 Millions Disbursed. In addition to the bonus and extra dividend distributions, the industry carried on its expansion program through the year, the investment in new buildings, additional heavy pro- duction machinery and the unexpected payments to workers and stockholders amounting to considerably more than $200,000,000. London Sales Jump. London had one of the greatest Chritsmas shopping rushes in British history. Mounting commodity prices accentuated an unfavorable foreign trade balance. Imports are increasing rapidly, but exports are lagging seri- ously. Backlogs Large Enough to Keep Looms Busy 15 to 18 Weeks. BY BERNARD S. O'HARA, Associated Press Financial Writer. NEW. YORK, December 31.—The record of recovery in the manufac- turing division stands forth as the brightest feature of the cotton trade’s year. Described as a condition almost without parallel the year closes with the industry’s unfilled order books holding enough business to keep the looms in active operation for an esti- mated 15 to 18 weeks. Print Cloth Prices Up. As another measure of the swing, textile interests point to the very strong tone of quotations for cotton goods. ceptional firmness at the peaks under the force of mounting demands of divisions of the market were said to have shown corresponding gains. The raw cotton market felt the stimulating influence of events in the spinning world, although futures prices moved indecisively after reach- ing a top in October. Late. reactionary tendencies were attributed to upward revisions of crop estimates, pointing finally to an outturn of around 12,400,000 bales in contrast with earlier indications of a mld of little more than 11,000,000 es, Consumption Expands. The price of middling spot cotton at New York averaged about 12.05 cent & pound, with the year's range 13.65 cents—11.20 cents. Domestic consumption of all growths of cotton was estimated by the New York cotton exchange at 7,050,000 bales against 5,651,000 bales in 1935 and 5,419,000 bales in 1934. World consumption of all growths was placed at 28,450,000 against 25,869,000 in 1935 and 25,532,000 in 1934. World consumption of American cotton was estimated at 12,530,000 bales compared with 11,594,000 in 1935 and 12,490,000 in 1934, Exports of American fiber were calcuiated at 5,700,000 bale against 5826000 in 1935 and 5818,000 in 1934 ‘Throughout the print cloth | division prices rose during the year| from 2 to 4 cents a yard, showing ex-! buyers for prompt deliveries. Other | BY SMITH REAVIS, Associated Press Financi.al Writer. NEW YORK, December 31.—An eventful year of recovery consolidation found new faces, as well as many long familiar, among ‘the pilots of finance, business and industry. - A retiring, 64-year-old bachelor law- yer, Herbert Fitzpatrick, suddenly leaped to command of one-seventh of the country's rail transportation when the mantle of the Van Sweringens— Mantis J. and Oris P.—fell upon his shoulders. He became president of Mid-Amer- ica Corp,, top holding company of the sprawling Van Sweringen interests at the behest of ‘two newcomers to the railroad game, George A. Ball, 74- year-old Muncie (Ind.) glass manu- facturer, and George A. Tomlinson, 71-year-old ship owner, who them- selves had helped to created Mid- America to help the “Vans” and for a new “adventure” in businéss. Fairless Goes Up in Steel. The huge steel industry brought another comparatively obscure figure into prominence when Benjamin F. Fairless, former Pigeon Creek (Ohio) schoolmaster, became top man for one- third of the United States Steel Corp.’s properties, the Carnegie - Illinois | Steel Co. | It was Fairless who carried on the | | protracted negotiations that led to a | new kind of working coritract—and a 10 per cent wage increase—for all of “steel's employes, followed by a gen- eral increase throughout the industry. Morgenthau Makes History. In the field of finance the familiar name of partly bald, gentleman farmer Henry Morgenthau, Secretary of the Treasury, was on Wall Street lips when he floated $700,000,000 in 22 per cent, 13-17 year bonds at the low- est rate for ordinary long-term finan- cing in the Federal Government's his- tory. Here are more of those who figured importantly in the year's business, in- dustrial and financial news: James M. Landis—slight, sharp- eyed chairman of the Securities and Exchange Commission, who developed far-reaching changes in the market- ing of stocke and bond$ and warned | vigorously against another speculative | boom. Ex-Reporter Heads Bank. Leon Fraser—a big," soft-voiced ! newspaper reporter turned successively ! college professor, lawyer, international | finaneier and banker; named presi- dent of the First National Bank of New York, one of the Nation’s influen- tial financial institutions. courtly dean of American railroad presidents, who fought for and won cheaper passenger rates for the East- ern lines. Joseph P. Kennedy—a Massachu- setts bank president at 28, and former chairman of the Securities and Ex- change Commission, guided as an ex- pert consultant the huge R. C. A. recapitalization and readjustments in the Paramount Pictures organization. Stanley Floats Big Series. Harold Stanley—quiet, middle-aged president of Morgan, Stanley & Co., | who floated the $335,000,000 bond i series of the American Teléphone & ‘Telegraph Co., the largest corporate refinancing in many years. Colby M. Chester, jr—president of the National Association of Manufac- turers, who laid down for his col- leagues a 12-point program for relief of unemployment, better treatment of the public and co-operation with the Government. Floyd B." Odlum—Methodist min- 1ster’s son from the West, who, with a start of $40,000, ran Atlas Corporation into & $100,000,000 investing company; with the firm of Lehman brothers, dominant figures behind the Radio- Keith-Orpheum reorganization. Index of Industrial Activify at 1929 Levels This chart, based on . for the last seven yoars the Associated Press indez of industrial a [ vity with 192930 ag 100, traces the course of the business tem; %mmum'uu g ked upswing. e s 8 8 8 3 8 88 8 » Daniel Willard — white-haired and PAGE B—1' IN YEAR EXTRA DIVIDENDS AND WAGE BOOSTS WIDEN PROSPERTY Depression Problems Open Year — Boom Control Talked at Close. ERA OF BETTER FEELING FOLLOWS LANDSLIDE Popular Confidence Firm Despite Economists’ Distrust of Many Basic Factors. BY FORREST H. GRAVES, Cambridge Associates Director. In 1936 recovery was transformed from hope to fact. Through wage increases, bonuses, higher farm prices, soaring business profits and the biggest dividend month in history, recovery became a reality 0 be seen, touched, felt and enjoyed by the great majority. . The year started with the problem of keeping the recovery movement alive; it closed with the problem of controlling a boom. The early months were chill with the menace of a po= litical campaign drawn on class lines; the late months ushered in an “era of good feeling.” And the biggest ex pression by voters in American po- litical history made hardly a ripple on the business graphs. Perhaps even more striking than the change in statistics was the trans= formation of public morale. As re- | cently as Midspring the popular attis tude was one of whistling in the dark. The “late depression” was a popular phrase, but spoken with crossed fingers. In Midsummer, however, the public began to take prosperity at its face value and from thence forward & definite “boom psychology” began to appear. It was not lessened, naturally, by the deluge of wage increases, bonuses and extra dividends that cheered the year end. Background Questioned. ‘The year closed with popular confle dence firm and abundant. Econoe mists, however, are quick to express distrust of many elements in the cure rent picture. They point to the ree cent sharp rise in commodity prices as an influence which may check the present broad urge to buy. They point to the unevenness of the recovery; automobile production is racing to= ward its 1929 peak while general builde ing construction, in epite of advances, remains far below average; 1936 divie dends will almost equal those declared in 1929, but 9,000,000 workers are without jobs. They point to the Gove ernment deficit, the vast amount of Federal money which still feeds the consumption industries, the tree mendous credit base which has been spread and which may be used to finance feverish, unhealthy speculae tion in commodities and securities. Many say, too, that wage and ether costs are outrunning prospective busi- ness profits, that with the surplus tax virtually forcing depletion of corporate reserves at the year end, the expan- sion of productive facilities that would aid the worst depressed industries will be indefinitely deferred. How Much Is Left? The question of the moment, then, is “how much is left>” Does another | abortive speculative boom impend that will explode before large groups have really tasted recovery? It does not seem likely. Many of the above elements may be regarded as sound or unsound, according to viewpoint. For its effect on the pere manence of our prosperity movement perhaps most significant is the tree mendous increase in consumer income which has taken place. In many ways this furnishes a happier augury than would a spurt in capital goods in ad= | vance of a demand to make them necessary. So far as the unevenness of the re< covery is oncerned, that, too, seems to portend only that those who declare we are nearing the peak are sighting from the wrong landmarks. History | repeats itself, but with extensive re- visions. It seems quite obvious, for example, that previous estimates of the saturation point of the automobile market will have to be revised. With general wage and salary increases just beginning, the auto makers produced within 600,000 units of the 1929 total. Retail sales will come within 10 per cent of the 1929 level, and if 1937 doesn’'t see all previous records broken it will be surprising, indeed. Steel has far wider markets than it had six years ago; production is cur- rently at the best rate since Septeme ber, 1929, although railrqad buying has hardly begun and the building ine .| dustry has not started to use steel in quantity. Refutes Pessimists. Although residential building is up 70 per cent from 1935, the demand for new and better houses has as yet only been weakly implemented with efe fective buying power. The huge utile ity expansion programs of 1929 and 1930 carried production facilities far | beyond the necessities of the time, bus these are already revealed as inadee quate and obsolete in many sections, The steel and allied industries have constructed new units this year to meet new requirements, and other manufacturers soon will find it ecoe nomic to add to producing capacity, And, surlpus tax or no, money can and will be raised for plant extension, where potential profits can be demone strated. The corporate surplus tax may retard the movement, but it will not halt it, particularly while money remains on the bargain counter. This brings us to another point which refutes the theory that.another depression may strike immediately to blight qur recovery in its first bloom, It is the prevailing plethora of “easy money.” It may be an embarrasse ment of riches causing grave concern, but the fact remains that history does not record a depression period ever setting in while money remained cheap and plentiful. And never was money and credit cheaper or more plentiful than it is todsy, in this Page