ANXIOUS STAGE

Dominion, Volume 27, Issue 37, 7 November 1933, Page 9

ANXIOUS STAGE

Lagging Recovery in United States PRESIDENT & INFLATION The opening of the seventh month of the Roosevelt Administration finds the men in control of the mechanics of recovery a prey to grave anxiety, some of which has been allowed to escape into the public prints, wrote the Washington correspondent of the London “Times” on October 1. At the beginning of September there were signs of a modest revival of industrial activity; now there is admission that a recent review of banking operations and of retail and wholesale trade shows that recovery is lagging, that new weakness is apparent in the N.R.A., in the agricultural and public works administrations, and in the programmes of farm and mortgage relief. The wheel of things economic cannot revolve unless it bas an axle in the form of a definite monetary policy upon which to turn. Whether the President will listen to the warning that future progress depends entirely upon the currency issue, whether the week-end’s crop of predictions'of an impending announcement from him can be harvested, whether such an announcement will involve that “devaluation and stabilisation of the dollar together with a promise to return to the gold standard” so freely mentioned —all these things are anybody’s guess. Meanwhile an unnamed member of the Federal Reserve Board is quoted as of the opinion that the banks are withholding loans and credits and business is delaying expansion until the Government has declared its intentions in the field of finance. There is nothing new in this, but the truth of the statement is more disastrously apparent with every day. One figure among many which are used in current discussion is worth citing as an illustration of the conditions which provoke alarm. It is said that the heavy industries, which might or should be doing business at the annual rate of (10,000,000.000 dollars., now show a total activity equivalent to 14,000,000.000 dollars only. The expected revival in the field of “capital goods,” the demand for which is believed by the President’s advisers to be potentially almost unlimited, has not occurred, while the overhead charges of those industries has been increased by the shortening of working hours and the increased pay of labour. There is even talk—timid talk, it is true—of bringing about some reduction of wage rates as a means of stimulation, and this is heard on the very eve of the convention of the American Federation of Labour, which - is reasonably certain to reassert its demand for more than workers have received. whether in money or a reduced working day. Unabsorbed Credit. There is short-term Government credit available in hundreds of millions, but neither business, industry, nor the banks will absorb it. As for the private capital usually at the service of long-term securities, it is said to be abundant, but it cannot be tapped. The general uncertainty keeps it frozen, as does the continuing fear of the operation of the new Securities Act. This shrinking from long-term investment does not handicap industry alone; it is a source of embarrassment to the Government itself. It might have been .riser, say some, if the President had decided to join battle with Congress when that highly inflationist body threatened the debasing of the currency during its first session, instead of capitulating, by accepting a transfer of discretionary powers to himself. Again, it might have been wiser, say these critics, if he had joined with other nations in an agreement if not to stabilise, at least to limit, the fluctuation of currencies during the Economic Conference. But lie did neither one nor the other, and if, is feared thaFhis present position has been weakened by this doubly implied acceptance of the inflationary theory. Yet the President’s sense of the danger of a fight at one or the other ' time was acute, his avoidance of the issues Involved won him general acclaim, and his prestige with his own people is not the least important of the factors of possible recovery. His position in the public regard is still powerful beyond precedent, and if—as travellers report—there is growing doubt everywhere as to the effectiveness of the measures he has decreed, the country is still ready to acquit him of blame. Credit Co-ordination. Perhaps Mr. Roosevelt still believes that mere expansion of Government short-term credit will turn the trick. He has now appointed Mr. Henry Bruere, an able New York banker, as co-ordinator in this vast zone of activity, and that gentleman’s duty is described as in part “assisting the campaign to assure capital that it is safe to go ahead.” ' . It is time, Mr. Roosevelt- believes, to see whether the Reconstruction Finance Corporation and other Government agencies are really pulling together. He will have an opportunity of inspecting at close range the situation which bas prompted Mr. Arthur Ballantine, former Under-Secretary of the Treasury, to warn the country that it cannot "borrow itself back to prosperity." An estimate of the financial operations of the Government under the "new deal” appears this morning. In round figures, it is 11,574,060,000 dollars, and this total does not include an unestimated number of hundreds of millions to be paid to farmers for crop curtailment. nor the new 330,01)0,000 dollars programme for the feeding, clothing, and fuel of 3,500.000 families, or 14,000,000 people, who will need care during winter and cannot secure it either from private charity or from the States and municipalities. The American public debt will shortly run far beyond that high figure of 25.485.000.000 dollars at which it stood in July. 1919. Restoration of Credit. In a speech delivered before the American Legion Convention ut Chicago. Mr. Roosevelt laid stress on the importance of restoring the credit of the Government. He pointed out that this could only be done by balancing the Budget, and he appealed to the American Legion for its co-operation “lit the great programme of national rehabilitation in which you and I are equally engaged.” Replying indirectly to the growing volume of criticism which has arisen from disappointment at the failure of the recovery campaign to achieve the extravagant objectives which General Johnson ami others claimed for it. the President declared that “realisation of our national programme cannot be attained in sij months.” Re-employment.

laid proceeded only part of the way, and if “from week to week there are ups and downs, the net result is a consistent gain." Freezing of credits hud been stopped, and "the ice is definitely melting: farm income has been increased, but must lie increased still further; industry has picked up, but an increased purchasing power must be stimulated in the future.”