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About La Grande evening observer. (La Grande, Or.) 1904-1959 | View Entire Issue (June 22, 1932)
Page Four Wednesday, June 22, 1032 LA GRANDE EVENING OBSERVER, LA GRANDE, ORE. Financial Situation Survey By National City Bank, New York Effect of Currency Hoarding and Gold Exports General Business Conditions (Continued Prom Page One) cities of New York and Chicago where most of the buying of government had to take place, and that funds therefore had to find their way out through the country In a more or less Indirect manner, the promptness with which the effect of the federal re serve activities were manifested In the different federal reserve districts has been gratifying. Rebuilding .Member llunk IUerve lialaiicwt With the marked reduction In re discounts and the steady Increase In the number of hanks clear of the federal reserve Indebtedness, the con tinued purchase of securities by the reserve banks has had the effect of building up surplus reserves of member banks, which Is the second objective of the federal reserve pol icy. As will bo seen from the table on changes In the different classifica tions of reserve bank credit, the first few weeks of government security buying resulted In no enlargement of reserve bank credit oustandlng. compllshments recorded with respect to the reserve banks. Never the lens, important progress has been made. The catastrophic de cline in bank credit In progress since last July has been arrested The turn has been most marked In the case of deposits, which reach ed a low point- of $16,837,000,000 in March and have since recovered to 17.128.000,000. For deposits to pre cede loans and investments In the turn Is, of course, natural, since the injection of federal reserve funds Into the market automatically swells the volume of deposits, while the movement of loans and investments depends upon the rapidity with which the funds are Invested. It Is evi dent from the course of total loans and investments that these funds havo not been Invested freely, but hero too, within the past month, there has been a distinct tendency for the precipitate decline to flatten out. I'uttlng the Fumhi to Work Tho fact that the new federal re- HOME OF PERKKINS MOTOR CD. since funds put Into the market Mrve Pcy has not done more to through security purchases were more than offset by the reduction In re discounts and In the acceptance port folio. After March 30, however, there was a change In the trend, and con tinued purchases of governments were stabilize prices and stimulate busi ness revival )ms undoubtedly dis appointed many people who expected too much within a limited period. Such disappointment should not ob scure the real accomplishments of accompanied by a rise of $401,000,000 j tl,e Plicy. which have been described in the amount of reserve bank credit f rrr' Til "1 fin i in i M . nfrj' - " m'" t ft X i r Id C " ii in mm mi inr m miiimmmmimmmmatimi it'MTimMHimwmmxtiim Jhl Mrui-tiire Ihmimh I lie IVrkln Molor iiiiupanv. otlicnvlw kiumii as the Fnhl eirur. tunc may be mi Jable .Mmiiitalii uhti h MjiikIh . u Heiitlm-i mi lite eilee of llio div" mi ui.irit ,.r furds the lilker u niarveluiw view of tiie entire (irunrtr Konde valley. because supporting improvement in the "capital goods" industries has not occurred. Of course. It can be said that the country is over equipped and that capital Investment therefore Is not needed but this is only a half truth In view of the scrapping that Is go ing on, the mounting obsolescence of attention has centered more on them, making them keys to confidence. Within tho next few weeks decisions will be reached In Washington on the government's fiscal policies and at Lausanne upon reparations and ner- hapn upon other critical matters. In their effects upon the will to spend of automobile sales and production is generally reached in April or tboue the first of May, and In the high and medium priced cars the trend has been about as usual, and is now downward. But in the lower price ranges the situation has been dif ferent. Duo to the late introduction and invest these- decisions will be of i of the Pord modri thn unrinv nrlr dlsDarltles which are disrupt ing the exchange of goods therefore have not been improved during the month. Among the commodities which reached new lows during May are copper, zinc, silk, wool. hog, steers, pig iron. suar, rubber, butter, and vegetable oils. An exception to the general weak ness, and a very important one. Is wheat. - The government estimate of tlie winter wheat crop as of May 1 was 441.000.000 bushels, a reduction of 17,000.000 as compared with one month earlier, and 346.000.000 under last year's yield. Private reports dur ing tho month have indicated a fur ther decrease. The spring wheat nrosnect is a more favorable one. Planting has made good progress and to develop periodically in Europe has as tho Proposals ' Hef expcndl been in full swing during May. caus- tures calling sooner or later for fUr ml the heaviest withdrawals of gold ther large offerings of new securities in any mouth since October. Through the 27th of the month the net loss had been 205.500.000. ine cnangu consisting of exports of 2O5.O00,OOO, an imri.fl nt i3aoo no in earmark ing, and imports of 12.8O0.O00. Near- ly ail or me exports weiu w w land. Prance, Switzerland and Bel glum, In that order, and the ex changes of all those countries throughout the month havo been at or close to tne point nuiKing shipments profitable. These smpmenis are me cajjiw by the treasury. Inasmuch as the trend of government bond prices dominates me murKCb tor me high est grade bonds of other classes, the latter havo declined in sympathy, (Continued on Pace Five) IIK.STV( KEKVICE STATION Already an outstanding figure In (the automobile service station busi- nesu, Mr. Heasty, still not satisfied sion of a coiitlnulnc desire of peo ple in other countries to have their funds at borne, following their experi ence with balances in ixnaon " rf.asin 8Vstem. This incurrea wneu gum ''lat. nr mrtuiiirn mnriitions are more satis factory than in several years. Even which losses were if the spring wheat crop should be a good one, total production will bo little if any above domestic require- mniita anH avnnrljl U-'tll romfi DUt of the carryover. j attracted hero Dy nign uuere&b iuu Tho acreage in winter wheat In 20 during the boom and which has been countries. Including KUfisia, is esii-, an element, m uuugci mm with tho service ho is rendering to the automobile traveler, is installing at this time, a now and complete car new In use to 1,088,000,000 on May 18, the highest since the year-end. While part of this Increase was offset by a loss of $200,000,000 In gold for ex port during tho period and a slight rise In money In circulation, never theless there was a net Increase of 280,000,000 In the volume of mem ber bank reserve balances available for use as a basis of credit. '- As a consequence of this Increase, member bank reserves arc estimated at the present time to be more than 300,000,000 In excess of require ments, sufficient at the customary ratio of expansion to support an added' volume of member bank credit equal to over 3,000,000,000 without another dollar of credit expansion by tho reserve banks. Trend of Mnnber Bank Credit So much for tho contribution of the reserve banks towards business recovery." By their action, pressure of deflation duo tq monetary causes has been relieved and funds have been made available for member banks and business to use at such time as Inclination and opportunity exist to use them. But business, In thc last analysis, can be benefited by easy money pol icies only insofar as they lead to an expansion of member bank credit. In this respect the showing to date lias boon less impressive than thc nc- portant. The pressure Imposed upon bank credit has been lifted, and funds are once more accumulating in large volume, awaiting investment In Industry, agriculture and trade. It remains now to find means for putting these available funds to work. To this end the principle obstacle now Is fear. Manifestly It is thc gen eral view of business men that the uncertainties In political and finan cial affairs call for policies of caution with respect to forward commit ments, and deferment of plans for new or replacement projects, and for expansion of operations, until their profitableness Is more clearly assured Among investors this attitude had lis counterpart In avoidance of risk In tho markets. Hence there Is lit tle show of Initiative or enterpvfao methods, new products and new ma chlnery with which industry needs to equip lUelf to meet changing mar kets and to keep production costs down. H Is more In accord with the facts to sny that tho barriers to un dertaking work of this kind are the unwillingness or the industries to en gage In It while they are having dif ficulty in making both ends meet, and the unwillingness of Investors and lenders to incur risk In Indus trial undertakings. Both policies arc rational ones, and In light of all the circumstances are not properly sub ject to criticism, since the critics could not act differently If they had the decision. Criticism of Bankers There has been much crlticiBm or thc banks for failure to pass the new supplies of credit Into use more rapidly. 11 is represented that after receiving great sums from the re serve banks and the reconstruction finance corporation the hanks arc as unwilling to make loans as before unci In fact are the chief of hoarders. Tills Is a kind of criticism that read ily passes current, but It Is unfair and Inconsiderate of the difficulties of the banking situation. Thc new credit which Is put into the mar- In business, capital investment coil- I ket bY reserve purchases of govern- tlmiOK nonl-lu flt a ntnnrUtlll nnri ! niCIjt llOlldS COIllS to tl)0 banks tt8 i.,it., i. ii m,i ,,...(,. .deposits made by the public, and tlvlty Is largely confined to supply Ing dally neetlH which are reduced Tor lack of purchasing power to satisfy them, Never has there been a clearer demonstration of the part that tho accumulation of capital and Its trans formation into buildings and ma chinery and other facilities for rais ing the standard of life, plays -in normal business activity. Every prom ise of sustained Improvement In Hie Industries making goods for personal consumption has failed of realisation SPECIALISTS in SIMONIZING "The All-Weather Protection For Your Car" V and D LUBRICATION CHHCK-CIIAKT SYKTKM FOR ALL CAUS A COMPLETE SERVICE INCI.l'DINC: WASHING TIKK RICI'AIKING AM) ItATTKUY KKHVK'INC CITY SERVICE STATION Second & Adams l'honc Main !)S() the banks are under the same obliga tion to handle them safely as In tho ens of other deposits. It should be understood that the business houses well supplied with capital generally aro In easy clrcumutances now be cause of slackened trade and are not desiring to borrow. duction peak has not vet been reach- Por the United States, and Indeed ied- After making 115,000-120.000 for all countries, the establishment j cars in each of the first three months of the national finances on a sound j of the year, the Industry turned out basis is a condition essential to eco- j 148.000 In April, apparently came nomlo recovery. This means balancing j closo to 200,000 in May, and with tho budget, both by courageous and j further expansion by the Ford corn patriotic action in rigidly controlling pany it appears certain that June expenditures and by increasing the ' wfil bring another gain, revenues through a broadening of the j of course, the figures are very low basis of taxation. The preent fiscal ! nd it Is necessary to go back to year which clmes June 30. 1032 shows J92l for comparable totals, but tho a deficit through May 24 of approxl- train Is, helpful in many directions. 2r?.l;iS 2-65G'0(0 000- of w'c W86.-iit is due to automobile orders that 000.000 represents appropriations for , operations of the steel mills increased t!)iri f?ni'''n,?nnrnrwlv.'''''!r''" gradually from the April low point t on and J82.000.000 purchases for Gf 21 per cent to 25 per cent in the the sinking fund. Estimates that, third week of Mny. according to the havo been prepared for the 1933 fiscal estimates of the Iron Age. year indicate the need for raising ap- Dlll,.. ...... proximately 1.100.000,000 in nddl- . Building construction Is extremely tlonal revenues and erfertimr n r,.- B,ow nn HKewise shown some- mated by the department of agri culture to be 5,300,000 or 3 per cent less than one year ago. The Canadian sDrlnif wheat area is reported de creased 3.5 per cent, but planting la off to a good start, in view oi ine part that wheat has frequently played In leading the way out of depres sion, the situation win Dear watcn- Inc. for the ground is laid lor an inv Dortant advance in prices if there should be crop failure in any of the principal spring wheat producing areas of tho world. Tho cotton crop is getting a good start with weather generally favorable and the acreage reduced less tnan the trade would like to have it in view of the excessive carryover from the present crop. However, tne last word Is not said upon the cotton yield until the boll weevil has had its chance at it, and the crop this year is very inadequately lertiilzeti. Tho prospect for agriculture Is nA a cheerful one In view of the prices of agricultural products, but Is helped by tho tendency of farmers every where to grow more of their living at home and to use more "family la bor." Farm wages have continued downward In a season when they or dinarily advance. The economies that are being made in ine cost oi pro duction will stand the farm areas in good stead when the time comes to market the crops next lan. Money 1 tales and iotd Movements Tho continued piling up of funds in the chief money centers, through tho federal reserve bank operations already discussed in this letter, has further eased tne money mantels, ana additional reductions in short term loan and Investment rates have oc- month. Com- ductlon of Aannnnnnoo in .m. 1 what mole than the usual seasonal curred during tho mental expenditures in order to bring ! exP:inBjn- Contracts awarded pared with April 1, prior to the ex receipts and expenditures into bal- iroug 0 2l6t of tno montn- ac- panslon of the reserve banks' secur anco by June 30, 1933 This calcu-' cordlng to tne R W- Dode corpora- ity buying program, the rates pre Intion includes ns revenue 6270 000 - I tlon' aven,ei $5,319,000 dally, an In- vailing at the end of May were as ooo tiue from foreign governments Jl Y.'i i pi iohows: April 1 Call money 2 Time loans, 60-90 days 2Va 3 Tlmo loans, 4, 5. fl months.:.. ..23; 3 Commercial paper, best names 314 4 Acceptances. 90 clays. asKeu u'fc .90 (.i 1.70 Mav 25 2343 which may not bo received, relies ' nverae' oitnougn a decline of 50.G upon some Increase of revenues duo ! .cent from one yettr For this to an upturn In general business, 1 niMeral Ram P"bllc works construc and does not include such appro- I tlon- wpeclBlly of highways, has been priatfons as may be necessary for tho,e,u,reIy responsible, since new resi recons true tlon finance corporation i dential building is more nearly at a Tho task of treasury financing dur- tantlstill than for many years back. Ing tho coming fiscal year. In view of j The foregoing are three very Im the uncertain balance of the budget, ! portant industries and even the mod Is a problem that demands Attention I crate Improvement noted is an en- neforo consideration is given to the ; couraging one. The question of the ' Treasury Bills vtu (mm iimhu imiiuMii caning ior i minimum u wuicn ousmess can j additional expenditure of several bil- drop is sometimes raised, and the As the banks have faced increas lions of dollars. course of these Industries seems to Ing difficulty in employing all their Without nKsnrnnro of nvorn mont. supply some evidence on the mat- funds at remunerative rates, it was determination to keep its fiscal house' tPr; nt anv rate tnev nave now held, inevitable that rates of interest paid i ...),. 1 1 . , ) it loir trrniinrl nr inifitnrl stiirVitlv f nr . r.n li.ni- iloni-wstts elionM r-nnio rinwrii t is safe to sayi ' L1,u ,w lomN r";. , "i?" f v r - ir v; that the banks welcome opportunities j it u Investment or buslnew Kcneral business or trade recovery. clearing house reduced rates which to emp oy the r funds afely. Un- "J ?hat o other lines the recent trend has its members may pay by 2 of 1 per .......... v.,. w.v ..v. m. tiu. , Blnlo nfiunncc iliH donc more to Dcpn ol disappointing character. The : cent, maxing tne new rates y2 or l lust two years many would-be bor-; UIlsett,0 confidence check business textile industries in particular have per cent on demand deposits payable nlnulr nT.MMoM'Tn .Ztm iinS rcvivil1 ttml "Mt th0 ood effects of een-dull, -The cotton mills durIng;to banks and individuals (except longer aro entitled to that rating. Ilho f0(Urn re3l.rvo credit exnansion i March and April sold only-about-one- mutual savings -banks -for -which the I hey are in need of reenforcements profirillll tl)an tho (1ehiy mi 'tjie t Half of their production and a sharp I rate is 1 per cent), and 1 per cent S Lrt h H h li l .!!! i of ""K1 ' ''"" efatlwly with '"f11"1"' of operations has fol-ion time deposits. This reduction OI UallK Credit. IlllS is Always thO ,,,, ,..,. ... ..." , ,.A . I Inwpri. nnmPKtln rnttnn pnnsnnmtlnn I r.Ktnr tlin rnti offflfllvo frnm TUtnv caso after every great shrinkage J , hopeful fact that the Washington ob-! 1,1 Al,ril owed one of the severest; 18 to October 10 last year; however, values, and the principles or sound : Kervem uniformly predict defeat of i declines on record, tho average per the ruling of the clearing house put banking cannot be disregarded at any tlM vnrlous proposals that would lead W"ing clay dropping to 15.600 bales! into effect April 22. providing for fine. t.,i,.. . I com tin red With lOfifKl In Mnr-h An. I darliiPtlnn frnm t.hn linlnnno nn whffh As to purchases of securities slm- ' n nf tllY ..,, h,lltI !: parently the mills have not sold i their I interest Is fieurcd of a sum coual banks are necessarily cautious about! Individual purchases of bonds of the j class fur which the market at pies- j ont Is narrow, for they cannot dis regard tho possibility that It may ho ance. according to the treasury estl- i:iru'i,-'n iino me ntic summer is : mo amount, was equivalent 10 a iow- matcs. 111 prospect. Woolen goods business ering of tlie rate paid, and therefore (ieneni ttiiviiiPvt i '...,.) ih.,. for ,ul1 has not vct riovelopecl to any the new rates are actually the low- . m nu misiniss i oniiiiuiii.H extent, although several weeks have I est ever fixed by the clearing house. Hiuiuii i i.t.iy imn i.u with j empseci since ine nvuiiuacturers or-. ana represent u.ino per cent on de neceSHaiy to Convert them back into tail improvement over its predeccs-! f.-n-d thplr full linns nnd nrlrnn nrn mnnrl rlrnnsltA rtftirfvl nn f.ho nlrl cash. Always the banker must con- ; aors. so far as general trade activity j substantially lower. In the rayon in-i basis. sider his obligation to the depositors Is concerned. Soino or tho Indus- 1 dustrv a complete shutdown in June t This action was followed by a cut whoso money he Is employing. tries havo shown an upturn in the 1 in talked of, to permit absorption of ! in the rates on foreign deposits, re- I'heso considerations are not of- nature of i belated "soring rise." but!tockH nn hnnri tio tiiir arwia Gnn. rinrinv tiim n it. i nnr femi as aigumcnts against furtln r , distributive trade has been dull, and : son has not been a favorable one and i commercial demand deposits, 1 per hip nosiery mius are operating at a i cent oi demand lunds ot central veiy low ngure. bnex production 1 hanks, and iy2 per cent on time de likewlso Is curtailed, the April total posits. expansion of loans or purchases of i such broad lmlexes of activity as car securities, but in Justice to the bank- 1 loadings and electric power produc- i cr's side of thc situation. It prob- j tlon have made an unfavorable show ably Is possible for tho banks to.in. running farther below tho cor movo more freely in com-erled action j responding weeks of 1931 than In j than they havo done singly, but time j any chiller period this year. More ls required for tho development of j over weakness in the security and this policy. The organization In tho , commodity markets contributed Its : ntiveriii reserve cusiricis oi commit-1 quoin or disappointment to the i Ing period In the markets Declines tees, composed In part of bankers 1 situation, indicating little confidence to new lows In stocks, bonds and and In part of Industrial leaders, j in early business revival. commodities have both reflected and ior tne purpose or advising how funds I 1 ho most encouraging development ; caused discouragement and have cre- scrvlce payment thero were suspended. The " vw ,.,' ,J ,, . withdrawals are regarded in this ! equipment and lubricants, applied in country as 'a desirable repatriation ; accordance with Instructions on of the foreign owned gold which wasichftrt8 prepared by car greasing ex- perts. This new service is to bo In stalled by the Texas Oil company, at which tlmo a general course of in struction will bo given to Mr. Heasty and his assistants as to tho proper method In the handling of the equip ment-. ( A personal register on which tour ists from many states and foreign countries have written their signa tures Is still maintained after more than four years of continuous opera tion. Tho personal service and cour teous, cordial treatment ho occord3 his visitors has won for him many friends among the traveling tourists, who never fail to call back, when passing through La Grande. In a contest conducted by the Texas oil company during 1929 for courtesy and cleanliness, Mr. Heasty s Btatlon was one of the winners in this district. The filling station Is located on the Old Oregon Trail highway at Adnms Avenue and Second street, handling Texas company Texaco products. ment while it has been here. Of course, it is regrettable that the movement is of a partly hysterical character, due to misunderstanding abroad of the measures adopted for relieving the credit situation. The withdrawals have caused no disturb ance in -the money markets, the re serve banks having offset them by purchases of securities. A slight Increase in currency In cir culation has occurred during the month, 'the -net gain having been $12,000,000 in the four weeks ended May 25. If this indicates resump tion of hoarding it is obviously of minor Importance. Evidently the ap prehensions .of Europe over our mon etary standard find little echo here. Bank failures, which are the primary cause ot ; boarding, continue much less numerous than in the winter. They totaled 45 In March, 68 in April, and 67 in May up to the 26th. ac cording to the American Banker. The Horn! Market Tho bond market has continued under pressure of discouraged selling during -May.' Losses in the lower rated Issues of all types havo been particularly severe and in numerous cases prices have dropped to the low est ever' recorded. Higher grade bonds have held their ground bet ter, but have declined likewise. Af ter the' middle of the month the government Issues developed consid erable weakness, and tho treasury 3s of 1951-55, which at the first of the month were quoted above 04, sold for a time below 90. The influences operating in the morket are not difficult to trace. Weakness of government bonds un doubtedly reflects the apprehension In the minds of investors caused by the long delay of congress In enacting tax legislation and in effecting econ omies to balance thc budget, as well Car Washing Simonizing House Cleaning Floor Waxing Window Washing all general cleaning Work': .: Fred Warrior Phone G83W ' 1306 Jefferson FOR TEXACO Gasoline and Oils Plus Cheerful Friendly SERVICE Come lo t HEASTY'S Filling Station 2nd & Adams being estimated at 20.500,000 pairs compared with 29,900,000 in April last year. The Course of Prices Tho month has been another try- may be safely used, is a fun her de-! In Industry during the month Is tho eiopment or llio reserve policy and helated expansion In automobile iimiuiMu iiiKi wiiii-n nos provmcu sup Complete Automotive Electric Equipment Service Battery Recharging K- Rebuilding WILLARD AUTOMOTIVE Electric Company II 25 A da dim Ave. Main 520 Is sound In principle. This Is a com slructlve effort to revive employ ment, and with thc organization ex tending over tho country should answer tho complaint that credit Is lucked up In the centers. It must bo considered that Mm paralysis or Individual Initiative, dis trust of credit and fear of the fu ture extends over the whole world. Its efrect Ih to produce a disintegra tion of organized society. It Is as IntectlouH as the most insidious dis ease, and Is In fact a disease of the higher civilization, wherein credit haM been long used with Increasing efficiency, and finally, under thc enormous stimulus of war and post war conditions, recklessly. The re action has been terrible, but all re aeltoiis spend themselves at last. Peo ple do not remain In tho fear paraly sis forever, (iradually l hey realize that all of llie elements necessary to orderly business and nrosiieiitv sllll exist and that only n sensible' policy of cooperation Is needed to j restore confidence and reestablish Un economic organization In full work ing capacity, J I'art for (lowTiwuciils (o I'litv 1 In large part the Mtuiitiou Is' the f ouicnme of delay in this count rv and I In others u!m In dealing wlth prob-j leniM which have passed beyond, the control of business men and become j governmental problem, and action upon which has become more vital as port for the steel Industry against the falling off m demand from Its other customers. The seasonal peak ated further difficulties for busi ness. Tho fall in commodity prices has been a slow one, but has centered In tho raw materials and farm prod ucts which already had declined more than manufactured articles, and thc Reduction in clearing house rates Is not only a consequence of the re serve bank policy, but is calculated to assist in making it effective, since tho low return on balances In the larger centers supplies an increasing lncentivo for country banks to use their funds at home even at some what greater risk. Thus tho change will bo a factor in spreading cheap money from the New York market over thc country. The (Johl shipments Another of tho "inllallon scores" concerning tho dollar which appear FREDS AUTO BODY AND FENDER SHOP Painting- and Color Matching Tops - Curtains - Glass - Fenders Fieu Rslimiites Cheerfully Given "Cw V..A .,.,,1 1 AI,J (f? tOCC i llU (UIU DC iYHLclU Im-kI liuKeiTield, Prop. I 211 Greenwood Ave. ill Square Deal Filling Station ti nd Groceries IN THO .V!!I .11 1 I I IISON USL BATTERIES 1920 AUTOLITE, DELCO-REMY y: ELECTRICAL PARTS CARTER AND STROM BERG CARBURETORS Burgess Battery & Electric 1308 Jefferson 19.52 BATTERY SERVICE AUTOMOTIVE ELECTRICIAN Specialized Service - Speedometers - Magnetos - Fuel Pumps Mcdonald electric company "Where Your Patronage is Appreciated" PHONE MAIN 7.1H WESLEY McDONAt.I) 1-128 ADAMS AYE. Formerly Cox Auto Electric SHELL PRODUCTS Service You'll Like Gas - - Oil - - Grease Tires LA GRANDE FILLING COMPANY Main .171 B. E. Kuhn and J. J. Zweifcl ax
