THREE AGES OF 1937

Evening Post, Volume CXXV, Issue 21, 26 January 1938, Page 14

THREE AGES OF 1937

BUSINESS IN U.S.A.

RIOTOUS YOUTH TO '■■-X CYNICISM

"Youth is a blunder; manhood' a - struggle; old age a regret." Well might one take Disraeli's familiar", epigram and apply it to the year 1937, (says a writer in. the ''Literary Digest" in reviewing American business conditions during the past year). Its youth (January to March) was frittered away in riotous living, Its maturity (April to August) foretold its doom. Its old age (September to December) was passed in cynical retrospection. Anno Domini 1937 was a iat baby when it was smacked into life. Business was booming; steel furnaces roared almost at full blast. Textile mills spun near capacity levels; a double hooker of dividends (at the close of 19,36) whirled • investors into an intoxication of prosperity; employment and pay-rolls, climbed back near predepressioiv levels. . But during its youth our economic doctors sensed that 1937 had become infected with an, inflational psychology. Some diagnosed the disease as con-i genital, an inheritance from its father. 1936. - Also during - 1937V'youth,' and extending:, well into maturity, workers in the:steel arid automobile (and other) industries went on strike. At the same time retailers in many industries, hearing ; the threats of inflation and of strikes, piled up their inventories and thus kept manufacturers working-at; full' tilt. ; THE TURNING POINT. When April came 1937 was feeling I -high"; but April saw the turning i point in its affairs. Early in that month President Roosevelt warned that prices of durable goods (iron and steel) were rising faster than prices for consumer goods, and he declared that the New Deal would attempt to curb inflationary price increases. At .tha. end of the month the Governors ■of the Federal Reserve System took the reserve requirements of the member banks to. the full, legal limit of.'an ;average of-20 per cent., thus putting :iht6lplay a potent credit control' in-; 'tended to prevent any further credit :. inflation.- : " ■ , From /April onward stock and com-: ■modity, prices began skidding down-.) : JiilL Farm prices fell continuously as '~ each crop estimate foretold greater i bumper "crops; Other commodities, rsuch as rubber, tin, and copper,' fared 'even ( worse. ' ' ]'. ■■.-■•' STOCK MABKET FALLS; ■ The tip-off to the general public that : 1937 had turned sick, did not come •'until the autumn. Then, during September and October, the stock market, ; :-vvhich had been sinking slowly, sud.denly fell.with three sharp bangs; and; ■ 'as the market fell it touched off other ■ .declines. ' ;. Once this happened, business • analysts, amateur and professional, ■ burst forth' with causes and cures. ■ 'They noticed that 1937's blood pressure —commodity prices—had fallen off ; 'alarmingly. Its temperature—stock j prices—which measures its health inversely, had receded to the lowest level for two years. In addition they found • .that 1937 was suffering from:,harden- , ing of the arteries—of production. . ■ Yet comparisons with scandalous ; 1929 showed basic conditions to be far then from 1937. True, con-! ■ sumption had fallen off, inventories 3,had piled up, production was being 'curtailed, unemployment was rising. " Analysts feared that the recession of .1937 might well develop into a de- ■ pression of 1938. . '■' From the stock market came pleas'; for relaxed Stock ■ Exchange' Control) ■ regulations, to restore liquid markets. In return the Federal Reserve Board eased up on margin requirements, and 'the S.E.C. warned exchanges that they must exercise better management • methods or else succumb to direct Government control. TAXES ON SURPLUS PROFITS, j ■ From business men came pleas to modify, if not repeal, such taxes asi ■ those on capital gains and surplus! profits which, they argued, were hamstringing business. In return Congress in special session began a study of those taxes.' From others, alarmed over.the New Deal fiscal affairs, came the cry that the swelling public debt was dangerous and that continued unbalanced budgets were hurtful. In return, President : Roosevelt promised .a. balanced Budget, >hile the last few months have seen a .change in the character of the public debt. < On the positive side the President proposed a huge housing drive to revive residential construction, hence to aid the lagging capital goods industries, to stimulate other industries, and to restore the country to prosperity. Moreover, the President began i late in the year a series of peace talks ■with utility heads, who promised that if a satisfactory agreement is.reached they will place orders for deferred ■equipment and thus stimulate the heavy goods industries. To most dispassionate observers the recession of 1937 was but a normal phase of the recovery cycle. They argued that once cost and price disparities were' corrected and : once glutted inventories were used up, the groundwork, for recovery would, be laid. But as they carted away the carcass of 1937 and awaited the advent of 1938. they vowed that the New Year would lead a more sober life.

■ ;. ■■■••;-■ . .Highest ' Xield. .' '■■■•. ' . ■ . . .price. p.c, P4., 'j- -. .■'■;' ■ , ■- ■ £■ <: d. £ «. d. ! . . ' Wellington. Chrisic.hui.L-li City, 4% ■ - i p.C, 31/3/40-44 .. a. 102 a 0 — ; Union-Bank .... l.s:-' 9.10 0 3 12 Carlton Brewery .. u. 3 5 5 3 13 '4 Tooth & Co. ..-: '2:15 His 3 15 10 Swan Brewery 1 T 4%. 4 11 3 Woolworths Ltd., ord. 15 9 2 8 0 Wool-B-orths (N.Z.), Ltd. I 0 (i ;i L3 2 Radio (1936) Ltd. ..120 3 12 9 Taringamutu Timber . 0 .15 0 — N.Z. Breweries ...:..■ 2 7 1 3 12 3 Burns, Philp, & Co. . 2 17 0 3 10 2 Morris Hedstrom .. 1 7.-.» '4 2 10 Mount Morgan 0 9 8 — Woohvoiths Holdings •. .-Ltd, 0 14 -m ..- . . ■ " Auckland. Govt. Bouds, 1 p.c, 1943^6 a. 103 a 0 '3 13 6 South British Ins. 2 8 0 .216. 8 National.Mortgage A . 2 5 0 5 12 1 Wellington Gas * 1 1« 8 4 7 3 Northern Steam .... 0 4 6 7 6 8 Northern Roller Mills 1 0 fi 3 18 0 Reid (N.Z.) Rubber .. 1 6 3. 6 110 Reid (NiZ.) Kubbei- ».," (rights ..' .;.... 0:110 . 10 18 2 Mount Morgan..." CO 3 — North Broken Hill .. 2 15 0 ■ .. — N.Z..Eerpetxia).Forests 2 : 7 6 . .— ChristcHurch. Iusei 1, Stocky 3%' p.c, '.1953-57 ,......■ 97..-.5 0 — Broken'Hill• Fty. .... 3 1 2 6 4 0 0 Kauri Timber ). 2 3 .6 14 9 Grey River (8s 9tl pd.) 0 11 0% — Broken.Hill South .. 115 9 — Mount Lyell ........ J. 12 3 640 Mount Morgan ...... 099 — jWkitcombe & Tombs . 3 3!) 4 14 1 ! Woolworths N.Z., ord. 1 0 8 3 13 2 Ballins Brewery (15s I pd.) 0 J2 (I — Thyrodone 1 11 0 — Dunedin. Insv. Stock, 4. p.c, ■ 1941M9 a. 103 7 B 3 14 8 Inscr. .Stock, 4 • p.e., 1952-55 a. 103 7 fi 3 17 S ■Coinm, Bank Aust. *a. 0 17 1 318 0 Mount Morgan ...... 0 !) 8 — '•: Broken Hill Pty. (con.) 1 J.I 0 — . N.Z. Breweries 2 7 0 3 12 4 N.Z. ■ Refrig. (10s pd.')-..' * 0 9 1 6 11 *Cum div. a.—Market pricp includes acciuecl iuteiest but not brokerage. 1.—Less Rnglish income tax. s. —Paid in sterling. v. —In Australian currency.