The Washington herald., 1921-11-09

the long run normal OF prices. of
our materials stock limits de-
crease. At some price. well above
the normal we begin to slow down
as a matter of general policy. and
presently we are again buying only
frCm hand to mouth.
Prices may still be increasing
and on some purchases we may lose
by holding to the policy of smaller
quantities for immediate needs. But
we have never been able to predict
exact prices, and our experience Is
that we come out better in the long
run Ly our more conservative policy
than by buying heavily up to some
peak price at which we can only
guess.
Naturally, with regard to the
items of most account in our par
ticular line os business, we keep
closest watch upon the special N
fluences which seem to govern the
general trend and fluctuations of
those special markets. With them,
as, in fact. with all the lesser ones,
we are guided rather than shackled
by our general purchasing policy.
But on the whole II Is very broadly
lived up to. 1t certainly justified
itself last year by leaving US with
light stocks on hand of almost
every item when the prices started
to break.
What business needs generally
is not less vigilance on the part of
individual concerns as to the spe-
cial conditions affecting particular
lines, but a very much larger and
more detailed body of information
gathered widely and authoritative
ly and distributed promptly and
frequently, regarding the things
that both govern and exhibit the
currents at work to bring about
and accelerate or retard the fluc-
tuations of the business cycle"
What sort of information would
you have gathered and distributed"
The most important thing, 1t
seems to me, Is to have well pre-
sented and widely dist ributed by
some agency in which We could
have absolute confidence those facts
which would help towards correct
estimates of the course of sales and
prices. These would be at least the
following:
Statistics of inventories and
goods on order.
Statistics of production with
the ratio to production capacity.
Statistics of construction be-
gun and under way
Weekly earnings and hours
by trades and establishments
with the ratio to capacity
Employment statistics.
Statistics of cost funda
mentals.
Factors affecting probable de-
mand for or consumption of
specific articles.
Remember that while consump-
tiOn. especially in a country so
large as ours. and with a constant
ly rising standard of living. is cap
able of indefinite increase, the rate
of Increase cannot be indefinitely
speeded up. Nor can expansion
either exactly fOresee or exactly
match that rate. Whenever ex-
pansion Overtakes or materially ex-
ceeds that rate. it strains the whole
structure. and we are due for a
tumble. Taking the country at
large. and having in mind the 'uI-
innate consumer ON the up wave
we are stocking up. On the down
wave we stop producing and are
drawing on stock. That's the story.
every time"
mere Mr.. Dennison reverted to his
sketch Of the business cycle.
Measures at Peak and Trough.
Now, take this sketch. and note
the points at which I have put ar
rows-A' and b 1t is to the frotb
Oh speculation at the top of up
wave and to the gloom of paraIyz-
ing fear at the bottom of the
trough, that follows the break. that
we shouid devote our efforts of ed
ucation and cooperation. The ar
row a points ito the place where
the information that l have ont.
lined as desirable would heIp us TO
put on brakes. Business now will
not listen to warnings uttered at
A-thlngs are too good, the boom
VIII go on forever. So the naxt
pest thing is to apply the same kind
OF information, at the point where
the other arrow points to b when
we are buried in gloom, and bus
mess feels as II the bottom had
lalIen out of creation. Then Is the
Time to have correct estimates of
the course of sales and prices, and
on the basis of such estimates appIv
Judlclous expansion of credit and
easing of interest rates with
preferential loans for productive
purposes. for the undertaking of
withheld projects. Then. when bus
mess Is in a teachabIe frame of
mlnd' after bitter experience. is