The Birmingham age-herald., 1921-06-29

New York, June 23.-(Special.J J-An executive of one of the largest of the American industries has confessed to feeling, until within a few days, somewhat blue wondering how long time would pass before his corpo- ration will be doing a business equal to that which it enjoyed previous to war days, This morning he said that the situation seemed to be clear ing up. Since June l the orders which have come for the products of this industry have already been greater in amount than in any month since October of last year. The com
 modities manufactured by this cor poration are chiefly utilized in manu- featuring industries of all kinds. Therefore, if an increase of orders for It's products has come since June l 1t is evident that many, if not all, manufacturing industries are also en- couraged by signs of improvement.
 For the moment the situation is somewhat acute. due largely to the passing of dividends by various cor porations. The corporation referred to in the preceding paragraph did not postpone or pass its customary divi
 dend. although it was deemed the better plan to reduce it little. Its management was wise in war days when the business that came to il was enormoL- and the profits large, because a considerable part of the ] profits were put into surplus in the frr <f ah n securities.
 Almost all of the dividends which have been passed since March repre- sent the failure in time of prosperity properly to build up surplus. or course this does not apply to the railroads. They have had no ca pacity to build up surplus. In | many cases the surplus was put into raw material. The great leather cor poration's surplus in excess of sS0,- 900. .000 was put into hides and skins, and that, too, at time when the prices for this raw material were very high. Then there came sudden ly a very great deflation in the prices demanded for hides and skins l The result was that this corporation
 found it's surplus invested in raw ma terial. and this raw material was so cheap that it was impossible to bor- row any money upon it. Dividends must be paid in cash. although some- times payments are made in stock or 1 in script
 l An Unprecedented Situation l The business situation of this time is without any precedent. Hereto fore business has become stagnant' bankruptcies in large numbers were reported and actual or dreaded panic ! loyershadowed the business world This had always been due to over production and overexpansion, as well as to the insufficiency of our na- | tIonal banking system before the | federal reserve system was estab- 1 lished. The panics of 1873. 1884, and the world crisis of 1S92-3. and the panic of 1907 were all due to over pr oduction, overexpansion and to the | insufficiency at least in the urited States of our old national banking system.
 l Not one of these factors is to be l found in the present situation. ln- stead of overproduction there is un-. derproduction. Our federal reserve banking system has demonstrated it's strength and it's capacity to prevent panic. Some refer to the cotton sit nation. saying that really there has been no overproduction Of cotton. A
 year or two before the European
 war began our exports of cotton were little over 100000 900 bales. It would ! be more than that now if Europe was in condition to pay for cottoh'