The Washington herald., 1921-11-08
INDUSTRIAL .WEATEER CHART SHOWS REVIVALAS STARTED EX

ing Immediately following panics.
Our company slowly developed q
scheme of working under the prin-
ciples OF the business cycle, and By
1899 we had put into effect system
Of charting from the available sta
tistics of business and financial
movements.
Iron and Money Rates up..
Pig iron is one Of the chief eie-
mehts az our finished product. In
August, 1907, our charts showed US
that the price Of pig iron had risen
from . low point Of approximately
$40 a ton in 1904 to little over s26
a ton. Interest rates had also risen
to a prohibitive point and the gem
eral price structure was up in the
clouds.
At . meeting Of our board of d.
rectors August 2, 1907, We took ac-
count Of these facts that our charts
showed US so graphically and dscid-
ed that we would set our house in
order for the coming storm. For 1t
was plain to us. from our charts
that inhation had gone TO such an
extent that q panic was iuminent.
The banking system Of that period,
lacking the essential element OF
elasticity, was rapidly reaching the
breaking point. 1t was obvious
that the credit burden was soon to
become disproportionats 70 the abli-
lity Of that system to stand the
strain
We proceeded Immediately 20
liquidats cur inventories. cut down
Production. pay our debts and buy
only on . day-to-day basis The
panic came In October, three months
after We had been able 20 predict
II. The end Of the year found US
with, our debts paid and our invsn-
tories relieved Of the load Of high
cost material. We not only came
through the storm, but We were
ready to take advantage Of the frst
signs Of revival and to help the re-
vIvs1 along. And II the number Of
business concerns employing this
method Of stabilization can be In
creased It will check the dangerous
peak Of supposed prosperity and
lessen the tragic dip into depres-
sion
After the 1907 panic pig iron went
down to S14 . ton and remained
substantially at that ngure until
early In 1915. The war had come On
in the meantime. bringing depres-
sion with It. People were sayIns
that the prevailing dspression would
last indefinitely, at least for the
period Of the war. The Iron and
steel business was especially hard
hit But our charts showed US that.
although the price Of pig iron re-
maIned stationary. production was
Increasing. In other words, In the
face Of the pessimistie prophecies
the demand was growing.
Time to Buy for the Rise.
We decided that then was the
time to buy pig iron. In February,
1915, we converted q large part of
our cash reserves into q pig iron
reserve. We bought pig iron and
stored t. Two weeks After We bad
made our contracts the price. Of pig
iron Jumped 80 cents . ton and
from then. on IL advanced steadily
til IL reached aSs . ton. We
bought In the market for our day
to-day needs, only nibbling at our
reserves, until the price reached S44
a ton. when We began using our re-
serve stock.
When America entered the war
and the government controlled GER
tain commodity prices pig iron went
back to $33 a ton, where it stood
when government control ended.
After the government ceased price
control pig iron went down to S2s.7B,
and then up again until 1t stood at
the general level Of t4s Z ton In
July, 1920. We know Of instances
In which bonuses brought the price
up to S56 q ton, but our charts
showed the general level Of S46 q
ton. At the same time we saw in
tsrest rates at sh. ., and 10 Per
cent and prices generally inflated.
Once more our directors decided
that depression was In sight. Once
more we liqutdated our inventories,
paid our debts, cut down produc-
tion, and got ready for the storm.
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