Newark post., 1921-11-02
"PEAK" YEAR FIGURES
APT TO CAUSE WRONG
PUBIC CONCLUSIONS
Comparisons of Today's Con-
ditions with Abnormal
War Conditions Unfair

Figures dealing with industrial ac-
tivities in this country are apt to be
misleading and to give more pessi-
mistic impression of manufacturing
conditions than is justified. This is
because most all comparisons are
made with conditions as they existed
in 1920 or 1919, at which time the in
dustrial world was at the flood tide of
activity.
An example of this misinterpreta-
ton is as follows: During the war
there was scarcely an industry in the
United States but what greatly in
creased it's capacity. A considerable
percentage of them doubled and
tripled their capacity. The increased
capacity which they then created in
order to meet the wartime demands,
still exists. When it is stated, then,
that certain industry today is only
working 500 of its capacity, it should
be kept in mind that this is 500 of
it's wartime capacity. 1t is using 500
of its war facilities, instead of 500
of it's pre-war facilities.
This means that in comparison with
its output prior to the war it is now
running nearly normal. To illustrate:
If plant increased it's capacity 500
during the war, it's present capacity
is 1900 as compared with 1000 in
pre-war years. Therefore, if this
plant today is running 500 capacity,
it is running 500 of it's present
facilities which is equivalent to 800
of its pre-war facilities; so that such
a plant compared with pre-war days
is really running only 1919 below
normal.
An apt illustration of this is fur
nished by the present situation in the
steel industry. Market reports show
that the steel industry is running
only 80 per cent capacity. This means
about 17,5OO,OO0 tons a year on the
basis of the present capacity of 52,-
100000 tons a year. But in 1914 the
capacity of the steel industry was
only about 35,OOO,0OO tons. During
the war the capacity of the steel in
dustry was increased so per cent,--or
to the figures named above. The pres
ent output of the steel industry, IT,
100000 tons a year, while only one
third of its present capacity, is one
half of its pre-war capacity. And, in
point of fact, the pre-war capacity
was seldomed utilized 100 per cent. In
1912 and '13 the production was only
30,000,000 tons, while the best prev
ious year,-1910,-showed production
of only 25,000,000 tons. These figures
illustrate the necessity, in order to
ascertain how present production
compares with normal conditions, of
comparing present production with
production prior to the war instead
of production during the war, and
also of comparing present production
with capacity production in pre-war
times, rather than comparing it with
capacity facilities which now exist.
The same principle applies to other
industrial and commercial data. The
people are apt to forget in reading
statistics which show tremendous
slump as compared with last year and
the year before that last year and the
year before were "peak" years in the
commercial and industrial world An
example of this is furnished by the
recent statement of our foreign trade,
which showed great decline from
the years of 1920 and 1919, but when
compared with trade in 1912 or 1913,
which were normal pre-war years, the
difference is not so striking. In point
of fact, the trade reports show that
our exports to Germany for the cur
rent fiscal year are greater than they
were in the year 1914.
It would not be true or fair to state
that there has not been decline in
wages, foreign trade and industrial
output, but in studying this decline one
must remember that too pessimistic
conclusion can be reached by compar-
ing data of today with data Of the
abnormal years of 1919 and 1920. To
get fair appreciation of the real
status of the country, comparisons
should be made with the normal times
which existed prior to 1914.