davidaulloa/AmericanStories huggingface dataset:
New-York tribune., 1921-02-27
Price adjustment Elements

1he price readjustment involves two
elements. The first Is the lowering Of
the general average Of prices. In this
we have made very great headway. The
February ! had fallen at least 35 per
cent from its peak. The second ele-
ment, however, is such readjustment
among particular prices, Including
wages and other costs Of production, as
W VII give, us harmonious price system.
! This we have yet to accomplish. Some
prices have fallen greatly, others have
fallen much less. Retail prices have
Jagged far behind wholesale prices in
their decline.
The general average Of wages has
fallen much less than the general aver
age OF wholesale prices, and in many
lines wage rates have not been reduced
at all. Rents move slowly, and the
shortage of housing presents a pre-
culiarly obstinate difficulty in the
present situation. House rents will
go down through the sheer inahil-
ity of tenants to pay existing rents.
/ Through various devices men with
falling incomes will reduce their rents,
by contenting themselves with reduced
housing accommodations, by families
doubling up and in other ways. A vast
deal of new building is called for, how
ever, before rents can be reduced TO
anything like the degree which Ia de-
sirahle.
Business rents are likewise not easy
to reduce, particularly where long
leases exist, but pressure on office
space and space for other business
purposes is being reduced, partly as
expanded businesses realize that their
needs are less urgent than they
thought, and as they sublet portions Of
their space. Further relief in Office
buildings is coming rapidly as mush-
room propaganda organizations give
way to real business men.
A satisfactory price readjustment !s
dependent upon the restoration of vigor-
Gus competition and of open markets.
Prices must be cut until goods move.
1t Is impossible to forecast in advances
at what level goods will move. Moth
ing but experimentation In the open,
two-sided market will determine this.
There are prices, however, for all prod
ucts and all services, at which demand
will equal supply and at which activity
can be resumed. The markets which
realize this first will have the earliest
rsyiyals. Thers Is already evidence
New-York tribune., 1921-02-27
suming her proper place in the worlds
production and trade.
UrsOund Paper Money

y
(14) Falling exchange rates when
due solely to distorted trade balances
tend to correct themselves through
checking imports and Increasing ex-
ports on the part Of the country whose
currency is below par. When, how
ever, exchange rates arc declining be-
cause of the sinking value Of IRE
aeemable paper money due to increas-
ing financial difficulties of govern
r1ents or issuing banks, this generali-
ration ceases to hold. Rising prices,
due to depreciating paper money, like
wise fail to check consumption. An
ticipating further declines in exchange
rates and further increases IN prices,
people become extravagant and specu-
lators buy goods more recklessly.
Production, moreover, is hampered BY
tlpctuating and falling values of ire
deemable paper money. in view OF the
impossibility Of forecasting future
prices and future costs. The greatest
single evil in the world to-day is the
unsound paper money Of the Continent
Of Europe.
(15) The American labor situation is
improving. The important problem is
that moderate men among employers
should cooperate with moderate men in
the labor ranks TO hold In check ex-
tremists in both camps.
Q6) Extravagant consumption, both
In the United States and in Europe,
meant that an abnormally large pro.
portion OF our industry was devoted In
1919 and early in 1920 to the produc-
tion of goods for immediate consump-
ton, including luxuries, rather than to
production of housing and long time
equipment. Physical capital IN the
United States deteriorated decidedly
during 1919 and early 1920. We were
living on capital. This ominous aspect
of the matter is rapidly being cor
rected.
.1) OF that reduced pars Of our
labor and resources which was devoted
to the production of capital a substan-
tial part was misdirected during 1919
and early 1920. Government ship
building continued on a great scale.
We over-expanded the automobile in
dustry. We neglected railroad equip
ment, public utilities and housing.
Unwise expansion has ceased. New op-
erations Of the right sort are being
planned,
New-York tribune., 1921-02-27
Erie,P
Garner, Strong, g,
Freight Road
Offers Excellent Service ON
Perishabie Merchandise.
Despite Unenviable Rep
utafion i'm Wall Street
Reason for the Situation
Record i'm Building Line to
Chicago Stressed; Nov
Striving for Economy
BY William E. Hooper

It is the weak railroad which is al.
ways making the most costly Efforts to
get additional traffic-often the least
profitable traffic. "From him who hath
not shall be taken away that which he
hath" Is as true in regard to railroads
as it is in regard to individuals.
In the days Of rate wars It was al
most invariably the weak road which
began to cut rates. In the day of re-
bates it was the weak road which could
most easily be made to give the largest
rebate. To-day it is the weak road
which offers the greatest inducements
in the way of service to secure addi-
tional business.
The Erie is weak railroad, both in
respect to its capitalization and to its
physical situation. 1t is more than q
hundred miles longer than its competi
tor, the Pennsylvania, between New
York and Chicago; is longer and haa
much worse grades than its competitor,
the New York Central and is longer
than its competitor, the Lackawsnna,
between New York and Buffa'o. Fur
thermore, the Erie has no coal mines
on it's Western lines, so that :ts fuel
for LOGON otives is, in general. more
expensive per ton than that of IT'S COM
petitors.
A standing joke in Wall Street, which
recurs with the regularity Of the
grounding and his shadow stuff, is
that the Erie is going to pay dividends.
If the Erie can continue to meet it's
interest charges it will need to show
first class operating economy. The
funded debt is substantial enough to
~, L ~ sA-I u
ond preferred, ETC., stodks are the
shadows Of an earlier generations
bubbles,
New-York tribune., 1921-02-27
Textiles Well Absorbed
Wholesale Business Far Ahead
of November

Wholesale sales Of textiles In Feb
ruary have been more than 200 per
cent greater in volume than in No
vembar of last year, according to es-
Inmates made by Snelson Chesney, vice.
president of the Textile Banking Cor
poration, which handles the sales for
number of textile manufacturers.
MIR. Chesney asserts that the in-
creased volume Is the result of wide
spread buying among number of mer-
chants, individual orders being placed
cautiously and mostly for smail lots
OF merchandise.
New-York tribune., 1921-02-27

The specific abnormalities manifest
ed in the United States in 1919 and
early 1920 were the following:
~ An export balance averaging $780,
100000 to $500, 100000 a month and ex-
ceeding the export balance during the
war itself, despite the fact that as a
creditor country we should normally
have had an import balance. This abb
mortality remains in large part uncor-
rected in the latest published figures,
though signs of a change are in evil
dence.
(2) During 1919 and early 1920, de-
spite our favorable balance Of trade
with the world as a whole, we were
losing gold heavily because Of our ad-
verse balance Of trade with the non
European world. The closing months
Of 1920 corrected this.
(s) AS a consequence of losing both
gold and goods in foreign trade, we
rad the awkward combination Of rap
idly rising commodity prices and grow
ing tension in the money market.
"a Governmental expenditure conttn-
ued after the armistice for several
months at rate of two billion dollars
a month, and since the armistce the
government has spent practically as
much as it did during the war. Gov
ernmental expenditure has tapered off,
but still continues very great.
(5) Municipalities. able to float tax
exempt securities. made excessive de-
mands On the money, commodity and
labor markets at time when the strain
was already too great.
90 With the return Of four million
men to industry from the army and
navy in 1919, we witnessed sharp de-
cline in the physical volume Of goods
produced in the United States in 1919
as compared with 1918.
New-York tribune., 1921-02-27
Economic Difficulties of Continent as
Pressing Now as Two Years Ago, Says
DIR. Anderson; Secs Hopeful Signs
BY DR.. B. Nj. Anderson Jr.
Economist, Chase Notionol Bank


ME article concerned with the
which brought
to which these unsound conditions and tendencies
and corrected by the crisis and with the
adjustment yet
The root of American troubles is be Europe
European difficulties fully
Apart from agriculture the revival
OF Europe has been hesang and slow while conditions public
and banking have steadily
recent MONTHS still stand high above the figures
standing of European in the foreign
lower than the early l99
activity, however is not dependent the
problems
New-York tribune., 1921-02-27
Quit Millinery Association

Jerome c, Mendel, secretary OF Tie
Retail Millinery Association of Amer
lea, has resigned, effective March 1
and will thereafter devote all Oh his
time to the development ef "Stylester. y
a millinery publication. Heber Ne
Donald, publicity agent for the mil
linery association, alse hsa resigned.
New-York tribune., 1921-02-27
Deterioration OF Railroads

Cd Deterioration in our railroads, as
a consequence of the war strain and
of labor conditions, hampered the op-
erations of many businesses. More
traffic was offered than the railroads
could handle. shortage of materials
was the result of this congestion on the
railroads. Goods in transit were tied
up, with the consequent freezing of
bank credits based on them. The situa-
tion was complicated by the fact that
railroad rates were lower than they
shou d have been, which increased the
amount Of traffic offered to the rail-
roads and imposd heavy burden on
the Federal treasury. Recent months
have seen great Improvement here,
(8) Rising costs Of production,
(a) labor costs,
(b) interest rates and money
rates,
(c) rentals,
(d) raw materials,
(e) wastes growing out Of rail-
road congestion,
(f) coal, and
(g) declining managerial effici-
ency,
all conspired to cut profits and TO
create business embarrassment. In
many important industries profits de-
'clined or disappeared. Such situa-
tion is a signal for crisis. Credits
are based on earning power, and as
earning power diminshes creditors be
gin to press for collection, liquidation
is forced and crisis comes.
(9) Industries with fixed prices but
variable costs, as public utilities, gold
mining. railroading and the like, were
especially hard hit in 1919 and early
1920. These industries now face better
days.
(10) Competition among sellers was
in many cases eliminated in 1919 and
early 1920, with consequent decline
in business efficiency. Labor monopo-
lies also grew strong. Competitive con-
ditiona
New-York tribune., 1921-02-27

Sterilization in the wholesale and re-
tail shoe markets for the coming spring
and summer seasons has been achieved,
IN the opinion of a dozen leading shoe
retailers in this city. A small ques-
tionnaire used in compiling current in
formation on the shoe situation reveals
q startling unanimity of opinion on
the volume of present business, prices
and the outlook for the future.
Apparently the lower price ranges
now in effect have induced consumers
to renew their purchases of shoes. Of
the twelve retailers interrogated ten
replied that the volume of sales in
pairs at present is larger than in the
corresponding period last year. Most
Of the retailers asserted that Janu-
ary was record month in the number
of pairs sold and that February prom
ises to break another record. The low
er prices, though, have not brought in
as much money as last year to five re-
tailers, but the other seven say that
in money value their sales are ahead
of last year.
The question "Do you expect prices
to advance or to decline from present
levels :" was one which the retailers
were reluctant to answer. Eight out
of the twelve, after some reflection, an
swered that in their opinion present
prices at which early spring footwear
is offered may be expected to be main
tanned throughout the season, except,
of course, toward the close of the sea-
son, when clearance sales are in prog
ress. One retailer of mems shoes is
Of the opinion that prices will show
slight decline in the near future, and
a women's shoe merchant also ex-
pressed the same opinion, but with
some reservations. Another retailer,
Who handles both mems and women's
footwear, believes that prices will show
an upward tendency, and still another
merchant expects hardening of whole
sale prices from now until April, and
then q, slight recession through the
New-York tribune., 1921-02-27
Changed Trade Psychology

(l8) Business psychology in 1919
and early 1920 manifested an Irrational
exaltation OF an extreme sort. From
this we swung to state of shell shock
in December of 1920. To-day we have
recovered from shell shock. Business
men are facing facts equarely, with
caution but with courage.
Progress in credit liquidation has
taken place since October of 1920, but
monetary ease has not yet been
achieved. The reserve ratio Of the
! Federal Reserve system in recent
weeks has been rising slowly at the
rate of fraction of per cent week.
"A much more thoroughgoing paying off
of loans will have to precede real ease
in the money market. With any con-
siderable acceleration in the movement
of goods, however, this might come
with surprising suddenness.
Price readjustment has gone FAR, so
far as the general average Of whole.
sale prices is concerned, but harmo-
NOUS price system has not yet been
achieved.
The industrial readjustmens involves
the partial diversion Of labor and re-
sources from the production Of con-
sumer's goods, including luxuries, to
the building Of houses, to the improve
ment of railways and public utilities,
and to other production OF capital
J equipment.
New-York tribune., 1921-02-27
Arguments for Raise

For example, when railway traffic
was rapidly developing, the brother
hood statisticiahs argued with great
persuasiveness for the increase in
wages based upon the increased pro-
ductivity of labor as revealed by the
growth in ton-miles a.d car-miles. and
in car and train loads. When traffic
inconsiderately failed to grow with
sufficient rapidity and costs of living
began to mount, the old basis was
abandoned and much more appealing
argument-that of the cost of living
was substituted. But it must be
obvious that increasing cost of living
furnishes no proof ono way or the
other as TO whether wages are ulti-
mately reasonable or not. It may
Justify g Temporary Increase. but il
New-York tribune., 1921-02-27
Condition Fairly Good

Inc physical condition of the Erie ia
to-day fairly good, although not rs
good as when the writer made trip
over 1t few years ago. The general
public probably hardly realizes how
good freight railroad the Erie is. In
the years from 1902 to 1914 it was con-
verted from a crooked, single track,
one horse road to a modern double
track trunk line from New York to
Chicago. This transformation, carried
out while the Erie was without credit.
in fact, continually on the verge of
bankruptcy-will always stand as one
OF the greatest achievements in Ameri-
can railroad management.
It Is the sort of thing that has been
done in the case of other roads by a
receiver having the backing of a Fed
eral court and the ability TO raise new
money on liens prior to the outstand
ing bonds, but F. D. Underwood did r.
for the Erie without either of these
two things.
When the enormous increase in traf-
fic came in 1915-16 it found the Erie
with its first class main line laid with
comparatively new, heavy rail, with
ample yard facilities and with some
heavy freight locomotives. Shop facil-
tiles, especially facilities for repairing
engines, were inadequate, and that is
one thing that is proving q serious
handicap to-day in the more economi-
cal operation of the road. LOGON o.
tives awaiting and in need of repairs
amount to nearly is per cent of the
total number in service.
During the years of rehabilitation
the most grinding economy was neces-
sary. Erie officers and men were paid
less and worked harder than those of
any other trunk line. AS is so often
the case, the hard-worked poor family
turns out the most loyal and best men.
SO 1t was with the Erie. When, however,
a uniform wage scale was adopted for
all railroads, the increase in operating
expenses was out of proportion to
what it was on other roads, Instead
of better pay increasing the output Of
man-hour of work, just the reverse
was proved to. be true, and this was
especially noticeable on the Erie.
New-York tribune., 1921-02-27
Foresee Recession irs Fall

Practically all of the merchants de-
clined to guess SO far ahead as next
fall, but the impression prevails that
by that time there will be further gen.
eral recessions, although not SO sharp
as those that have occurred within tho
last year.
On the subject of prices that will
appeal appeal to % the public some differences Of
this information it was necessary to
classify shoes according to quality.
Three classifcations were made, high,
medium and low grades. Again these
had to be subdivided in mems and
women's shoes, since 1t is generally
recognized that women's shoes, contain
New-York tribune., 1921-02-27

Of revived activity in certain lines
where price readjustments have been
most drastic. There is no justification
for other businesses to hold back. We
shall all be better off when we def
nitely take the plunge and have done
with the thing
New-York tribune., 1921-02-27
Need Equilibrium

The price fabric involves retail
prices, wholesale prices, wages, freight
rates, money rates, foreign exchange
rates and q multitude of other items,
most Of which ere final prices for one
producer, but are cost prices for an
other producer. 1t is necessary that
the prics readjustment should con-
tinue until costs and prices arc in
equilibrium, before the real resump-
tion OF business activity can be ex-
pected. The open market, with free.
ewo-sided competition, gives the an.
swer to this problem.
Our problems are manageable but
they are not all solved. Our general
business and credit system is exceed
ingly strong. Our businesses generally
made wise use OF the enormous profits
OF the war and postwar boom. Divi-
dend policies were conservative. over
sixteen billions of corporate profits
were turned back TO surplus. Inven-
tories and other assets were conserva-
lively estimated. The total wealth of
the country, over $25o,000, 100000, is
enormously greater than the volume of
credits resting on it. Credit risks have
been diffused, by variety of wise
practices. There are, moreover, distinct
signs Of reviving activity in lines where
price readjustment has been most
drastic and the lines where trade is
still deadlocked will do we'll to learn
that their prosperity is to be found
In competitive open market conditions.
New-York tribune., 1921-02-27

leaves the real question as 20 the
reasonableness tf the basic wage en-
tirely untouched.
Arbitration boards have struggled
with the question and have had much
to say concerning what constitutes a
reasonable wage, but when all the
verbiage has been brushed aside the
final verdict of the board has usually
stood upon middle ground between the
extremes Of the two contestants. In
other words, the board has decided that
the reasonable wage is what the en-
ployers can be induced to give and the
employees to accept.
While frequently conceding in their
labor controversies that this or that
class of labor should have an increase
because its basil wage was too low.
Che railways, generally speaking, have
resisted the more extreme and far
reaching demands of the labor organi-
cations and have fallen back upon the
defense employed by the bankrupt At
lanta, Birmingham & Atlantic-that
their earnings were not sufficient to
warrant the increase demanded.
Resented by Labor
This defense has always been re-
sented by labor, which refused to recog-
HiZe CnaC lCS reward Tor service per-
formed should bear any necessary re-
.lation to the ability of the road to pay.
Receivers money is just as good as
any other" has been remarked more
than once. This position is sound, pro-
vided there can be found by The Labor
Board formula for reasonable wage
that will settle the question on its
merits. Congress has assisted to the
best Of its ability by writing into the
transportation act of 1920 the require
ment that the Labor Board in de-
termining the business and reasonable
ness of wages shall take into account
the scale of wages paid in other in
dustries for similar work, the relation
to cost of living, the hazards of the
employment, the training, skill and re-
sponsibility required, the regularity of
employment and the need for adjust
ment of previous inequalities.
This list, while suggestive and help
full, settles nothing. It merely furnishes
a guide. 1t leaves the way open, as
all problems of reasonableness must
necessarily do, for the exercise Of a
wide discretion.
New-York tribune., 1921-02-27
Offers Fastest Service

1t is not surprising, therefore, to the
railroad man, although it may be to
others, that the Erie before the pc
riod of government operation offered
the fastest freight service of any road
between New York and Chicago. and
that it handled larger proportion of
perishable freight, such as California
fruit and dressed meat and packing
house products, than any other road.
This business is eastbound and the
refrigerator cars in which it moves
have to be sent back empty. The rail
road company used to pay the owner
of refrigerator car cent and half
mile whether the car moves loaded
or empty, receiving, of course, the
regular freight rate on the contents Of
the car when it is loaded.
This rental which the railroad c2m-
pany pays the owner of the refrigerator
car has now been doubled, so that
since the car has to move mile empty
tor every mile it moves loaded the
railroad now pays rental of six cents
mile for its loaded refrigerator cars.
Say the car loaded carries twenty tons,
this rental means a subtraction of
three mills ton mile from net profits.
AS general rule if a railroad can
make net profit on freight Of three
mills ton mile it is doing we'll In
OeASA "oAuo, LiilS buSllSSS is DdTGly, II
at all, profitable. Even if the Erie
owned the refrigerator cars it would
still have an overhead charge CORE
spending to the renta- now paid. Dur
ing the period of government opera
tion the proportion of fast freight was
greater even than in 1914 and 1915.
In contrast to this fast freight busi-
ness is the haulage of anthracite. We
are accustomed to think of the Lacka-
wanna, the Lehigh Valley, the Reading
and the Delaware & Hudson SIS hard
coal roads, and forget that the Erie
gets quite large share of this busi-
ness: The tonnage of anthracite on
the Erie is greater than the tonnage
Of any other one commodity Anthra-
than any other commodity. The haul
on this is not long and it Is largely
eastbound, but is probably the most
profitable business that the Erie does.