The gazette-times. [volume] (Heppner, Or.) 1912-1925, 1922-10-26
BUSINESS OUTLOOK
IS MUCH IMPROVED
Increasing Demand for Commodities.
Production Speeding Up.-No Dan
ger of 0ver-Production
By ROBERT E. SMITH.

II is said that the surest way to
hasten longed-for event Is to create
universal expectation of it. The
stage is set and ready for the appear
anee of the business boom so long
and so eagerly anticipated; it Is the
psychological moment. Perhaps we
can not go so far as to say that the
expectation is universal, but at least
it is true that the feeling Of optimism
and happy expectation over the busi-
ness outlook is very general. We have
noted but one exception, but one dis
senting vote to the poll of optimism.
The National Association of Credit
Men passed resolution at their con-
vention averring that "there is no
ground for believing that business
boom is in sight. The dan
gers of rising prices and increased
production costs should be appreciat-
ed by all concerned" Most merchants
are inclined to believe, however, that
this warning has ring not unlike
the cry Of "Wolf!", for as a matter of
fact, stocks are unusually low and
there is less commodity speculation
than there has been for years.
With the increasing demand for
commodities, production is being
speeded up to the limits imposed by
labor and transportation, and it will
be long time before there is any
danger of over-production. The aeeel-
GRAFTON of activity can continue on an
increasing scale for many months to
come before any apprehension of
glutted market need be felt. Pro-
longed labor disturbances have kept
production in many lines at a point
far below normal and as a result un-
filed orders have piled up to a degree
unqualled in long time. Thus the
time is ripe for great activity in all
lines of production. Unfortunately,
production costs have increased also,
because wages have again taken an
upward leap, and this will, of course.
be reflected at once in increased
prices. The advancing tendency of
wheat still continues and woolen
goods, silk, paper, kerosene, metals
and sugar are all likewise frmer or
higher.
Speculation is rife as to whether
or not the security market has reach
ed its peak and interest rates their
low point. The fixing Of the rate of
the new government loan at AZ per
cent for rs to 30-year bonds would
seem to indicate that Secretary Mel
lon does not look for a further de-
cline in the basis of bonds. In the
past two years, bonds have advanced
from Is to 20 points. This includes
bonds Of the highest grades, both cor
porate and government issues. Two
years ago, when prices we're at their
lowest-the lowest point in a genera
tion-there was wonderful oppor-
tunity to switch from short-time to
longtime securities. The possibility
of appreciation in the principal of
the longtime bonds made this profit
able, even at the sacrifice Of one or
two per cent in yield. Now that Sc
curity prices have advanced to what
may be the high point and yields
have been so drastieally reduced, the
question arises whether or not a re-
versal of this procedure would be ad-
visable-that is, exchange long-term
for short-term bonds II business con-
tinues to improve for the next year
or two, it seems almost inevitable
that the price of money and the yield
on bonds will rise.
The government has of late years
been financing itself on a short-term
basis-that is, through short date
bonds repeatedly paid off and renew
ed, and the floating of the new long
term bond issue aims at plotting the
Treasury smoothly through the big
operations of the next nine
months During this time many
short-term msturities have to be tax
en- care of In addition, on December
15 next, $50, 100000 of victorys fall
due and on May 80, 1928, 1890, 900 900.
Between now and the first of next
July the Treasury will have to pay off
or fund obligations amounting to 49,
525,000,000. The Treasury now faces
a deficit and the war debt cannot be
paid off to any material extent during
the present fiscal year. The debts
falling due must be refunded and
thus left for liquidation to another
generation. The present generation
has borne fair division of the inan-
cial burden Of the war. 1t favored
'pay-asyou-go' policy up to the linn
it of its capacity. One of the first
necessary steps of peace was the re-
duction Of the war taxation, for the
sake Of business. Debt principal has
been reduced, however, by some ST.
200, 100000, and now stands at S22,-
800 100000, bpt it is hardly practic-
able to reduce it further in the near
future. The present taxpayers need
a breathing spell, relaxation from
the pressure of taxation. An appre-
citation of this fact by Mr.. Mellon
seems to be indicated by his plan to
spread over a thirty to fifty year per-
iod our tremendous war indebtedness.