Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-12-03
BUSINESS IMPROVEMENT LIMITED
TO HALF OF AMERICAN INDUSTRY;
BOOM NOT GENERAL, SAYS BABSON

Wellesley Hills, Dec. 2-Roger w.
Babson Saturday called attention to a
very important fact in discussing the
general industrial revival.
"Depressions hit the country very
much like storms says Mr.. Babson.
and Just as they affect different
localities of the country in regular Sc
quence they also affect the different
divisions of our business world in diff
ferent degrees and at different times.
THE fact that a depression nrdi-
narily starts in the northeast, works
south and west, finishing its course
in California, is clearly evident from
a statistical study of the situation. If
we look at the business world We Iin,
it dividing itself into four big divisions
and we find that the business depres-
sion traces its regular course through
this industrial fabric.
First. there is the raw materials
group, or iron and steel companies,
coppers and oils, crop and livestock
producers. Second there is the trans
portation group, the railroads and
steamships. Third. there is the manu-
featuring group with its automobile
factories, textile mills and the other
10DTiGaIOTS vi itHisHtu plOdiStc"
Fourth. and finally, there is the dis
tribusion group headed by. the whole
sale houses. mail order firms, chain
stores and finishing with the multitude
of retail Establishments.
Big Four Groups
Now what happens to these big
four groups when a business depres-
sion hits the country? The first to
suffer is the manufacturing group.
This is partly the result Of financial
stringency. Take the recent depres-
sion, it appeared first among shoe fac
tories, textile mills and other fac
tories. In a broad way these are con
centrated in the northeast section Of
the country, and it was exactly in this
region that trouble first appeared.
This was entirely characteristic. 1t is
what happened also in earlier periods
of business depression. Far sighted
executives foresaw long in advance
that this would be the first part of
the country to weaken. because it is
the home of the manufacturing group.
Then came the next act in the drama
of depression. AS the logical result of
curtailed manufacturing, we get a slump
in the raw materials group. When a
shoe factory shuts down, orders for
leather shrink. When a textile fac
tory shuts down, orders for cotton and
wool dies down. So the initial weak
ness in the northwest spreads to the
west and the south. The west and the
south are the home of the raw ma
terials group.
"As traffic is finished goods and raw
materials subsidies. there is lessened
activity for the transportation group.
The railroads fall into line on the
march.
The tragedy closes with the last
act. namely the downfall Of the dis
tributing group, numbering the great
mass of retailers scattered throughout
the entire country. who are caught with
high cost goods. The economic cur
tain falls on a land sunk in almost un-
depression.
We have just seen all this enacted
our eyes. With this sequence
of events still fresh in memory, a
business man is blind. indeed, who can
forcsee the pageant of return
ing prosperity. Manufacturing activ-
has been resumed. The northwest
is well advanced on recovery. The
south and tn some extent the west are
better as the raw materials
group begin to struggle to their feet.
Gar surplus mas tHhiiStG 10 'ai sEott
age-reflecting aud measuring the re
viva1 of the transportation group.
Final Stage
Bat the final stage is still before
rs. We have vet TO witness full re
sumption among the great rank and
file of retailers who constitute the
group of the Big Four, the Trad
ing Group.
Therefore. l estimate that improve
nent is not vet general and that the
best is yet TO come. when all the Big
Four Groups shall participate in pros
Those who apprehend that the
oull movement in the stock market is
an end. might we'll question whether
recovery can IN any sense be complete
Observation-Disclosures NEUTRALITY-SUSPICIOUS.