Mohave County miner and our mineral wealth., 1922-11-17
! DABS0N cl3 Famous a!1t?u;s,
 lU on Business Conditions

Wellesley Hills, November llth 1922. Since the recent excitement o. the steel mergers this class of stock. has disappointed most people, in fac those who consider the steel industry as a barometer of American bushes. are decidedly upset. Roger w. Bab son who forecast the failure of the re- cent merger schemes in these columns explains the action of these stocks rather satisfactorily.
 "Steel prices" he says, "have re- gently shown signs of weakening, a generally expected tendency. A sur vey shows that surface conditions in- dicate strength, but the underlying sit uation which is the most important, tells totally different story. You will remember that six months ago the trend of production of steel as we'll as other commodities, was dis tinctly upward. Steel output has re- covered from the domestic 1921 slump when only 2O,00o,O00 tons of steer were produced, which was 501o under the previous years output. With the increasing supply, there was no scarcity. Unified tonnage was in creasing only moderately and trans portation conditions were not consid- cred critical. Prices of steel billets at that time were ruling 20co over the pre-war average.
 Suddenly the picture changed The pinch of the diminishing coal sup ply became more effective and the ad- vent of the rail strike brought addi- tional apprehension. The buyer be- gan purchasing ahead to protect de- liveries. Orders were pyramided-a fact that is reflected by thrilled ton mage, which jumped from 5,776,00C tons in July to 5,950, ,0O0 tons in Aug ust but in September jumped to G.. 691 ,000 tons. The wave of heavy buy ing, due to artificial elements, is now passing. The outlook is again chang ing. The coal and railroad strikes are events of the past and as artificial tendencies are ironed out and elim- mated, there is a strong possibility of weakening in the price structure This does not mean immediately fol the question of delivery over the win ter months is very important. Stee: billets today rule 3sqo over the low point of this year and 65% over the pre-war. average. This level is higE enough for we are not on the eve oi a boom in steel or commodity prices Fin general. r .as.t.sas.
 "We should not forget that there are several important phases to con. slider on the bear side. The steel pro ducing capacity of this country as ii stands today is much greater than ou, ability to consume and export. IT. 1913, the actual output of steel az. gregated 31,000,000 tons while pro. ducing capacity was estimated at 35,. 100000 tons. In 1920 we produced 40, ,00O, 900 tons, last year 100000 tons and this year probably 30,000,' 900 tons, but the main point is, il called upon, we could produce a stee at the rate of 55,O00, 600 tons annual ly. 1923 is bound to be a year od keen competition. Fundamental con ditions indicate that we are not enter ing a prolonged period of over-ex pansion and any stimulation in con sumption will prove gradual and O. a. limited character. Producing casts particularly fuel, transportation an, labor, are high enough and the nex major move, in conjunction with tn law of action and reaction should b downward. Certainly this is not tn time to be bullish on steel. Protec tion over the winter months is tn
 prime buying incentive.
 l Tt is questionable whether tn
 steel industry is fully readjusted. I did not conform fully with the con
 struction of the economic cycle il
 1920 and 1921 and this is one of tn
 reasons why am not partial to stee
 stocks. The underlying structure o
 steel stocks is not over-strong alth
 of course individual stocks may shoN independent strength in sympath
 with the action of the stock market. General business as reflected in tn index figure of the Babsonchart holding it's own. Activity is 5% be
 low normal-the same as last week.