Evening star., 1922-12-30

he Will have a relapse. We now nave
! passed the most painful part OF the
| but a process of cost reduction and
| rebalancing Is necessary"
Price Spread II Wide.
| To-day wide disparity exists be-
tween prices of different commodities,
and particularly the spread between
producers and consumers gooos:
This is brake on trade. One-half OF
| the goods that the other half has to
sell. There are 106,000,000 people IN
! the United States. and so per cent OF
| them get their living from producing
! or distributing raw materials. 1t has
| thus far been Impossible to reduce the
! prices of finished consumers goods TO
| meet the cuts on these raw materials
| The purchasing power of these people
| is out of it's natural proportion.
| '.It Is not entirely matter OF re-
ducing wages, although labor costs
are a large factor, nor is II entirely a
! matter of inefficient management. NO.
| the problem of high costs Is not
problem of any one element, and re-
adjustment can come in only one way
drastic competition. All this Will
take further time.
Does this mean that there will be
no opportunities in 1928? Not a bit:
There will he just as many chances
| to make money as In any year you
| ever llEeQ. II Will DC IOE Jou
| to make as much during the next
| twelve months as in any year OF your
business life. but 1t will not be along
| the lines which made money in 1919
/ and 1920, nor in any other boom year
| The profits in 1923 will come by Civ
ing attention to details. by stopping
| the little leaks, by saving here and
there through new labor-saving in
! ventions. and. most Of all. by devils
ing new and more economical means
of distributing goods. This was not
| at all the situation during the busi-
ness boom. Then the man who stopped
to prevent small leaks found himself
| caught by the momentous rise in
prices and changes in general condi-
| tions
| Wild and merry while they lasted.
Now business has come back to earth.
In most industries an excessive pro-
| ducinS capacity was created. During
the boom overhead costs we're in
creased to keep up with an abnormal
turnover. Today the amount Of bust
ness has dropped back more nearly
to normal. but costs have not been
proprotionately reduced. Higher
wages, higher rents. more expensive
sales organization-in fact. nearly
every Item of expense Is out of pro-
portion with the amount Of business
done.
Instead OF wild gyrations in the
commodity markets, the average trend
throughout the coming year should be
commodities are high and others are
very low. but the majority at present
are about Is per cent above their
levels year ago. A year from now
We shall probably find them averag-
ing at about the same level they stand
further rally from the low Of 1922.
and agricultural products certainly
should do better"
Earnings. Will Be HIGHER.
Earnings" continued Mr.. Babson.
should average somewhat better than
in the year just passed A sur
vey of 100 leading Industrial compa-
MES MES recently made by my organiza-
ton. showed that in 1913. 96 per cent
of these companies made a net profit.
while only 4 per cent showed deficit.
In 1921, the number of firms which
could show a profit was cut down to
4S per cent. Over half. or 90 per cent
on their years business. Nineteen hun
dred and twenty-five has witness a
change from red ink figures into black
Ink figures. but the amount OF net profits
will not be large when the books are
finally balanced. We are Just getting
back onto the right side Of the ledger
The shortage Of labor Is one Of the
worst features Of the 1923 outlook
The moment that business works up
to average activity. 1t becomes i'm
possible to get sufficient workers
This raises costs and in turn In
Of living. The immigration law Is
largely the cause Of this shortage.
This law restricts the number of I'M
migrants in single year to pe'
cent of the total number of respectiv.
nationalities already in the United
hn "
addition Of 100000 immigrants a
year. Now we are receiving less than
100000, and at least So per cent of
these are women. children or other
dependents. On the other hand. ]
doubt II the repeal Of this per cent
immigration law is the proper solu-
ton Of the present labor shortage.
"The real solution Is not the repeal
of the present immigration law. bui
rather the repeal OF the contract Ia
Dor law for as long period as the
3 per cent law remains in force. This
would make 1t possible for employers
to promise selected foreign workers
employment before leaving their owl
homes. The moment that the immi-
grafton law Is repealed the CONTRACT
labor law can again be applied;
There should be no great dihculty
in getting ample supplies Of btu
minous coal this winter. The dim
culties which brought on the STRIKE
last year have not been settled. mere
is serious danger Of another strike In
the soft coal fields.
Much Worry Over Politics.
Everybody IL worrying about the
political situation. There Is talk of
radical legislation during the coming
year. Most of this is merely the
echo from campaign speeches. 1t
may be a noisy year. Both tho con-
servatives and the radicals have
veto power. but neither 10 strong
enough to push through any extreme
mea sures Of its own. Tho only kind
Of legislation that will really be en-
acted 10 that which will appeal to
members of both groups. Already the
Federal Reserve Board has Issued q
ruling. admitting a large amount Of
agricultural paper for rediscount in
the federal reserve banks. The Mus
Gle Shoals problem will probably be
settled, either by sale to Henry Ford
or by development on the part OF the
government itself. The soldiers bonus
will probably be enacted, although
no agreement as to the terms or
means of raising the money has yet
been made. 1t is improbable that
there will hs any increase In the
amount of business taxes.
The political aspect has fright
ened many stockholders, but it IL
AafipA1v foo oar1v "a ha xvNvriA6 The