Perth Amboy evening news., 1922-12-02
NOT YET
GENERAL SAYS BABSON

WELLESLEW HILLS, Dec. a.
Rogers w. Babson today called at
tention to a very important fact in
discussing the general industrial re-
yival.
"Depressions hit the country very
much like storms" says Mr.. Bah
son. land just as they affect different
localities of the country in regular
sequence they also affect the differ
emit divisions of our business world
in different degrees and at different
times.
1.-THE fact that a depression ordin-
arily starts in the northwest works
south and west, finishing it's course
in California, Is clearly evident from
a statistical study of the situation.
II we look at the business world we
find it dividing itself into four big
divisions and we find that the busi-
ness depression traces its regular
course through this industrial lab
ric.
"First, there is the Raw Material
group, or iron and steel companies,
coppers and oils, crop and live stock
producers. Second, there is the
transportation group, the railroads
and steamships. Third, there is the
manufacturing group with its auto
mobile factories. textile mills and
the other fabricators of finished pro-
ducts. Fourth, and finally, there is
the distribution group headed by the
wholesale houses, mail order firms,
chain stores, and finishing with the
multitude of retail establishments.
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
strlngency. Take the recent depres-
sion, it appeared first among shoe
factories, textile mills and other fac
tories In a broad way these are
concentrated in the northeast section
of the country, and it was exactly In
this region that trouble first appear
ed. 1t is what happened also IN
earlier periods of business depres-
sion. F~arsighted executives fore
saw 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 comes the next act In the
drama of depression. AS the logi-
cal result of curtailed manufacture
ing, we get a slump in the raw md
L6IlAlS SEOQPs "AGh ohOS
tory shuts down, orders for leather
shrink. When a textile mill closes,
demand for cotton and wool dies
down. So the initial weakness in
the northeast spreads to the west
and the south. The west and the
south are the home of the raw ma
terials group.
"As traffic in finished goods and
raw materials subsidies, there is les
sened activity for the transportation
group. The railroads fall into line
on the downward march.
'aThe tragedy closes with the last
act, namely, the downfall of the dis
tributing group, numbering the great
mass of retailers scattered through
out the entire country who are
caught with high cost goods. The
economic curtain falls on a land
sunk in almost universal depression.
1--WE have just seen all this en-
acted before u eyes. With this
sequence Of events still fresh in our
memory, a business man is blind, In
deed, who cannot foresee the pageant
turing activity has been resumed.
The northeast is well advanced on
The south and to some ex-
tent the west. are looking better as
the raw material group begin to
struggle to their feet. Car surplus
has changed to a shortage-refect-
ing and measuring the revival OF the
transportation group.
"But the final stage is still before
us. We have yet to witness full re-
sumption among the great rank n
file of retailers who constitute the
final group of the Big Four, the trad
ing group.
"Therefore. I estimate that i'm
provement is not yet general and
that the best is yet to come, when
ali the Big Four groups shall par
ticipate in prosperity. Those who
apprehend that the bull movement
in the stock market Is at an end'
might well question whether recov-
cry can in any sense be complete with
the enormous distributing group st'l
to be heard from.
"It is true. of course. that ths
stocks of the co-called trading cor