Evening star., 1922-01-22
FINDS MUCH TO ENCOURAGE
IN THE BUSINESS OUTLOOK
Herbert p. Howell, Banker, in Address
to Dry Goods Dealers, Also Notes
the Serious Aspects.

10 a greater degree OIL COEpOTdto
economy. There has been. as result
work, a development of greater man.
power efficiency. Wage reductions
have contributed to the bringing
down of production costs.
Price Situation Better.
1.-The price situation is also better.
The period of avalanche price declines
is over. This movement was still in
progress at the opening Of 1921. After
q period of business activity for near
ly twenty years. with rising prices.
1t was new experience for business
to have prices start downgrade. The
present generation scarcely knew
how to do business under such cir
cumstances. Although many prices
will continue to recede. business and
banking are now better schooled to
cope with that situation. We need
ization.
'The attitude Of the public in re-
spect to buying is now a more cal
culable business factor. In the first
place any thought that the public
Will buy at almost any price can be
eliminated from business calculations
1t can be set down as definite that the
eliminating in buying. Decreased
purchasing power and unemployment
have made it so. People are willing
TO buy what they require, SO far as
they are able and where they can find
fair prices: A thrifty public. in the
long run. is better for business than
ls an extravagant public.
Reasons for Optimism.
With all these facts of better
ment. why should the decision not be
rendered in favor of the optimist ?
Because on the other side of the
picture there are certain serious
elements OF maladjustment that can
not be ignored. There are impedi-
ments to the healthy functioning of
the markets and difficulties in the
way or a complete readjustment of
ton. These obstacles must be over
come before anything like a funda-
mentally normal business situation
can be re-established.
Among the obstacles to reduce the
costs of production and distribution
are certain classes Of wages. Mining.
and building labor
must be further readjusted. The eff
fects of the still relatively high wages
permeate all kinds of business. There
can be NO thoroughgoing completion
or general readjustment until these
sources of high production and distri-
button costs have been dealt with.
Similarly. on the cost side-of doing
business. is the burden of taxation
The countrys obligations must be
met by taxes Relief in this situation
must be worked out through the diff
cult process of reducing current gov
ernment expenditures and through
the burden of necessary tax
alton SO as to reduce as much as pos
sible its hampering effects upon pro-
ductive enterprises. The new tax law
and reduced aggregate tax levy are
encouraging features.
Debt Factor Considered.
again. as to market conditions
are the debts created by the extensive
funding Of current obligations fol-
lowing the boom. This has created
against present and future earnings
Also the burden of high overhead
charges for extensive, overbuilt or
idle plant equipment has to he
reckoned with.
'These various sources of special
to the difficulties of doing business. of
reducing prices, and. therefore, to the
slowness of recovery While they are
operative they must be met by econ
omies in other directions. 1t can be
said that never before in modern In
dustrial history shas there been such
pressing need for economy, never be-
fore such an imperative necessity to
reduce wastes and increase efficiency.
Finally, on the cost side of busi-
ness must be cited the high-priced in
ventOrfes still to be reduced. Despite
the general progress made in inven
tory readjustment. there are many
lines yet carrying a heavy burden
here. Impaired buying power made
impossible in many cases the distribu-
tion of stocks at prices covering pro-
duction costs. 1t seems inevitable
that some further losses must be taken
on this account. Here again there ap-
pears to be no alternative but to or
set these losses by unusual economies
in the total activities involved in
such stocks.
Marketing Side Discussed.
'On the marketing side of business
we are confronted with a choppy con-
dition of prices. Many prices have
gone much further toward the pre-
war basis than Others. This has made
impossible. for instance, the absorp-
ton by the agricultural communities
Of normal volumes of retail goods
whose prices have not fallen to so
great an extent as have prices for
farm products.
although some prices have apparently
reached comparatively stable levels
and no general collapse is to be
feared, nevertheless, there are some
prices where further changes are to
be expected. This is true where ex-
cess stocks of raw products are over
the market because of over
production or impeded distribution.
downward movements may
b beaA1pected here.
FINALLY, there is the effect of the
situation in the world markets upon
the domestic Industry and commerce.
is quantity production
country. 1t must. therefore. have
world markets. This is broadly true
in respect to agricultural products.
1t also is true in respect to many of
our manufacturing industries. While
demoralized condition the marketing
of such surpluses will be a problem.
America has the resources and is
equipped to do a tremendous busi-
ness, both in the domestic field and
in the foreign field. But the mar
kets. both In the domestic field and
the foreign field, are still greatly out
Of gear
Washington Rated High.
Out of 120 cities in the United
States Babson's Reports, just issued,
rates Washington second in its fore
cast of business for March. The per-
centage rating given the city is 115
per cent. which is topped only by
Toledo, Ohio, which is given the high
rating OF 120 per cent New York
city, with it's 5.62O,O48 inhabitants, is
rated at 95 per cent, while Chicago,
Boston and Philadelphia draw the
same figures. Baltimore is given 11O
per cent.
In order to draw a comparison in
percentage with March. 1921, he says,
multiply the percentage figures by
sales during March Tin dollars) and
the result will be the volume of busi-
ness that can be safely planned on
for March OF this year.
District National Dinner.
The officers. directors and employees
of the District National Bank were