Idaho County free press. [volume] (Grangeville, Idaho Territory) 1886-current, 1922-11-16
SAYS
The Steel Stocks

Wellesley Hills, Mass Nov Ia
Since the recent excitement of the
steel mergers this class of stocks has
disappointed most people, in fact those
who consider the steel industry as a
barometer of American business are
decidedly upset. Roger w. Babson, ex-
plains the action of these stocks:
"Steel prices have recently shown
signs of weakening, a generally ex-
pected tendency. A survey shows that
surface conditions indicate strength,
but the underlying situation which is
the most important, tells totally diff
ferent story. You will remember that
six months ago the trend of produc-
ton of steel as well as other commo-
dities, was distinctly upward. Steel
output has recovered form the domes-
tic 1921 slump when only 100000
tons of steel were produced, which was
so pecent under the previous year IS
output. With the increasing supply,
there was no scarcity. Untitled ton
mage was increasing only moderately
and transportation conditions were
not considered critical. Prices of steel
billets at that time were ruling 20 per
cent over the prewar average.
ARTIFICIAL INITIATION
"Suddenly the picture changed. The
pinch of the diminishing coal supply
became more effective and the advent
of the rail strike brought additional
apprehension. The buyer began pur-
chasing ahead to protect deliveries.
Orders were pyramided-a fact that is
reflected by untitled tonnage, which
jumped from 5,776,000 tons in July to
5,950,000 tons in August, but in Sep
TENDER jumped to 6,691, 900 tons. The
wave of heavy buying, due to artifi-
cial elements, is now passing. The
outlook is again changing. The coal
and railroad strikes are events of the
past and as artificial tendencies are
ironed out and eliminated, there is a
strong possibility of weakening in
the price structure. This does not
mean immediately for the question of
delivery over the winter months is
very important. Steel billets today
rule 3S percent over the low point Of
this year andes percent over the pre-
war average. This level is high enough
for we are not on the eve of a boom
in steel or commodity prices IN gen
eral.
90 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 1T
stands today is much greater than our
ability to consume and export. In
1913, the actual output of steel ag-
gregated 100000 tons, while produc-
ing capacity was estimated at 3d.
GOO. 900 tons. In 1920, we producded
&c, 0OO,O tons, last year 100000
600 tons and this year probably 80.
100000 tons, but the main point is, If
called upon, we could produce steel at
the rate of 100000 tons annually.
KEEN COMPETITION IN 1928
The year 1923 is bound to be year
of keen competition. Fundamental
conditions indicate that we are not
entering a prolonged period OF over
expansion and any stimulation In con
sumption will prove gradual and OF
limited character. Producing costs
particularly fuel, transportation and
labor, are high enough and the next
major move, in conjunction with the
law of action and reaction should be
downward. Certainly this is not the
time to be bullish on steel. Protection
over the winter months is the prime
buying incentive.
HIt is questionable whether the
steel industry is fully readjusted. II
did not conform fully with the con
traction of the economic cycle in 1871
and 1921 and this is one of the reasons
why am not partial to steel stocks
The underlying structure of stee
stocks is not over-strong although OF
course individual stocks may show in
! dependent strength in sympathy will
the action of the stock market"