Evening star., 1923-12-31


to or e hadoW
Mr. WEST and d is un
changes in the
business world. In the excited rise of
February and March Wall street was
talking about another imitation and
business boom like 1919. From April
TO the end of October, with the ex-
ception of a brief revival in mid
summer, the financial community
went to the opposite extreme, aban-
doning itself to pessimism as eXtrava-
giant as it was unfounded.
The point is that, in both instances.
Wall street completely misread con-
ditions A serious danger existed that
the speculative movement on the
stock exchange would influence the
calculations of business men outside,
getting them to overstock with hlgn.
priced goods during the excitement
of the spring, and soaring them into
a shutdown by the display of per-
sistent and apparently unexplainable
weakness through the summeY and
AS a matter of fact something of
this sort did actually happen: In Ger
tain basic lines of industry there was
overbuying early in the year, r;naa ana
were tumbling. a feeling of excessive
caution began to spread in business
circles.
Little Harm Done.
Happily the financial markets
righted themselves before much harm
was done. The turn came at the
close of October with the declaration
of an extra dividend by the United
States Steel Corporation. This action
by the largest American Industrial
organization was instantly interpret.
ed as an authoritative expression OF
confidence in the future. 1t led the
way to a reversal in sentiment >on
the stock exchange, which. in the
last few weeks. has found refectlon
fxre I1x- in
1t seems fair to regard the Wall
street advance of the last two
months as something more than
recovery from prices that were un-
a genuine expression of opinion that
the present satisfactory conditions
obtaining at the present time in most
lines of business will continue well
later viii! depend probably more
than anything else. upon domestic
politics. 1t is traditional in pres
idential year that both business and
the markets maintain a waiting at
titude for some time prior to the
nominating conventions, and that un-
less election results are reasonably
we'll forecast, they go very slow
through the summer. The discount,
ing movements have rarely started
until a month or so before the No
vember polling.
Radical Policies Seen.
Radical policies are going to be
urged with greater force than in any
campaign probably since 1900. The main
question is whether these radical ele-
ments wiz succeed in capturing, or
at least in partly influencing plat
forms and candidates. This will be
settled at the conventions in June
and July. The business world should
be able to judge after them whether
or not it must prepare for subversive
cha
Outside OF political uncertainties
there are distinctly more favorable
points than unfavorable in the gen.
oral outlook. Under the wise direc-
tion of the federal reserve heads
fears that the great gold accumula-
tion in this country would be a
temptation to Misrepresentation and
imitation have been dispelled.
The addition. of another $300,000,-
600 or SO to our gold supply during
the last twelve months will not be
regarded, as some would have taken
II year ago, as a danger symptom.
The American credit system has
never been more sound than it is to-
day. Legitimate business has never
been more assured of obtaining all
the bank accommodation needed and
on moderate terms.
Ban on Excuses.
At the same time, the reserve
board has given proof as 1T did last
spring, that it proposes to shut down
upon any excesses-any over-huying
and over-borrowing-suc as led up
to the crisis of 1920-21
This strength Of the credit position
with the enormously important sup
> porting FACTOR of the federal reserve,
present situation. Next to this is
the unusual spending power of the
labortng class, due to full employ-
ment men, at high wages. 1t is curious
this point has been dwelt upon,
whereas six months ago the same
shortage of labor, with resulting
high wages, was deplered for the
maaner IN which it struck at the
profit margin. But it is true that
TINS buying capacity of labor has
been the chief sustaining force back
or the general business volume. To
II may be credited the record break
. ing totals in the retail distribufive
trade. To 1t may be ascribed the
unparalleled railway traffic, with
consequent maximum gross earnings.
is this Characteristic of the 1923
situation likely to be carried over
into 1924? Apparently it is Under
the present immigration restrictions
there seems no likelihood of such an
increase Increase in the labor supply as will
down the buying power Of the wage
earners. The chief benefciaries are
the merchandising companies, which
nave large turnover at compara-
lively moderate prices. These feel
the stimulus of the buying move
ment and yet are able to pass the
extra labor costs on to the consumer.
Labor Cost Cuts Profits.
On the other hand with most Of
the basic producers the high wage
scales are an offset to the large busi-
ness volume. 1t is reasonable to pre-
dict for most of these industries
much the same sort of Conditions
during the coming months that have
obtained during the last year, namely.
moderately satisfactory profits, but
with high labor costs preventing any
unusual return. -.
The two most important remaining
aspects of the situation are agrf-
culture and European affairs The
Department. of Agriculture has esti-
mated the total value of the past !
years crops $3.50, ,00O, 600 in excess of
the year before. This has resulted
from the great rise in cotton, the un-
usually high prices which the corn
raiser was able to secure and the
more moderate improvement in a
good part although by no means all,
of the live stock industry. Outside
of the wheat country it has been, in
the main, q good year for the farm
er. The figures have failed to justify
the talk of agricultural depression
which was SO common six, months