The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1923-05-19
WALL STREET IS
SUFFER|NG.FROM
NERVES ATTACK
Presence Of Some Deflation
Obvious But 1t Does Not
Justify Unsettlement
BY WALTER Il. BROWN
Editor New York Commercial
Especial Dispatch to The AEe-Hernld)


NEW YORK, May 1s,-If we are
entering upon a period of initiation,
it is just as well for us to recognize
the fact at the outset. There has
been no denial that all the elements
of initiation have been present for
some time, but the question has boon
whether or not they were being made
use of. The greatest safeguard has
been the fear of it, and the eau
tionary measures taken to prevent it.
That there is some of it under way
cannot, be denied, but it hardly seems
credible that it can have reached the
point where it Jusufies such unset
tlement of values as has already
taken place upon the stock ex-
changes. This can only be ascribed
to certain amount of hysteria
which the fear of initiation and its
consequences have engendered. In
other words, Wall street is now hav-
ing an attack of nerves" When
Steel common sells below 81, it dis
counts a pretty sharp reaction from
present industrial activity, and more
than seems possible from the pres
ent industrial activity. There have
been some recessions in commodity
prices. but not sufficient to so affect
earnings as to call for such sharp re-
auctions in stocks as have already
taken place. If present prices are
justified, then it means that the high
levels reached in March were not
justified, or, in other words, that
stock market values themselves were
inflated. This was so in some in
stances, but was not a general con-
dition.
Weakest Feature of Boom.
The weakest feature in the induc-
trial boom has. been the building
situation. The boom itself began
with the necessity for building, and
the danger was recognized at the
outset that it might run away with
itself. This is has probably done in
some respects, but it Goes not follow
that the boom has actually spent it
self. AS it stands now the building
trade is not suffering from a slack
ching of demand, but from too much
demand, SO that it mas actually been
necessary to hold a conference for
the purpose of seeing what could be
done to check it. AS has previously
been pointed out, the federal govern
ment set the example by deferrinS
all government building that was not
absolutely necessary. Private instl-
tutions began to adopt the same plan
and the movement at once became
widespread. There is thus held in
reserve a large amount of public and
semi public building against the time
when there shall be falling off in
private building. The next question
this private construction has caught
up with the demand.
From the standpoint Of actual
housing requirements, this is not so,
because even with the tremendous
activity of the past two years, it has
been impossible to make up the defi-
cit of the war period. What has hap
pencd or is happening Is that build
ing costs. because of the advances In
labor and materials, have reached
point where apartments cannot De
rented at figures sufficient to insure
an adequate return on the invest
menf. while dwelling houses cannot
he sold to prospective occupants at
price high enough to cover the
cost.
beginning of Buyers Strike.
In other words, there is the be-
ginning of the buyers strike in the
building industry. Apartment house
construction in the cities has been
proceeding at furious pace. Capt.
tai was easy to obtain, but the labor
supply was not sufficient and com
peting builders resorted to bonuses
to lure workmen away from one an
other. Every branch of the building
industry was affected in the same
way so that not onlX did labor costs
pile up in respect IF building ma
teriaIs, but even more so in connec-
ton with actual erection. 1t is now
proposed that bankers be less liberal
in the matter of credits for the time
being, while all building that can
POSSIBLY be deferred be held oyer at
least until the fall.
1t may be that this has had some
effect upon the slowing down of the
demand for finished steel. but the
only recessions in prices have been
the disappearance of the premiums
offered for quick delivery. There is
still in prospect a heavy demand
from the railroads for new equip
ment, SO that the only real effect
upon steel ought to he the lessenlns
of the pressure in one direction IN
order to permit larger output IN
Others. If the building situation Is
allowed to run away the Imitation
will be followed by collapse, with It's
consequent depressing effect upon
ether classes of business. In other
words. it will impair confidence
which it had such a large part in
restoring. This in fact, is the great
est danger rather than that there
should be any falling off in actual
requirements. The trouble then IS
not that we have caught up with our
building necessities, but that costs
have arisen above the safety line so
that here must be an enforced cur
tailment OF operations until they
dron back to a reasonable basis. The
problem therefore, is one of sane
financing on the part of capital ana
a reasonable attitude on the part Oh
labor.