Evening star., 1923-07-22
RESUM|NG BUILDING
BOOM TO BUSINESS
Construction Men Make Most
important Move of Week in
Commercial World.
SECURITIES DO BETTER
Foreign Tangle Must Eventually
Be Favorably Adjusted-Rail
Situation Still Causes Worry.
by GEORGE r. HUGHES.

Special Dispatch to The star
NEW YORK, July 21.-Perhaps the
most encouraging development OF
tho week in the commercial situa-
tion was the announced decision or
the large construction companies to
go ahead with the building program
which they abandoned last May be-
cause Of excessive costs, both for
labor and material.
1t is not that this incident is so
important In itself. but rather that
It illustrates the unvarying process
by which eXcesses in costs or in
prices are corrected. The lesson
should be taken to heart by those
who foresoe wholesale disaster In a
continuously declining wheat market.
More Buildings Needed.
There was and still is large un-
filed demand for building construc-
ton. The deficiency which accum-
ulated during the war has not been
made up and is not likely to be made
up for several years to come. But
when two months ago there seemed
to be no prospect of any let up in
the continuous demand for higher
wages and in steadily mounting costs
OF materials, the building program
CdIls 10 an abrupt matt. ne lloll :
gage and insurance companies. which
finance new construction, as well as
tho contractor, withdrew their sup
port.
But now steel and lumber are
lower and wages are apparently sta
bilized. Moreover. additional work
ers have been attracted by the pub
Iicity given to the higher share
claimed by and awarded to labor
under present conditions. So in this
hrv. -
courage and the recent reaction Is
left behind.
Efforts at Price-Fixins.
The building industry is different
from some others in that there is
no doubt about the consumptive de-
mand. The situation with regard to
wheat and oil is not an exact par
allel. In both these latter cases there
- an apparently excessive supply to
which the demand Is inadequate.
The consequence is lower prices for
both commodities But it is in the
inrariable rule that lower prices in
crease consumptive demand. The
only doubt is how low prices must
so before this increased demand be-
comes evident.
psint is reached. 1t is the function
of the speculator TO anticipate this
result. In SO doing he performs Il
very useful service and whatever
this extent injurious.
Lower Prices May Aid Demand.
As far as wheat is concerned. there
have been repeated demands that the
government step in and fix a price
which would enable the farmer to
get more than the cost of production.
1t is needless to argue that this Will
only make matters worse. Those
who advocate this remedy are I'm
mune 10 the argument. IT, however.
before any scheme for government
price fixing could be put into effect
the market should rally under the
play of purely economic forces the
campaign in behalf Of government
Interference would lose its impetus.
There is already Il movement to
limit the output of oil. a device not
imnedia tely practical in the case OF
wheat that promises at least to
stabilize the price. 1t is also. per
fectly possible that the low price
here also will stimulate the demand
1t is this natural process OF cor
rection which the security marke cts
have been taking notice OF this week.
The pesSimism which accompanied
three months Of declining quotations
- gradually being diSsipated and 1t
- beginning to dawn upon the minds
81 those who speculate in stocks that
perhaps after-all the business out.
iouli is not entirely black or even
dark
Securities Doing Better.
Comnarisons are now beiHs made.
not between the present volume or
business and that Of last March. but
between the present and a year ago
rhis time. The result is that slowly
iut very persistently speculative and
semi-speculative securities are re-
covering their lost ground.
There remains TO be considered the
situation abroad. and while it would
DO exceedingly dangerous to indulge
III any prediction when there are SO
many unknown factors. it can well
I've maintained that sooner or later
the logic of events must compel
reasonable settlement between France
and Germany. II and when that
comes to pass there is not an i'm
mediate favorable reaction upon our
own industry it will be very surpriS-
lug. Frank A. EanderliD insists that
business in America can be maintain
IA at high level. even without the
European market but a clearing up
Of the situation over there would
greatly emphasize prosperity here.
Foreign Bonds Firm.
Tt is significant in this connection
that the foreign bond market no
longer manifests the nervous interest
ii the progress Of negotiations
abroad that it did when the French
initiated action against Germany last
February. Foreign bonds still sell
very low, but are remarkably firm,
considering the nature of the news
and the reaction in the exchanges,
In only one respect does the situa-
rion fail to show Improvement.
There is still bitter political opposi-
tion to the railroads and threats of
cut in rates. In the face of this
stocks make only a feeble response
10 the extraordinarily good earnings
statements.
Copyright. 1921