Perth Amboy evening news., 1923-01-20

shortcut. We would be trying to
| eyade the tail end of u quota OF
depression. There would be q I
back which would last until that
quota was completed. AT the mo-
ment, there is no sign or sucn IN
fation. The indications are that the
remaining fragment of the allotteu
depression will be wiped out In due
course: and with a clean slate we
| shall be ready for the next period
of prosperity.
"WilI our next period Of prosperity
he big or small? The question IS
peculiarly difficult. After a big per-
Tod of over-expansion, a big action,
il is practically certain that there
will be q. big period of depression, a
big reaction. Knowing the action,
YOU can forecast the reaction-Ou'
the rule is hard to work both ways.
To illustrate, if you stretch a spring
a certain amount you car forecast
approximately what Will be the re-
hound. But you can't SO easily Tore-
tell how far the spring Will De
stretched the next time. Hence, per-
iods of prosperity or action are Tar
more difficulty to forecast than per-
iods of depression or reaction.
However, we know that there Is a
general tendency toward equality. IN
other words, in the long run, periods
of prosperity tend to be about equal:
They vary greatly in duration, ana
they vary greatly in intensity. But
the intense periods are usually snort,
and the mild periods are usually long
so that the area or mass is
ably constant. Though the form OF
- 80 ~rncnnrifU IG still
undetermined, we know in advance
with reasonable assurance hat It's
area or mass will be approximately
that of previous periods. SHORTY
after it has begun to develop, there
may be a clue to it's probable form,
whether intense and brief, or mod
crate and prolonged.
Besides this principle OF acton
and reaction, there is another lea
t1re of the business cycle that can
safely be applied in practical ways.
Every business and every locality
has it's own particular place in the
cycle. The bond market, for exam
pie, is usually far in the lead, declln-
ing or advancing before other lac
tors show a change of trend. Inc
stock market also has a pronounced
lead. Though not so prompt as the
security markets, building is some
what in the van as compared with
other lines of business activity. Near
the other extreme is retail trade
which is a laggard both on the up
swings and the doWn-swings. COM
pairing different sections of the coun-
try, the manufacturing centers tenu
to lead, and the regions of produc"
ton of raw materials tend 10 lag.
Comparing the physical quality OF
business with its dollar value, guam
tity advances or declines before
value. In a store, the number OF
sales slips physical quantity TENDS
to decline before the cash register
readings (amount of sales in DOL
Iars). In a construction industry
the number of permits tends to de-
cline before their value in dollars.
But the thing of real import
ance is not merely to know this Sc
uuence-Which is a fairly simple
proposition-but also to know how
Fest the period of depression or over
expansion is being run off. For ex-
ample, early in 1920 the stock mar
ket turned down. The retailer who
noticed this reversal and attempted
to estimate when the lightning would
strike his own business, would have
been at a loss to set the date. But
| presently when general business
| sank below par and began to SWEEP
out an area of depression, then the
| retailer was able to forecast. know'
ing how much depression was que
and how fast 1t was being WORKED
off, and knowing also his relat!v'
| position in the cycle, the retailer
| could estimate very closely when hi:
| turn was coming.
"To illustrate the zeal meaning o.
| the business cycle, one Of the bes
| analogtes is to compare it with cleo
: tricity. Cali prosperity electric pow