The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1923-08-06
Nation Neither Bound for
BoWWoWS Nor Imme-
diate Prosperity,
EUROPE PLAYS PART
Level : Headed Consideration
Is Most Needed = Two
Great Dangers Appear
BY DIR. LEWIS H. HANEY,
Director OF the Bureau of Business
Research New York University.

Director Of the Bureau Of Business
Research New York University.
NEW YORK, Aug. Elm a number
OF ways industry is now back about
where 1t stood last September or
October Barring unwise legislative
tInkering, no reason appears why we
should not take up the process of
sound recovery where it was dropped
in last years boom.
Much doubt, however, is being
thrown into the air concerning our
industrial condition. On the one hand,
the banks and the conservative poll
ticians in power are continually re
peating that conditions are sound and
that the volume Of trade is lower. On
the other hand, wheat farmers and
the politicians who hope to gain by
tanning discomfort are crying wolf.
wolf" and insisting that the outlook
is bad. When such a difference ex-
lists, you can be PRETTY sure that both
extremes are wrong.
Must Keep Level Head
Those of us who are not politicians,
not bankers. not wheat farmers need
TO keep a Level head. Things are
neither so good nor so bad as they
are painted. The plain facts are as
follows:
Beginning late in 1921 business
started on an upward climb which
reached the proportions Of small
boom last spring. This boom was
based chiefly on manufacturing to
I'LL demands that had gone unsatis-
fed during war-times. notably build
ings and automobiles. Exports were
good and gold plentiful
But the prosperity Of the spring
months were unevenly disrupted
Prices we're out of normal adjustment.
Foreign conditions were Ignored and
many optimists argued that we did
not need European markets to attain
domestic prosperity. AS result we
soon found ourselves producing more
than we could dispose of at the exist
ing prices at home. Bluntly' there
was overproduction in several basic
industries and as exports diminished
while imports increased, prices began
to fall
Moreover, the imitation in wages in
the home Industries, such as the
building trades began to cut deeply
irto profits. It was found that our In
dustry could not go ahead without
further readjustments to put it on
normal peace basis.
Wheat Acreage UnduIy Expanded
For example, our wheat acreage
had been unduly expanded as a result
Of high war prices. and it has to be
reduced. Crude petroleum prices had
been kept too high during the war
and after. and they have TO come
down. Speculative building activity
to profit by the housing shortage was
pushed too rapidly and exorbitant
prices had to check the abnormal
squirt.
So the reaction came about May
as forecast by the previous decline
in the stock market and in whole
sale prices. Forward buying" fell
of and the unelled orders for steel
declined SHARPLY. Above all, new
building projects dropped. The boom
had rested largely on building &C
tivity and consequently decreased &C
tivlty brought it to an end.
On all sides we see declining whole
sale prices and decreased activity In
basic industries Retail prices and
retail trade are always slower In re-
flecting changed industrial condi-
tons, and, therefore. they are making
the best showing at present. Build
ing permits are down. Iron and
steel production has decreased, also
bituminous coal production
Railway tonnage, when allowance
for seasonal variations is made, fell
off in June. Above all. business ac-
tivity as reflected in the volume Of
bank checks debts to individual ac-
counts) has been declining steadily
IN comparison with the usual sea
sonal movement. Even the number OF
business failures has increased again
during the last two weeks I need
hardly refer to the depressed condi-
ton Of the stock market.
Must Consider Europe
This Is enough to show that the
business as usual folks are blind or
won't see. But 1t does not lead to the
conclusion that we are headed for
another 1921 or 1908. I think it is
merely a warning-a warning that
there is no quick and easy out--a
warning that the war is not yet over
and that we must work hard and pull
together to bring back normal condi-
lions. 1t Is foolish to think we can
continue to prosper while Europe is in
such bad shape and we are boarding
the worlds gold supply.
But It is also foolish to think that
we are headed for the "demnition and
bowwows. Today credit conditions
are not strained and there are no
signs. Of panic. The very fact that
production in basic industries is being
checked means an end to over-pro-
duction.
In the case of wheat and hogs and
petroleum, this will take a long time
and much hardship. But patience
and business sense will work the
thing out. Certainly no legislation
can do it.
(By the way, why rush to prosecute
oil rehners for shutting down while