Evening star., 1924-12-20
BUSINESS NORMAL,
BABSON DECLARES
Economist Traces Path of
Trade Recovery to Healthy
Condition.
BY ROGER w. BABsON.

BY ROGER w. BABsON.
Special Dispatch to The Star.
WELLESLY HILLS, Mass, Decem-
Der 20.-Business is again at normal
General activity as reflected by the
Babsonchart Is shown at par for
the first time in eight months.
The final November figures, Just in,
bring the line UP from a point s per
cent below normal, where business
stood at election time. The readings
by months trace the path OF decline
during the early part of 1924 and
picture clearly the advance that has
taken place since the election. On
the eve of the election business stood
at per cent below normal. Today 1t
has made UP this loss and things
stand at an even balance.
What Normal Means.
You may wonder just what is meant
by normal business" and an expla-
nation is certainly due. We have
heard of normalcy In business and
we have heard about pre-war condi-
tions. Other comparisons have been
made with the boom year of 1919,
and still others with the depression
year OF 1921. So many different bases
have been used and the term normal"
has been applied loosely to mean so
many things that our present use
should be carefully defined. In study
ing business conditions and the
changes in the business weather
here we show the fluctuations .on a
largo chart which combines all the 26
leading barometers of business into
one picture.
So far as general activity is con-
cerned, the path OF business is de-
fined by two lines on this chart. The
central one, or so-called Ky line,
follows the path OF national growth,
regardless of the immediate situation.
1t pictures total transactions and re-
fleets the real expansion of business,
commerce and finance.
Present Status of Trade.
The second line. which runs alter
nately above and below IL, shows the
exact present condition of trade, In
their Interpretation these two lines
might be likened to tree. The tree
grows little each year. as Is shown
by the rings you see in the cross
section of its trunk. At certain sea-
sons of the year, however. the tree
does show activity on. the surface
that changes the appearance of
things
In the Spring. when the leaves are
budding. IT seems to be growing rap
idly, but in the Autumn, when these
same leaves shrivel and fall, the tree
looks as though it were dying. 1t is
somewhat the same with business and
these two lines that measure it's two
kinds of progress. The KY line
of season, while the line of present
activity reflects the surface develop
ment of the individual season.
Constant Change. Noted.
Our business and financial worlds
A,yf sNz
tree is, except that the changes from
prosperity to decline. from decline to
depression, from depression to i'm
provement and from Improvement TO
prosperity do not occur with any
regularity as to time. Business sea
sons are of varying length and of
different intensities. These changes
have made money for many people
and have carried others to their
graves. In fact, the presence of ex-
treme fluctuations in conditions pre-
sents one of the greatest problems
in our entire commercial and eco
nomic worlds today. Abnormal pros
perity gives us false ideas of values
Easy profits due to rising prices and
speculation undermine our habits of
work and thrift. We become inter
ested in spending rather than earn
ing: then the great basic law of
de-
preston results.
Losses wipe out business profits,
the bread lines form, and by suffer-
ing and by want we again learn the
fundamental lessons of industry and
thrift. AS our overdraft on the bank
of prosperity is gradually paid back
by the hard process OF working more
and spending less things gradually
improve and business comes back into
balance.
Business Now Healthy.
BY normal business. them we mean
that activity is neither running ahead
nor tagging behind the KY line, but
Is running at the fastest pace we can
continue to hold. Normal business is
healthy business. and at present bust
ness Is in exactly this normal, healthy
condition.
President Coolidge has emphasized
the necessity for "stabilization" in the
present situation. Secretaries Mellon
and Hoover are stressing economy and
the dangers OF imitation. The Gov
, ernment Is awake to the tremendous
advantages of this normal situation
and the losses that will inevitably
accrue IL the present improvement is
allowed to develop into a spree Of
speculation.
Personally have spent the last 20
years in an effort to cut down these
Jumps and bumps in American busi-
nses, to lessen these extremes and
to eliminate loss and suffering by
helping business men to keep nearer
to this line of normal growth. It is
improbable that these fluctuations
will ever be completely eliminated
but as more business men and more
wage workers recognize these changes
in the business weather their results
are modified and the penalties imposed