The Bozeman courier. (Bozeman, Mont.) 1919-1954, 1925-11-27

new 10TH.
The increase in the rate of indus
trial output which has actually oc-
CURED since midsummer is probably
little greater than might be expected
on purely seasonal grounds. But the
essential fact is that both production
and trade have been, and still remain,
distinctly large.
The output in most lines appears to
be well adjusted 20 the rate of cen
sumption, the Survey says. A level
Of general activity much higher than
that which now prevails would indi-
cate an accumulation of stocks in the
hands Of producers or distributors,
and would therefore fail to justify as
confident an outlook as is possible
under present conditions.
Sound Basis Of Activity
Most of the fundamental factors
underlying the current situation are
such as to warrant the optimistic at
titude generally expressed by bust
ness leaders. Progress toward the
restoration of balance among individ-
nal industries and economic groups
has continued. Agricultural purchas-
ing power will undoubtedly be en-
HANGED during the present crop sea-
SON. Prices of farm commodities, es-
pecially animal products, are swing
iug into line.
The credit situation is no longer
such as to encourage Over-expansiOn,
but on the other hand it holds no i'm
mediate threat of stringency. Not
able progress in political relations
abroad gives promise Of accelerated
economic revival. While the more re-
cent developments in connection with
the settlement of international debts
have not been all that could be wished,
it may be said that the outlook in that
direction has been somewhat clarified,
and that a basis for future negOtia-
tons has been established.
The |lOnger-term outlook, however,
Includes several factors which must be
regarded as less encouraging. One If
these is the continuance of feverish
building activity in some sections of
the country where there is no longer
any evidence Of housing shortages.
Warnings against "Overbuilding" are
heard with increasing frequency.
1t is not likely that such a situa-
ton is yet general; nor is it by any
means certain that it will become so,
Nevertheless, the present rate of &C
tivity, in the face CT high costs and
declining rent levels, suggests the
need Of caution. The general business
situation in the last few years has
been so closely related to conditions
in the building trades that the effects
Of an abrupt curtailment would be
keenly felt. It is much to be desired
that construction activity recedC
gradually to a moderate level, avoid.
ing a period of speculative Over-ex
ransion followed by one Of severe de
pressicn.
Position of Financial Markets
Conditions in the financial markets
reflect, in a much greater degree thar
business conditions generally, the eff
fects Of easy money during the las
Two years. The consistent refusal o
business men and bankers to be LEI
into a period of unsound expansiO,
based on the excessive gold reserve
has diverted huge amounts Of capita
funds into the security markets. Thi
immense money supply is largely-al
though, cf course, not entirely-re
sponsible for the strength Of securit
prices and the activity of trading thi
year and last.
During the last month, transaction
on the Stock Exchange have risen t
record heights, while the movement {
quotations has become ~increasingl
irregular. 1t is likely that bot
stock and bond prices would be four
unusually sensitive to any pronounce
and sustained tendency toward high'
money rates. 3
To what extent a major downwal
reaction in security prices might a
feet the general business situation
highly uncertain. That there won.
be some reaction is almost inevitab
for psychological reasons if for
other. However, the bases Of prese.
levels Of activity are strcng enouG
to Withstand considerable pressure (
the financial side. The fact that bus