The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1925-12-31
CAUTION URGED
BY BANK Err FOR
1925 BUSINESS
Landon, Financier, Sees
Prosperity in Coming
Year.
HITS lNSTALLMENT PLAN
Warning Against Enthusi-
asm Is Given.
BY Hugh NICK. Landon

lice president and chairman of the
"a executive c0lnmitte of the Fletcher
S$ Savings and Trust Company.
A year ago the statement was
made in this review that we
were entering 1926 with bust
ness distinctly on the upgrade. "
The business curve on the chart
of the Harvard Economic Serv-
ice shows that business has con-
! tinued throughout the year on
8a uniformly high level.
q This lire is, Of course, composite
OF conditions generally. It's height
has undoubtedly been due to the alb
normal prosperity prevailing in two
Of the great industries of the coun.
Atry, building and automobiles. Their
j prosperity, however, has inevitably
spread to many other lines of in
dustry. So while prosperity has been
somewhat unevenly distributed it
has nevertheless bee nso obvious as
to need no emphasis. One need only
glance over the record of corporate
dividend declarations, with its long
list Of extra disbursements at the
close of the year, to have the whole
story in a nutshell.
The Future
The interesting inquiry is as to
the future. The general expression
of business leaders is one of pro.
nounced optimism. And it may be
admitted that in the long view the
ture of the United States will prob
ably surpass the visions of the most
visionary. But nevertheless there is
periodfcity In progress, in busi-
ness as in all other things, and as
long as manufacturers are required
to estimate markets alternating
periods of prosperity and depression
are certain to continue. When
Everything looks prosperous and
everyone seems cheerful, one
naturally wonders, "Isl the tide near
the flood?'" If so, the ebb is due
before long.
1t is an unquestioned tendency of
the American people to become
victims of their own enthusiasms
and to over-discount the development
of their inexhaustible resources by
borrowing too heavily from the
future. A current instance of this
\ is seen in the real estate speculation
4 which has been humming so merrily
in many sections and on top of
u that. in the speculative building
which is becoming so widespread.
\ One has only to travel in any
direction to become convinced that
much Of the building construction
which has been such factor in the
prosperity of the past year is highly
speculative in character.
The significance of this becomes
additionally impressive when one
considers the enormous sums in
volyed. A project calling for an
expenditure of eighteen or twenty
millions Is no longer staggering.
Indeed there is under considera-
tion one project in the city of New
n ork where the expenditure of
NJ 90 600, 900 is seriously discussed.
IL There never has been a time in
history when the conversion of liquid
n capital into fixed form on large
I scale has not been followed by seri-
4 Gus business depression. The great
ioaning agencies in New York, in
surance and trust companies, have
Joined in warning that funds for
the grand scale apartment house,
and office buildings will be shut
off; they state that in these respects
the metropolitan district is already
overbuilt, that vacant space is plenti-
ful, and that the near future holds
"a long, tedious downward trend of
rents"
Article Quoted
on this subject the annalist of
Dec. is, said: "The most critical
question before business is what is
going to happen to building in the
next few months. If construction
can be curtailed to the degree of ex-
pansion that the public and investors
can safely carry, the transition to
the inevitable lower pitch of activity
may be of that gradual sort which
can be called normal in the sense
of 'healthful.' If on the contrary
the extreme readiness of the public
n to invest in securities of every sort
is abused, certain parts, at least, of
the inflated building activity will col
lapse suddenly, cutting off employ.
Aent, purchasing power, and
Mercantile profits on a considerable
scale, and reducing production in a
wide area of supplying Industries.