Evening star., 1925-01-17
CORNER IS TURNED
IN TEXTILE TRADE
BabSon Declares 1925 viii
Be Much Better Year in
Mill Business.
BY ROGER w. BABSON

BY ROGER w. BABSON.
spocisl Dispatch to The star.
WELLESLEY HILLS. Mass. Janu-
ary 1.-THE textile industry has not
been so dull for 20 years as IN the
year Just closed. Business has been
exceedingly poor; the mills have made
only small profits. If any; many dirl-
dends have been passed and unem-
ployment in most textile centers has
been quite general. Many stockhold-
ers in New England mills feel that
the entire industry is moving South,
and they are naturally discouraged.
Hence. most people connected with
textiles whether owners or employees,
have been quite depressed during the
past year.
Allied industries suffer.
Not only has the textile industry
Itself suffered. but allied industries,
such as tho manuractu of textile
machinery and equipment. have been
depressed also Many feel that the
industry is overbuilt at the present
time and others find 1t difficult TO
finance the installation OF new ma
chinery. The situation is further
complicated by the fact that there is
n difference in plant investment OF
between $40 a spindle in the old
plants OF the North and $50 a spindle
in the new plants Of the South. Al
though II is very possible that new
plant may be more profitable than an
old plant at $40 a spindle, this diff
ference Of 500 per cent is, neverthe-
less a drag on the industry.
Manufacturing Outlook Better.
The year 1924 closed with the low
est spindle houp activity that has
been witnessed for years. The past
week. however. has seen some mills
working full time. Although buyers
are cautious awaiting stabilization,
stocks are low and the demand must
soon increase The cost and price
readiu ustmeut which has been in
process the past year will go far
toward A stabilization OF the isdustry.
! estimate that the next statement
OF production will show a jump OF
over 40 per cent in cotton goods
since the low of last year. Prices
for print cloth, sheetings. gray goods
and ginghams are now more in line
with the general commodity market
than they have been for several
years.
Three Vital Factors.
OF course the textile situation is
primarily bound up In three factors
first, the demand for goods; second,
the price of cotton and. third. the
wage scale. Statistics clearly indt-
cate that the demand for goods VIII
he greater in 1925 than in 1874.
Prices will be more in line. people
will have more money and stocks
must be replcniShed. As TO the price
OF cotton il is difficult TO make fore
casts but it seems now at a falr
level and is relatively cheaper than
wool at the moment. Although cot
ton is now 80 per cent over pre-war
levels. it must be remembered that
il was 1870 per cent above pre-war
levels a wear ago. As l have frankly
stated in times past that cotton was
too cheap or too high, perhaps my
opinion today that II is selling at
fair price is worthy Of considerat ton
The wage situation has distinctly
improved during the past year. ]
believe that at least 80 per cent of
the New England cotton mill spindles
are now operating on the 10 per
cent reduced wage scale. This means
that more than 80 per cent of the
10000 operatives have adjusted
themselves to the new conditions. All
of this is exceedingly favorable to
the funda amental situation.
Textile Securities Lag.
Unfortunately, textile securities
have not met with marked public
favor Many investors-yes, the
great mass Of investors outside of
New England-have little or no in
terest in textile stocks. In a way,
the mill owners themselves have been
largely responsible for this condition.
! say this because they have here
tofore tcnaciously held the good
stocks and have offered to the public
the poorer ones
So long as mill has continued
very prosperous the owners have held
the stocks. and. as rule. it has only
been when they saw the tide turn
against them that they sold these
stocks to the public. This means
that the public has been let in on
many of the poorer ones.
In connection with other industries
this may be more or less true, but it
is not the rule. The successful bank
ing houses have built up their repu-
tations by seeking good securities for
their clients. and in many industries
the public has had an equal oppor-
tunity with the individuals to make
profits and to secure an attractive in
Yestment.
Good Mills Stocks ApIenty.
The above statement. however. does
not mean that ii is impossible to
secure good mill stocks. such as
Amoskeag, Pacific Mills. West Point
or others which I might mention.
These may all be purchased on the
market by brokers who specialize in
mill stocks. it is now possible for
an investor to buy stocks in any Of
the good mills. He must, however,
choose carefully, as they are not
handed out on a silver platter.
With general. business, as reflected
by the Babsonchart, at per cent
above normal and the tide still rising
believe the textile industry has
turned the corner and that 1925 will
DC much better year