Evening star., 1926-11-02
BUSINESS TURNING
TO STEAD|ER PACE
Gradual Betterment Seen
Following EIeCtion-VioIent
Upsets Not Likely Now.
By DAVID LAWRENCE.

Business conditions throughout the
territory visited by this correspondent
during the last few weeks are, gen.
orally speaking, good. but the average
executive no longer is 80 much con-
cerned with the fluctuations of a sea.
SOnRl character. He wants to know
whether a major or minor decline is
in prospect.
The term Slowing up" was most
commonly heard by the writer to de-
scribe certain downward movements
in recent weeks. but invariably this
was accompanied by the belief that
the elections would mark the turning
point, and that from now on there
would be a gradual Steadying OF the
whole economic situation.
The disaster in Florida and the
drop in the purchasing power of the
South due to the cotton situation have
not had the unsettling influence
which such happenings would have
had in pre-war years. 1t takes gen
eral, Nationwide change to affect
business conditions as whole. This
is partly due to the multiplicity OF
American business interests nowadays
hs well as the variety of markets that
have been opened up to American pro-
ducers since the war.
A congressional election is always
source of apprehension. Does 1t mean
n revival OF attacks on business, end
less investigations. restrictive leglsla-
ton and other disturbances when
NAV he relatively small in the area
of their direct effects but widespread
in the psychological effects on bus1-
ness as a whole? The underlying
strength of the Republican party in
she last two years has been its tOier-
ant policy toward business. This mas
tn some instances been departed from
bv the Department of Justice in the
case of some big mergers, but the de-
partment's action was defended by the
Coolidge administration with the eX-
PLANTATION that it was preventing a Slt-
uation that might provoke Congress
TO Sterner remedies.
With the elections out of the way
and Congress in control of the major
fly party in consonance with the con-
troll of the executive by the same
political party, the outlook for the
next two years can hardly be said to
be one of disturbance for business.
AS for major and minor declines,
It is a curious characteristic of the
present epoch in American history
that there has not been a major de-
cline since 1920. Since the Spring Of
1928 the up or down turn of business
has been OF comparatively short dura-
ton. This has been partly due to
control of credit by the Federal Re
serve Board, excellent transportation
facilities, surplus plant capacity and
healthy labor conditions.
New Policy i'm Buying.
DR.. E o. Merchant, economist
for the G.. H. Mead Paper Co, whom
bo int at Tavtop
Ohio, says that these factors have
made it possible for any expansion
in the demand for goods to be quickly
satisfied, SO that oVerordering and
Overstocking of goods at rapidly ad-
Vancing prices has been largely done
away with and hand-to-mouth buying
has become the general practice in
all lines of business"
During the past year." explained
Or. Merchant, there has been no
heavy accumulation of inventories,
Ior any sharp rise in commodity
prices. Hence it is very improbable
that there will be any forced liquida-
tlon of goods or any sharp decline in
commodity prices during the present
recession. 1t is true that bank loans
are little larger and money rates a
little higher than they were a year
ago at this time. But here again
Enefe is no evidence Of imitation or
stringency such as would bring on
Forced liquidation. The banks gener-
ally have an abundance of funds for
Ioaning purposes and it is probable
THAT money rates will soon begin to
soften. L a decline in stock prices
and a slowing down of business is
promptly followed by a Softening Of
money rates. that is considered by the
best authorities to be conclusive evi-
dence that the dOwnswing is a minor
and not major movement"
Views like the foregoing are typi-
cal of what the writer learned in talk
ing with the executives of some of
the largest business institutions in the
country. The undercurrent is one of
confidence in the future not merely for
q few months ahead, but for years
ahead, Hardly anybody predicted a
slump such as visited the country in
1931. The prevailing opinion seems
10 be that the general level of busi-
ness will continue to be high, though
short time fluctuations will occur af-
3eCting individual industries or sec.
lions of the country.
(COpyriCht 1929