Evening star., 1928-12-30

concentrated in the last f1ve years.
The increase in production and In
real income in the United States Is un-
paralleled in the worlds history. Ac-
cording to the statistics issued by the
National Bureau of Economic Research,
the Nations income increased from
ST, 900 600, 900 in 1923 to 100000, ,000,-
900 in 1926 an increase in dollars of
1926 purchasing power, of nearly $14,-
900, ,0O0, ,00O or more than 18 per cent.
According to the estimates given in
the News Bulletin Of the National Bu-
reau of Economic Research. Inc, for
February 81, 1927, the purchasing pow
er of the national income increased
46 per cent from 1921 to 1925. AS the
farming class has lost relatively in real
income. the workers and managers in
industry have gained even more than
IS per cent in purchasing power dur
ing this period.
Justifies High Stocks.
| In this increase in real income is a
| solid measure of Justification for the
| higher plateau on which the stock mar
ket rests today. since it records gain
| in the intrinsic value of the securities
of corporations. While production and
profits in 1927 fell slightly below the
| record of 1926, Is Is calculated that the
record of 1928 overtops that of 1926,
especially during its latter half. And
be it remembered that small gain in
the gross income Of corporation
means large gain in the earnings
on common stocks; for common stocks
represent the equity after deducting
the relatively fixed shares Of the bond
holder and preferred stockholder.
Hence the Hoover market" This
gained its impetus during the presi-
Dental campaign and after the election
of an engineer President whose leader
ship of industry. as Secretary OF Com
merce. is largely responsible for the
American organization Tor mass proouc-
ton and its attendant economies.
The intrinsic value Of stocks has in
creased from the knowledge that the
achievements of the recent past will
continue in the future. The war it
self, as Bernard M. Baruch has point
ed out, consolidated the various indus
tries into powerful groups. Mr.. Hoo
yer, from his experience before, during
and since the war, appreciates to the
full the economies realizable from the
pooling of information and elimination
of waste in organization and processes,
mass production and better methods.
BY applying the principle OF central
izing ideas and decentralizing their
execution he has put to work every
industrial community in the country.
,,,...., Better Methods Used.
Public and semi-public agencies,
chambers. E. of commerce. and other
business and civic associations have
helped to educate the public in bet
ter methods of production and mar
keting. The wasteful practice OF max
ing hundreds of varieties and models,
regardless Of the users demand, has
been superseded by the policy OF max
ing only such models as merit dennite
demands dozen or a score. probably,
instead of several hundreds.
Building of homes was spread over
the Winter as well as Summer months,
thus smoothing out the yearly employ
ment curve. The public has been In
f1uenced to steady the seasonal huctua-
tions caused by changes in style: In
this program the departments at wash
ington worked with the trade asSocia-
tions and promoted programs for stand
ardization of costs, materials, specif1ca-
lions, production, equipment and fin-
ished products.
The Department of Commerce, reor-
ganized under the engineering leader
ship Of Mr.. Hoover, has co-operated
with the people for useful social and
economic ends. Series of committees
were created in many industries. In
the lumber industry Mr.. Hoover has
told how these committees finally per-
fected a system for the grading of lunl-
ber and for guaranteeing OF these
grades to the public, which is now car
ried out wholly within and by the
lumber industry itself, with conse-
quent savings in elimination of waste
and fraud of upward Of $3.50, 100000
year"
These processes are still going on.
Radical changes for the better have
been installed and are planned for the
long future. Trained physicists, chem
lists and economists are searching con-
tinually for new power, materials and
methods to transform the face and
structure of industry. The market re-
ports, trade reviews and business or
ganizations are spreading the knowledge
of these forthcoming changes.
Labor's Shoulder at Wheel.
Finally, labor has put it's shoulder to
the wheel for more production. I'VE
will rely on facts rather than on force"
President Green of the American Fed
Grafton Of Labor declares; while John
P Frey of the Federation Council, finds
in the increasing power of production
new instrument with which to meas
ure wages" Wages have gone up in
proportion to increased output. Prohi-
bition, always better enforced through
the contract relations between employer
and men than by political action, gains
in effectiveness as the little companies
are merged into the greater corpora
tions. The age of trust busting is past,
the age of mergers has aided in the
fro nj fvSS NJ
its steadier and more alert workers.
Because Of the scientific appraisals
of the stock market by the investment
trusts and investment counselors, there
fore, and the strides in research, inven-
ton, elimination of waste and increased
productivity that have characterized
the years since the war, what was once
speculation or mere gambling in COM
mon stocks has changed toward safer
investment. The intrinsic value Of
stocks, present and future, has increased.
Price Level Maintained.
Along with these influences for a
higher market, the commodity price
level has been maintained in relative
stability since 1921, largely by the action
of the Federal Reserve system CO.
operating with business in the control
of credit. A dangerous surplus OF gold
has been redistributed among the
central banks of the world in aid of the
postwar resumption of the gold stand
ard. This has steadied the levels of
commodity prices in foreign countries
and encouraged international trade.
The comparative stabilization of gold
in terms Of goods has given reinsurance
to the bond market as well as to stock
investment. The investment trust and
counsel have led investors to put their
eggs in three baskets-common stocks,
| preferred stocks and bonds.
The high plateau on which the stock
market now moves is, therefore, result
Of improved order and efficiency in
American business.
SERVICE is SUSPENDED.