Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-16
Economist Says Business
Decline Has Apparently
Reached Bottom.
RESUMPTION OF ACTIVITY
IN STEEL CENTERS CITED
Expanding Auto Output and Bet
ter Stock Prices Cause Change
in Sentiment.
Special Dispatch to The Star.

special Dispatch to The Star.
CLEVELAND, Ohio, February 49,
The bottom of the business decline ap-
pears to have been reached. The evil
dences Of this are to be found in the
increase of activity in the iron and steel
industry, in the rapidly expanding out
put of the automobile industry, in the
notable improvement in business senti-
ment and in the increasing strength
and activity of the securities markets,
says the Business Bulletin of the Cleve-
land Trust Co., edited by Col Leonard
P. AyreS. General business is still sub
normal, but conditions do not appear to
be getting worse in many lines or in
important ones, and they are certainly
improving in some that are fundament-
ally significant.
General business recovery may or
may not make rapid progress in the i'm
mediate future. We appear to have
reached the bottom of the business val
ley, but we do not yet know how wide
the valley may be. In the two most
recent periods of Subnormal business, in
1924 and 1927, recovery began as soon
as the bottoms of the declines had been
reached, but in nearly all the previous
recession periods definite recovery was
longer delayed. 1t now seems probable
that in this present case recovery will
be prompt, but that is not yet sure.
Building Construction.
Building construction has not yet
turned definitely upward, and that Is
particularly true of residence construc-
ton, which is exceptionally slow. How
ever, the severe Winter may be holding
building back, and meanwhile it is well
to note that while construction Is still
below normal the figures are not getting
worse as the weeks pass. Freight traf-
fic on the railroads has not yet showed
signs of Improvement, but it is not
showing notable decreases, and here
again it may be that the severe weather
is in part responsible for some Of the
decreased activity.
Iron and Steel Industry.
Business recovery will be achieved
when the fundamental lines Of indus
trial activity get back to normal. This
he not yet happened in the case of any
one of the more important basal indus
tries, but there are encouraging EVIL
dences that the process of recovery is
under way.
Activity in the iron and steel industry
fell steadily and rapidly from early
october to the second week of January
1t then turned up, and has made suS-
tanned progress since that time. This is
the most hopeful indicator that we have
that real turn for the better in in
dustrial activity may have been reached.
Automobile production was still at a
high level last October, and its decline
to the third week of December was swift
and drastic. Since then there has been
a considerable recovery to levels that
are still well below normal, but which
may probably be bettered during the
weeks just ahead. This recovery is
largely due to the activity of the Ford
and Chevrolet plants, which have am
bilious schedules for February and
March. If these schedules can be ad-
ing general recovery of business ac-
tivity by Spring.
The growing optimism of business
sentiment during the past month has
been largely based on the steady in
crease of activity in the fundamentally
important iron and steel industry.
These are business developments of
real Importance, for it is an old and
we'll tested rule that the iron and steel
industry increases its rate of output
only in response to demands from
creases as this present one during times
of slow business mark the turning point
toward general recovery. and probably
that Is what is happening now. Some
times the industry makes a false start,
as II did in January of 1924, when II
blast furnaces were brought in. with 81
more added In the next two months,
only to be followed by a decrease of
124 furnaces in the four succeeding
months.
Stock Prices.
There is one consideration which in
dictates the wisdom of restraint in in
terpreting the increased activity in
iron and steel as surely marking the
turn toward the better in general bust
ness. This is that the prices of iron
and steel products have been steadily
falling as the output has increased.
Possibly demands for steel are less
urgent than the increased activity
would seem to indicate.
A year ago the industrial stocks were
priced much higher than the rail
issues, but now the two groups are
close together in market valuation.
More than % million passenger auto
mobiles were registered in this country
in 1929. The gain over the number
registered during the previous year was
nearly two million cars, and only twice
before, in 1923 and in 1925, has there
been so great an increase. The 10
million mark was passed only seven
years ago, in 1922, so the increase
during recent years has been truly
phenomenal.
n nHyTTN AWTrD ~-c