Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-11-09
RAW MATERIALS ON HAND
FOR ERA OF PROSPERITY
Ex-President Coolidge Ayers ''They Only
Wait for People to Come Forward
to Utilize Them"

~ Was Io6 merely Gtldt tic NoAue O1
all the chips changed suddenly. That
would have been a sufficiently disturb
ing CONFUSION. But the point Is that
the chips went downward In value In
| different ratios. The farmers corn
went down in value about one-tenth.
His wheat went down about q third.
The miners copper and the Southern
farmers cotton went down about one
| half.
Now. If you ask what would happen
to poker game In which there was
this sudden and violent disturbance Of
values OF the chips, the answer can be
gwen even by person not experienced
! in the game. The necessary conse-
| quence is that the players stop. or
almost stop. They hesitate to make
bets or, in the field Of business, they
hesitate to make ventures or commit
ments. because they do not know
whether their chips, or their commodi-
ties, will have the same value when
they come back to them. So far as
men play at all, or do business at all.
they do so with extreme caution and
with the smallest possible commitments,
Tnere Is, in short, falling on IN
I volume and speed Of business, and that
Ialllng on constitutes the depression We
have been having for year past.
Confidence In New Values.
We can now approach the answer to
Mr.. Coolidge's question. We can iden-
tify the particular thing in which the
people lack confidence" What they
lack confidence in and what they must
acquire confidence in, before business
resumes its normal volume and activity.
Is the new level of value for the chips,
the new level Of prices for commodities.
So long as some business men think
prices will go lower, they hesitate to
buy. SO long as other business men
think prices may go higher. they hest
| tate to SELL
Confidence that the present level OF
prices will remain reasonably stable IS
the one thing that must come about
before business men begin to play their
game with accustomed speed and In
accustomed volume. That is the one
kind OF confidence, the particular kind
OF confidence, that Is needed for the
resumption Of normal business In de-
| presSions, this confidence Is often dex
layed for some months because Of the
particular position in which some busi-
ness men found themselves when the
downward plunge Of prices came. Some
men found themselves with considerable
stocks Of goods on hand, for which they
had paid the high prices formerly
prevailing. It was characteristic Of hui
man nature for those men, Immediately
after the drop, to hope that prices
would 60 back upward to their former
level. 1t takes several months for this
state Of mind to wear away. What such
business men, and all business men.
should better hope for, Il not return Of
the old prices, but reasonable stability
Of the new prices.
When viii this confidence aErixe4
The answer lies partly in mass human
/ nature, mass psychol0gy land ID there
fore difficult to predict. one can only
cite the fact that majority e The
raw materials enumerated By Mr. Co0I-
| tdge, especially such commodities IS
cotton, copper and rubber, are now &C
q price close to, or lower than, ~ costs
to produce them. When COMMODITIES
are at that price they cannot, Is every
banker and business man knows, 60
materially lower. And they are fairly
certain not to go much higher until
after we are well on our way INTO the :,
midst of the new EZRA Of prosperity
that Mr.. Coolidge accurately predicts.
Need for Buying Seen.
| In short, there Is little reason to lack
confidence that the present level OF
prices will, as to most commodities, re-
main stable for q period long enough
to serve as the base Of q new forward
surge in business.
/ N16n ACC0 " CCdcC AAGfAAA2 AOA AA@8AA~~
prices. Equally they need to cease
waiting for lower prices. What they
really need is confidence that the pres
ent level of prices, roughly, Will prevail
and remain fairly stable. When this
confidence arrives, business Will begin
the new forward surge into that "era OF
unprecedented prosperity" which Mr..
Coolidge confidently predicts.
If business man believes that the
present level of prices will, as to most
commodities, remain stable for rea-
sonably long future period, then the
thing for him to do in his own self
| interest is to begin to buy and to con-
tract to buy the commodities ne needs
for future expansion. A good many
business men have reached this state
of mind. A considerably larger number
of bankers have reached it. Such bank
ers are advising their customers who
are in business that 1t Is prudent for
them to begin to stock up with the
| raw materials that Mr.. Coolidge mem
tons or other raw materials.
The business men and bankers who
have come to this conclusion are, as
rule, those with most experience, those
who have seen before, in previous years,
the duplicate of the conditions that
exist now Younger business men, those
under 40, lacking memory Of similar
conditions, are the less able TO have
confidence now. The business men
who have had really long experience,
the comparatively few who were in
business during the depression Of the
1905, are the more able to see what
is now the prudent course for them to
| follow. A man like Mr. Mellon, whose
memory and experience include not
only the depression of the 1Se0S but
the one of the 1905, is the best equip
ped to have wisdom now. If Mr.. Mellon
were to choose to give public or private
advice to business men now, 1t Is fair
guess he would counsel them that men
cannot hope to buy raw materials IN
any large way or over any considerable
period of time at a lower price than
such commodities cost to produce.
Can any automobile manufactures or
manufacturer of tires hope to buy his
supply of rubber, for example, for 1891
and 1882 at a lower price than 10
cents a pound2 Can any textile manu-
| facturer reasonably hope to buy his NJ
| ture supply OF cotton at lower price
than the present? The same question
can be asked as to the mass Of other