Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-11
BUSINESS LEADERS
LOOK FOR UPTURN
Present Depression Is Only
Phase OF Economic Cycle
in Industry.
BY JOHN F. SINCLAIR.


has been sick! It still feels pretty
tough, but it's getting on its feet again
and soon we'll have forgotten the bust
ness headache we've had for few
months"
This was the view of "R. S." as ex-
pressed in a letter to me.
It set me thinking Here we have
had nearly year of major depression,
evidenced by a dropping commodity and
stock price level, unemployment, slack
ening trade-both foreign and domes-
tic-and wage reductions.
What about it? Will 1t be over soon?
If not, why?
r. G. Dun 81 Co. complies each week
a summary of wholesale prices of 294
stable commodities of domestic and
world commerce. 1t showed So COM
modities-or 20 per cent OF the list
for a recent week which fell either be-
low or near pre-war levels. Thirty-two
of these price quotations were actually
below pre-war levels.
Think of wheat, rye. barley, coffee,
coco, sugar cotton, silk, rayon, hay,
hides, rubber, copper, tin, zinc, silver,
coal at the pre-war price level-several
of these now below any level since 1907
and sugar below any known levels!
Period of Decline.
The entire United States list is only
% per cent above the 1913 level, while
the level in Great Britain is only II
per cent above.
Are prices going back to the 1913
level? Is the old 1913 mark TO be
smashed? True, some prices have sunk
below those of 1918. But Will the aver
age OF the 294 commodities on the Dun
list smash the 1894 record? What is
the end to be?
We are in period of major de-
cline. Have been IN a PERIOD
of commodity price decline for about
five years. viii We have another five
years of declining prices? If We do
A chart Of the Federal Reserve
Beard giving the peaks of wholesale
prices from 1900 to 1890 shows that the
three big peaks were in 1912, 1855 and
192O-all war imitation. From 1912 to
1920 saw decline from about 24o to
ITO per cent. From 1920 to 1885
prices were fairly even. Then they be-
gan to rise, up to 1887.
Bang! Down went prices then until
1872 Again a fairly even level till 1860.
The Civil War came and again prices
shot up. From 1865 until 1896 America
was in a period of declining prices.
They were terribly hard years. Some
people made money, but the great
power, growing unemployment in cities,
bad industrial conditions generally. 1t
was probably the most difficult period
America had gone through.
Rise During War.
Then, from 1896, prices rose. until
1914. The war saw a rise in the whole
sale price level from 100 in 1914 to 240
in 1920. The dollar was worth about
40 cents, as compared with six years
before. Again a violent price decline
in 1921-the most violent in American
history in one year--and since that time
n fairly even price level. But now we
are in for another long. severe decline
OF the price level.
Eevry one wants to know. Depression
talk is heard everywhere When will
the depression be over? Who or what
started it?
What changes must the crash bring
TO business and what changes to
labor?" asks a reader. viii it put an
end to conditions which permit the
operation of factories at capacity for
few months a year, and their closing
the rest of the year? Will it result in
the employment of fewer men, but in
their employment the year round?
Since the war business had been
having an easy time of it. The spread
between production cost and selling
price had been so great that business
hadn't had to worry muck about idle
time. The public which paid the ex-
orblntant profits and the laborerS who
we're out of work when the plants
closed were the only ones to suffer.
VIII we get back to those conditions,
or VIII managers be forced so to gauge
their market as to keep running IL
months year during the overproduc-
ton slack months to take care of sea-
sonal markets."
Believe Worst Is Over.
The letter continues: MANY men who
we're thrown out of work this Spring
are back on the farms for the present.
VIII they stay there? Are they per-
nanently lost to industry, or are they
merely competing in another over
crowded industry to add to the farm
problem?
If some permanent changes are tn
be made in the economic and social
structure of the country by the present
situation, what are they?"
Tnese are frank, straight questions
about which people are thinking. So
let us begin by saying that some stu
dents believe the bottom has already
been reached and that the worst of the
business storm is over
The Business Week recently gave
eight solid facts that point to a busi-
ness upturn: % Expanding bank
credit, ~ idle money seeking a lob.
80 bare shelves. "a sustained public
Buying power, (5) farm income pros
poets, 90 raw material imports ID
home-building, 90 automobile outlook.
R. w McNeel, Boston, makes his re-
marks a little more personal to those
who are interested in the stock market
by saying:
Those who hold good and sound
stocks, or purchase them at current
levels, can therefore look ahead con-
1idently to receiving sometime in the
future substantially higher prices for
them, regardless of immediate fluctua-
tons
This opinion is fairly widely held at
the moment.
Others believe that business may be
little slow in coming back; with good
prospects. however, that it will be back
to normal in a few months.
The Brookmire Economic Service, in
q recent summary of business condi-
tons, says:
l. Business has entered upon the last
stage of the 1880 decline. The bot
tom will probably be found well below
June levels
g. Unless the decline becomes sharper
ending in a verigable slump there will
be little or no recovery before Novem-
Der.
3. The whole of the third quarter will
probably fall below the average for the
second quarter.
4. The return to fully normal business
conditions will be deferred to some Pc
Rod during the first half of 1881.
Sees Improvement.
DIR. w Randolph Burgess. Federal
Reserve Bank of New York, said recent
~ that improvement in the business
world could be expected before many