The Washington times., 1930-07-11
CHANGE IN BASIC
FACTORS MEANS
RECOVERY

uLUUELHI
The past month has witnessed
changes in basis factors, says
the business review of the Amer
ican Bankers Association Journal
for July, and cleared the way
for a definite recovery later in
the year" It Is stated that a
study of the history of previous
comparable periods of recession
indicates that a cycle of improve.
ment is imminent.
There is no doubt" the
Journal continues, but that
the curtaiIment of production
in the major industries has
been much greater than the
falling off in consumption on
the part of the public, and this
has inevitably led to a marked
reduction in the inventories of
finished goods all along the
line from manufacturer to re-
taller.
Cycle About to Change.
"Hand-tO-mOuth purchasing,
which has been common prac-
tice for the past 10 years, has
during recent months, been still
further restricted by the unwill-
ingneSS of merchants to carry
anything more than a minimum
of stocks, both because Of the
declining trend of prices and
the uncertainty in the business
outlook, which of cOurSeecreates
a situation that later on must
bring buying of more than nor
NAL proportions and tenden-
cy for prices to become firm or
even rise.
That the present recession is
about due to change into q
cycle of improvement is indi-
Gated alike by the history of pre-
viOus comparable phases in this
country and by the more conf
dent predictions of a growing
list Of authorities on business
and fOrecaSting. DIR. w. r.. 2
Burgess, of the Federal Reserve
Bank Of lJew York, points out
that the continued heavy de-
mands from 12O,OOO,OOO people
give assurance that the malad-
justments of this period will be
irOned out before many months
have elapsed.
''It is universally agreed that
the strong and liquid position
of the banking structure gives
assurance of ample funds to fl
, nance the revival of activity
and that the exceptionally low
level of interest rates is not
only bringing the bond market
back on its feet, but is a strong
incentive to borrowing for in
duStrial and trade undertak-
ings.
Business Not ''Flat"
"An examination of the sta
tistics covering the production
of goods does not furnish any
grounds for the assertions,
loosely made but rather widely
circulated, that business is flat
on its back For the American
frame Of mind, ambitious for
progress and regarding the
normal seasonal gain as so
per cent or upwards, it is
natural that the delay in gen.
eral recovery, combined with
the recent renewed weakness in
security and commodity prices.
should have engendered such
feelings of disbursement.
I'm Wall Street and other
Centers there is a tendency to
measure all conditions in fluc-
tuatiOns of a few per cent, and
to quickly change from extreme
optimism to extreme pesSimisn.
On the other hand, throughout
the country at large, the
population is going along with
its work, its recreation, its
home life, pretty much the
same as was done last year
and is likely q year hence.
Many business men might
notice that their trade was
not quite so good this year as
last, but would not be aware
that a depression existed If
they did not read about it
continually in news from New
York or hear such waiIingS
from their friends who had
thought that in stock specu-
lating they had discovered the
royal road to wealth."