Henderson daily dispatch. (Henderson, N.C.) 1914-1995, 1937-10-01
Current Business Drop
Z Merely Breathing Spell
In Prosperity Upswing
CONTINUED from Page One.)

4. Retail sales are slowing up. While
| dollar sales are above the 1886 level
/ unit sales have dropped below Con-
suners so heavily stocked up last
Spring that they are now resisting the
| 10 per cent jump in retail prices.
S. New corn is selling at only IS
cents bushel on the farm and oats
for only IS cents. Millions of bushels
/ Of Argentine wheat are ready for tx
port at IS cents per bushcl less than
our domestic price. Last year farm
ers bought heavily of goods and
equipment on time for which they
must now pay.
T 8. During the past two years the
number of concerns going into bank
ruptcy has Teen at the lowest level
in history; but commercial failures
are now increasing.
z Profit margins are steadily mar
rowing. Higher labor costs and heav-
/ ier taxes have pushed up operating
i expenses. Selling prices are being held
| down by consumer resistance. Earn
/ :ngs for the third quarter will reflect
this squeeze
8. From March, 1888, to March, 1886,
bank deposits increased $4,000, 100000
This tide has now turned. There has
been a $2,O00,OOO,OO0 drop in deposits
since the beginning of the year.
%. Federal Budget problems seem to
DEFY solution. Despite terrific taxes,
federal receipts will fall far short of
expenses: while politicians continue to
block economies. .,
10. Confidence is at the. lowest .ebb
in three years. Threats OF further
Labor troubles, martial music in Eu-
rope and Asia, and fear of new de-
preston are making business men
pull in their necks like turtles.
Now turn these bearish trends a.
round and look at their optimistic
side.
Ten Optimistic Factors
1. The current slowing down of the
textile and steel industries is healthy.
It will keep inventories in line with
demand Lower volumes should make
iasor and materials concerns realize
that unreasonable wages and prices
defeat their own purpose. -
2. The commodity price drop is also
basically sound. Prices last Spring
were out of line with demand. Fearfof
a general Labor strike caused too
much forward buying and too sharp
rise in prices. The presenet shake
out is good for business
8. Railroad economists are cheer
full They expect higher costs to be
| offset bV Increased freight rates. AS
evidence of this, one big road. placed
an order for 1000 freight cars only
ten days ago. Further orders will be
released if the rate and labor situa-
| lions are ironed out satisfactorily.
| a. Volume of retail sales is below
L ~ ;e M
| Of September, 1895. Last Fall there
was an abnormal increase in retail
trade due to X0nus spending. Now we
are witnessing healthy i-uying.
s. Grain prices have tumbled, but
the government estimates farm in
come this year at $4,000, 100000 the
highest since 1929. Gains in dairy, live
stock, and many small fruit prices,
plus good crops, should boost farmers
income IA, per cent over last, year.
X g.. Commercial failures may be on
the upgrade; but the number of new
concerns being incorporated has not
increased since 1882. Marginal con-
Germs are still going into bankruptcy;
but this means more business for the
survivors.
Z Profit margins are lower; but the
sharp drop. in commodity prices
should restore some of the spread be-
tween producing costs and selling
prices. Increased volume during 1888
should also take up some slack. More
over, lower profit margins go hand
in-hafld with sound prosperity.
8. Even though deposits are drop
= ping, our huge gold supply{can be ex-
| banded into q total available credit
of $125, 900, OOO--twice the 1929
peak. Moreover, the S2O00,000,000 gain
in commercial loans this year means
that business men are starting to use
this credit. e
1 8. The Budget will not ice balanced
this year nor nexts From our chill
drens viewpoint, our federal financing
policy Is wicked. However, huge fed
eral OUTLAWS are inflationary. They are
! builish from the short-ternn angle.
s TO- The labor market is strong to-
day; but it will turn downward some
time Just as the stock market turned
| in 1929. Business men are currently
| gloomy: but they were far gloornier
in 1894. Since then business has ad-
yanced 40 per cent and stock prices
have Increased so per cent.
These bullishs and bearish factors
just about offset each other. The bal
ance, however, fails strongly on the
side of optimism when the basic trend
is thrown on the scales Business is on
the rebound and it has not yet reach
ed it's peak. From 1880 to 1894 the
country raised less food and made less
goods than it ate or consumed. 1887
is the first time in seven years that
there has been normal balance be-
tween production and consumption
The pent-up demand for those five
lean years has yet to be fulfilled.
Business cycles are like the ocean
tides. When they are running in
nothing can stop them. This recession
is simply an eddy in the basic upward
trend. Despite the possibility of sew
eral months of business unsettlement,
the tides are strong enough to wash
business farther up on the shores OF
prosperity Although another depres-
sion is certain some day, am still
an optimist and believe that the bull
=, ~.st1.4 t,-s - xrnf ,,11Y,oitonfn6 Com