Henderson daily dispatch., 1938-08-19
Spectacular Upsurge In
Business Seen for Fall
Continued from Page OneO

Continued from Page One.)
tWell my sons been to college, he
reads the papers and he listens to the
radio ,and he ought to know.
$50 the father cut down on his
meat and bun orders, began to talk
! depression, took down his advertising
signs and no longer bothered to stand
! out on the highway to sell his hot
dogs. And his hot dog sales fell off al
j most overnight. You're right, son..
] the father said to his boy. we certain
ly are in the middle of great de-
preston"
Ups and Downs Sharper.
This little story not only illustrates
| the point about today's pessimists.
i but it also has a deeper moral. For
| 35 years I have been studying busi-
ness statistics. I have big Babson-
chart hanging on the wall which
! covers all those years. Whenever l
look at this business chart, l am
amazed by the violent changes in the
line which pictures the good and bad
times of business. This "curve" has
gone up and down more in the last ten
years than in the three previous de-
cades.
This fact is especially disappoint-
ing to me. When l started on my ca
reer of gathering data about business,
1 had typical youngsters idea that
I was embarking on a cruSade-a
crusade to help educate people about
the business cycle. With such educa-
ton | believed that the curve" would
smooth out. thought the peaks would
gradually become lower and the val
leys shallower. But the opposite has
happened. The zig-zags are now more
pointed and come more often than
ever before.
News More Sensational.
What are the reasons? There are
many 1 believe that the major ones.
however, are the greater public in
terest in the business cycle and the
new role government is playing in
business The cherished hope of my
early days (that the more knowledge
the public had of the business cycle
the less severe the cycle would be-
has worked in reverse. What happens
is that people try "to beat" the cycle.
Business news now gets far moro at
tention than it ever did. Furthermore,
such news is handled much more SEN
sationally-especially by radio COM
mentators. The result is that business
today is ruled by emotions rather
| than by statistics.
| Here is how it works. Some morn
| ing the public wakes up to the fact
| that the business outlook temporarily
is uncertain. Activity slacks off and
securities are quietly sold. News of
this uncertainty begins to appear.
People are fearful that they are on
the brink of depression. Suddenly
the crowd stampedes. They rush to
sell securities, to get rid of commodi-
ties, to cancel orders, and to lay off
workers. Gloomy news fills the head
| lines and the air-waves. From good
times, the country is plunged into re-
cession almost overnight.
Mob Psychology.
| After the necessary adjustments
are made, the pendulum swings back
again. Business gets better and Sc
curities rise. News of this gradually
appears. The public begins to think
boom lies ahead and they will be
caught flat-footed by rising prices and
empty shelves. Suddenly confidence
|
and securities is on. Bullish news fills
the papers. The radio commentators
dress it up sensationally. Then we
have another feverish boomlet.
Hence, it seems to me that business
is being run on mob psychology.
Moreover, this up-anddown trend is
accented by the new governmental
| control of business. The President
! comments favorably or unfavorably
i on the business outlook. In fifteen
minutes his remarks have reached
every hamlet and farm. The effect is
! tremendous. So | think these are the
reasons why the up-and-downs of bus
| mess are much sharper than they
were 80 years ago.
| Statistics Cannot Be Ignored.
| To go back to Mr.. Trundle's story,
however. there is still one more
| thought. If business continually in
| creased its meat and bun orders, ir-
respective of what statistics showed
we would soon be in hot water. Peo-
ple can eat only so many hot dogs.
Inventories can get so big that they
can ruin business. Periods OF ADJUST
nnent are necessary to keep business
alive lust as there would be no hu
| man race if we did not get 1ndiges-
ton when we eat too much, SO our
| present business system would havt
died long ago if we did not nave Pc
| riods of reaction.
But now the 1878 reaction is fas'
passing. The Babsonchart is only Is
per cent below normal today com
pared with % per cent under normal
eight weeks ago. The pain is gone. II
is time to stop moaning ABOUT 1t.
Start doing business now. 10 not oe-
lay until conditions are booming
prices sky-high and another reactlor
lust around the corner. Remember
! hose who wait TO get the proof sci
dom get the profit.