Evening star., 1939-01-01
Record Upturn
Indicates New
Gains Ahead
Fresh Progress Likely
Even Though Staple
Prices Decline
BY FORREST H. GRAVES
Editorial Director, Cambridge Asso-
Tnr

WHICH IIle IllSll-WdLeI HldIkS VI 1879
appear by no means unattainable.
1t will not be an easy, affair
weather climb. The pace of recov-
cry suggests that a.pause would be
normal, and that it may come soon.
But the totals of goods produced
and business transacted during the
full IL months of 1889 should speak
more truly of the natural, physical
and human resources of the Nation
than any years totals within
decade
AS abruptly and as generally un-
expected as the descent of the de-
preston in the final half Of 1887.
came the recovery of the last half
of 1888. It's first hesitant begin
nings are now evident in the figures
for June, the time when the ma
jority anticipated the dullest sum-
mer's business within memory. In
July there was another hitch up
ward in trade indices. but many
discounted it as just the final
brightness of false dawn. in spite
of the sudden eruption of the stock
market in June, after weeks of
lethargy. to force an advance Of
approximately 81 per cent in indus
trial stock prices in just II days OF
trading
War Crisis Ignored.
BY fall, when business activity
proceeded to mount almost un-
checked by the real imminence of
war in Europe, the strength and
validity of the new recovery move
ment could no longer be questioned.
Recent figures show that the rate
of advance in industrial production
since July matches the rate of de-
cline which began in August, 1887.
And both are without precedent in
their achievement of the shortest
business line between the levels Of
depression and prosperity.
Of course. mid-cycle recessions
themselves are common enough in
our economic history. There are
similarities to the 1878 depres-
sion in the "Rich Mans Panic Of
! 1907" which came after the 1893
panic and its companion silver
coinage depression of 1895. Per-
haps even more likeness can be dis
cerned in the depression OF 1884,
which occurred four years after re-
covery from the long postwar de-
preston which began in 1874.
Price Trends Alike.
Throughout the earlier postwar
recovery period, and without halt un-
til the depths of the secondary post
war depression had been reached
the def1ation of commodity prices
had continued-as was the major
movement from 1920 to 1888. Com
modify prices took an upward squirt
in 1879 and remained up until the
abrupt ending of the gold resump-
/ ton prosperity period in 1884-vir-
/ tually the same course which prices
! followed from 1888 to the spring OF
1887.
From 1882 until 1897 IS years
later, prices trended slowly down.
ward with hardly a pause. 1t is
much too early, naturally, to de-
termine whether a resumption OF
the downward trend. which began
in 1920 and was broken by the rally
| from 1888 to early 1887, has been
definitely resumed. But there is
certain evidence to suggest 1t. There
was a brief furry in the commodity
markets following the passage OF
the SO 500 900 900 relief bill
last June. War scares buoyed some
i prices for brief periods, but never
immoderately. Since the Munich
agreement. however, price indexes
have tended to move within the
range of few points, usually show
ing more of a tendency to jiggle
down than to 60 upward again.
Influence of Pound.
Another suggestion of lower levels
for world commodity prices is Of
fered by action of the pound ster-
ling during recent months. If ster-
ling is to be cheap, world prices can
hardly be high. in view of the tre-
mendous influence of the pound ex-
change rate on world markets.
Does continued price deflation in
dicate an early resumption of de-
flation of business? Here the record
of the years following that other
midcycle recession speaks out quite
defnitely-and against the school OF
thought, so recently prominent, that
declared that higher business activ-
ity was impossible without higher
prices.
After the 1884-5 slump, although
as above mentioned, commodity
prices drifted downward, with only
brief terms of f1rmness, until 1897
there were seven years when bust.
ness stayed above the normal
level except for two six-month in.
terruptions.
This is not to be taken, of course
as a forecast of prosperity levels
extending into 1916. 1t does sug.
gest, however, that there is nothing
in a stable or even slightly down.
ward price trend to prevent a gen.
eral high degree of business and
industrial activity.
Danger From Abroad.
For the immediate future the pos.
sibility of trade collapse abroad
seems the greatest danger. Laying
aside the chance of war, an event
whose impact here is beyond hypoth.
esis, the artificial dependence oi
most foreign industry on armament
expenditures is more of a potentia!
menace than our pump-trlming
Even though the effect of 1essenec
Federal spending may soon produce
a problem for us, this spending has
not been hugely important factor
to our heavy goods industries. The
complete cessation Of w. P. A. and
p. w. A. activities would not ins
(ses UPTURN. Page D-Sl