Evening star., 1941-01-01
inventories Register
Smaller Gains Than
Order Back|ogs
Manufacturers Busy
Assuring Plants Of
Adequate Supplies
Nv Cambridge Associates.

BY Cambridge Associates.
One of the manufacturers chief
breads in a period of prosperity
is that he will be caught long
with surplus stocks Of raw materials
and finished products when the de-
cline comes In this condition. he
is at the mercy Of competitors
who buy in a falling market and
produce for less cost. At the end
of 1910, the chances of being
caught long" were slim, indeed
for the average manufacturer.
It is true that inventories have
expanded in the past year. But the
amount of that expansion is not
as great as the expansion in gen.
eral business activity in the same
period. And since the average
manufacturer has a backlog of Or
ders which will take him through
several months of production, his
concern is mainly the problem of
assuring himself that a supply OF
raw materials will be continuously
available.
Zeal Expansion in 1929.
Inventory expansion began with
the onset of the war in September
1889, and by the close of that yeal
a 10 per cent rise had been chalked
up by consumption and durable
goods alike. A substantial part OF
this inventory accumulation was
financed by means of loans from
banks. as reflected by an increase
in the recorded total Of commercial
loans by members of the Federal
Reserve System in l0l cities OF
approximately S700,0OO000.
Since that time, however borrow
ing has shifted in character The
S450,000000 increase in commercial
loans during 1910 was slow and
steady growth representing, in large
part, financing Of new additions to
existing productive facilities and
in lesser part. the refnanclng OF
securities outstanding in the hands
of the public for the purpose OF
obtaining lower interest rates.
Since December, 1889. much of the
original inf1ationary psychology of
the beginning of the war has been
spent and the factors which are
operating to keep commodity prices
down have gained recognition.
In the first place. there was an
excess of capacity over present needs
in the hands of almost every sup
plier of basic commodities.
In the second place, there is a
huge volume of funds avidly seek
ing employment at profit, which
would tend to expand present pro-
ductive facilities as the need arises
And finally, the Federal Government
has explored the whole problem OF
war initiation and stands ready to
effect control measures as soon as
they become necessary in the public
interest.
Forward Buying Discouraged.
1t is not surprising that under the
influence Of these powerful factors
commodity markets sagged through
most of 1910, and accumulation OF
inventories was discouraged. AS a
matter of fact, after the initial ac-
cumulation in the final three months
of 1899, the 1910 rise in inventories
for consumers goods" on the aver
age, was practically nil, and the
increase for durable goods" was nc
more than Is per cent, according tC
Department of Commerce figures.
Chief among the rapidly-eXpand-
ing figures was transportation equip
ment other than automobiles, where
inventories have nearly doubled in
Is months. Other substantial in
creaSes in the same period: Elec-
trical machinery, 30 per cent: au-
tomobiles. 40 per cent; chemicals,
20 per cent; paper and allied prod
uctS. 20 per cent, and rubber prod
ucts. % per cent. The last three are
classed as non-durable, or consump-
ton goods. From the end of the
year 1899, the rises in inventories
in all claSSificationS are much less
impressive, and declines were shown
by food products and other con-
SumerS goods.