OCR Text |
Show Business Leaders Predict Recovery Early This Year i i H I. J--M : "'T"""T ' x r x I" : 4 it.V ' - r I if?-. , I f ? T- W x i 1 $ j r rv 'V J u v-k s K I " M,? M v' j I , K k : Dawes' Charts Show Prosperity on the Way. By WILLIAM C. UTLEY THAT bluebird Is back again. The harbinger of happiness once more is just around the corner, twitting a merry tune of prosperity and plenty, all to come to us who anxiously wait, sometime in the year 1935. At least that is what our business leaders are predicting. The depression de-pression is over, say the Big Wigs who know, and with that welcome message they have been getting every-Thursday luncheon groups drunk with joy and sending business-conference sitters-in singing their ways home in hysterical glee. Most ardent champion of the bluebird Is Chicago's Gen. Charles Gates Dawes, banker, diplomat, former for-mer Vice President of the United States, and more recently sotto voce angel of his city's Century of Progress exposition. Practically all throughout the depression, General Dawes had forsaken the world-famed world-famed "Hell Maria" pipe with the subterranean bowl for a comfortable comfort-able curved briar of more orthodox center of gravity. Well, he's back smoking "Hell Maria" again. He was puffing away at a great rate on "Hell Maria" when he told Chicago's Association of Commerce at a recent luncheon that the depression de-pression was over. "Nothing can stop the progress toward it," said the general, "just as nothing could stop the progress toward the chasm in 1929. The various vari-ous steps taken by the government to aid business and employment will neither greatly retard nor greatly accelerate the return of good times." Shunting back and forth between an Imposing display of figured charts and a microphone, the general gen-eral growled, "This is a devil of a way to -make a speech," but went ahead and made one, anyway. He predicted a definite boom in durable dura-ble goods In May or June, and he used the charts to prove it. Trend Definitely Upward. General Dawes' concisions were the result of a study of the steel industry in-dustry and other heavy industries over a period of several months. His charts showed the trend In pig iron and steel prices and the volume vol-ume of pig iron production during three separate ten-year periods marked by depressions. They showed that in each depression prices slid downward for five years and eight months, then turned upward up-ward abruptly and climbed for about a year. Although prices were not allowed to decline In the present pres-ent depression, production of pig iron and steel has declined vastly more. This has resulted in a tremendous accumulated demand, which the general says will begin to be felt In large volume this summer. sum-mer. Steel companies will make huge profits when this action occurs, he y , I N I Frederick H. Ecker. said, and then prices and output will become stabilized at substantially higher levels. Not so rosy a picture is that painted paint-ed by Col. Leonard B. Ayres, Cleveland Cleve-land economist. He said the chief unsolved problem of the depression is unemployment In the durable goods industries. The three great obstacles which block the way back to normalcy are political ones, he says. They are the fear that continued con-tinued governmental Interference in business will make it Impossible for corporations to show a profit, fear about the future of our money, and the newly revised securities act. Only after these readjustments are made can the accumulated shortage of durable goods begin recovery, according to Mr. Ayres. The shortage he estimated to be as much as the total output of all the Col. L, B. Ayres. durable goods industries for two and one-half years. The industries indus-tries would have to operate at 25 per cent above their normal rate for ten years in order to make up the shortage. As Dawes Sees It. Mr. Ayres' predictions may be much more attractive than he intended in-tended them. The whole thing depends de-pends upon whether or not he is right about the attitude and action of the government. Here is what Mr. Dawes says: "The difference between Colonel Ayres and myself is a marked one. He evidently looks upon the Intervention Inter-vention of a changed governmental policy into the situation as being definitely determinative of the question ques-tion as to whether the coming year of 1935 will mark an advance In prosperity over 1934. "While I recognize the overwhelming over-whelming long time importance of a balanced budget and wise governmental govern-mental policy, I point out that the normal course of recovery Involving In-volving mass action is not determined deter-mined by human reasoning, but by human nature, and that the rate of recovery is following the same course In this present depression and for the same simple causes that it did in the two great former major ma-jor depressions in the country, those of 1873 and 1S93." "Priming the pump" through great governmental expenditures does nothing but force an increase In business activity as long as the priming fluid lasts, he said. The return of prosperity In 1935, If all goes well, is also looked for by Edward A. Filene, widely known Boston economist. Much depends on whether or not the Supreme court will uphold certain phases of the New Deal. He warned that If the Supreme court does not co-operate with the President, the country coun-try might be "compelled to turn to socialistic measures." Will Begin Spending. "Business is pledging co-operation with the President, and there is undoubtedly un-doubtedly a more widespread understanding un-derstanding that prosperity, both for consumer goods and durable goods industries, depends basically upon the buying power of the masses. There Is no telling, however, how-ever, how far tills promised co-operation will go and we cannot expect ex-pect rapid improvement unlil business busi-ness generally acts upon this new understanding. "Congress will arrange for na tion-wide unemployment insurance- J thoroughly sound business mens- ures and millions of Americans will begin to spend money which they have not dared to spend before, be-fore, satisfying their long-accumulated wants and immediately stimulating stim-ulating business and providing more employment and more buying power. pow-er. On the other hand, congress may more than undo all this good by flirting with unsound radical legislation, particularly currency inflation. in-flation. "Some Industries, such as the au- tomobile industry, are already leading lead-ing the way to recovery by courageously courag-eously setting out to supply the long-depressed demand for consumer consum-er goods and their success is sufficiently suffi-ciently marked that we may expect other Industries to follow suit. "If business generally does play-ball play-ball with the President, and the Supreme court does not call the game, we may find ourselves in such a crisis that the government, against Its will, may be compelled to turn to socialistic measures as the only way in the emergency to-keep to-keep the masses provided ivith the necessities of life. "Trying to balance all factors,, my expectation is: "1. There will be some improvement improve-ment during the first three months of 1935. "2. There will be some Improvement Improve-ment In the spring and summer over the conditions of 1934, but not enough to indicate that recovers-has recovers-has come. "3. The fall will show a marked improvement and the trend from then on will be definitely upward. . "4. By the fall of 393G, we will be so far recovered as to make it generally evident that we are on the road to unprecedented real prosperity." pros-perity." Upturn to Start Soon. Business magazine and newspaper newspa-per editors throughout the country-agree country-agree that business will be on the upturn during the first quarter of 1935. A survey published by Associated Asso-ciated Business Papers, Inc., indicated indi-cated that the editors expected department de-partment store sales to keep up their recent gains into the first quarter, with narrow profit margins. . Shoe , ' , production was only 10,000,000 pairs- behind the 1929 peak in 1934, but the last year"s performance is expected ex-pected to be passed early in 1935. The outlook for the textile industry-indicates industry-indicates that its business will be-about be-about 10 per cent better in 1935,. according to the business editors. Editors of automotive trade papers pa-pers predicted a substantial increase in-crease for the first quarter of 1935 compared with the first quarter of 1934. In the steel industry, the-steady the-steady small increase in production, which has existed for the last few months is expected to be projected. Into the first few months of 1935. The estimated steel output of 1934 was 24,700,000 tons, au increase of 2,100,000 tons over 1933. Machine tool trade paper editors--called the prospects for both volume vol-ume and profit in the first quarter exceedingly bright. Electrical apparatus ap-paratus wholesalers look for Improvement. Im-provement. So does the oil Industry. Indus-try. Although much depends on governmental policies, it is thought that the building trade might even, triple the 1934 business, with remodeling re-modeling on a scale twice as great, as in 1934. Secretary of Commerce Daniel C-Roper, C-Roper, who should know the situation situa-tion if anybody should, called the-1935 the-1935 outlook "indeed very satisfactory." satisfac-tory." He predicted a sizeable upturn up-turn in the heavy goods industries. "Every place-I go," he said, "faces-and "faces-and features and the approach of persons indicate a more optimistic: outlook than has been In evidence-for evidence-for some time." Probably one of the most substantial substan-tial reasons for expecting a better-year better-year in 1935 Is that advanced by-Frederick by-Frederick H. Ecker, president of the ' Metropolitan Life Insurance-company. Insurance-company. "We can see many reassuring facts on the economic horizon," he-continued. he-continued. "Among these, the outstanding out-standing one, in my judgment, is-the is-the increase In the combined na- ' J ' 1 ' f i i " T - ? 3t h i A r" - Ll4 Q ill; 3 Edward Filene. tlonal Income, which for 1934, according ac-cording to our economists, probably will exceed that of 1933 hy something some-thing like 15 per cent Labor income in-come in the form of all wages Hint salaries In the United Slates is also. expected to show an Increase or 1933, bringing it to a total of aboui $35,000,000,000." (fi. Wcjtt-i n Newspaper Union- |