Show Babson Says 1927 Sh Should ld Be Year to t Get Out S of Debt 2 z Conditions of L Labor boi Investment Market Markel and Industry Are Shown Stocke 04 OS S 06 j- j jT 07 01 T 0 i 10 II U ii 13 14 15 16 91 17 1 20 21 23 25 26 17 a 45 1 I I ft 13 I OF AMERICAN AMERICAS BUSINESS J V IS I'S III c if I STOCKS N 1 W t I N L I A fh no 20 S IS IV A II III I V fI 1 v IV IVIlL IlL I S lIS Y Vr f AI v r v 0 D JL 80 75 7 v r 1 IE M 1 I- I Ivr N V ISN N 0 0 IS lJ fJ F r ii W HJ fr t- t f r N AJr t Y I il 40 5 55 5 F i 1 E V t I I IV f 7 J Jy y yo 20 o X Ji vt D I J 1 I 2020 0 W 10 2 20 0 I BAl X OF TIm TIlE CHART CHAUT O of or this tills chart Is to represent the lie volume of business with the l price t factor ellmin eliminated ted In compiling lids chart cliart the ii tal ci lowing 10 subjects treated to price IllcO Inflation depending on dollar unities alues ore arc n used cd failures I pK pg g Iron 1 Pro Pro- pro production 10 new building domestic ant and forel foreign n mone money rates volume of foreign trade r railroad earnings and anil crops Stock rails and amI Indus I trials an and nn en Index of Canadian business conditions arc also abo Included Tho 1110 lino Y X-Y represents tho lie country's net gain atu or 01 lh grO The abo the lie normal or 01 X Y line represent periods of l busi lusi business 11 I ness expansion cX or 01 while the lie areas b below low tile the normal line IIno represent periods of business depression lon The Tho high l points of the lie stock s tock market have o generally conic Como In iii tho ilie carl early part of oC the expansion CX I area areas amI the lie he low Jaw points In till the early port pert of ot tise areas low v money r rates tes and amI high bond l prices hate o usually conic about the end of at o the tho depression areas antI and high mone money rates and low l lov bond 1 prices at about tho ho end of tue tho c arras areas details as lIS to bow tho ho chait chart u is compiled and the Y X-Y line linc Joc ted located Mill III nih be sent anyone on application Special DABSON PARK Mass Dee Dec 31 D What What Is generally regarded as the most prosperous year ear the tho United States has ever witnessed has just closed dosed It is true that cert certain ln localities and certain In- In In Industries h have ve not been up to par but the success of ot the others has s been so marked d that the tot total l vol- vol volume vol volume ume of ot trade has s exceeded any any- anything thing ever known The rhe concerns that have maele money have havo pre-eminently pre been those which have used the most efficient methods Those which h have ve continued their OP- OP OPerations op operations have been more or on less of ofa ofa a 3 failure That a n very large pro pro- proportion proportion pro proportion portion of ot companies h have ve been working on I progressive t and anel effi- effi efficient effi efficient cleat lines Is evident Compared with ton ten years ears ago our total effi eW- efficiency clency has been Ira Ira- Im Improved I proved and there i Is no question In InI I m my mind that this trend will con con- continue continue continue to tho the untold ad advantage of our country This improvement ement In is due 1 I to far tar reaching and arid progressive meth moth methods oils and 2 to economic saving and increased efficiency through prohibition The amount of good produced per pet worker Is 50 BO per cent more than he lie produced a n few years ago CIr RT SHOWS snows IOSI POSITION TION OF OP BUSINESS nUSI That the year has been a huge success i is evident t from every statIstical measurement A brief resume of ot the chart ot of o Amen Amen- American can business will emphasize emphasize 4 point January 1926 1326 saw busi busI- busIness busi- busi busine business ne ness receding from an unprecedented ed height reached In December 1925 A rather general recession prevailed pre through May but busi busi- business bual- bual business ness was in good volume June showed a goo good 1 recovery reco which has bas lia extended through October The Index of ot general business stood at In December 1925 This rec- rec record rec record ord w was s almost reached last Aug Au- August and September and was equalled In October The low lov In business durin during 1926 was re- re recorded recorded re recorded corded at 11 In 1110 May which Is con con- considerably con considerably greater re ter than 87 the low point In 1925 As s to how long good business will wiil be enjoyed this depends on th the attitude of the people It the they be- be be como be-como como come intoxicated with their past successes and attempt In 1927 to Inflate tho ho situation still further there will be bo trouble Certainly t I will be a mistake to 10 build stores apartments and offices at tho the rate ot of the last few years Moreover It ItIs itis ItIs Is dangerous to push the thO automo automo- automobile automobile bile output nt at top speed Indefinitely Other cautionary factors might be mentioned but the tho peo peo- people peo- peo people pie of ot the nation have ha It wIthin their po power er to advance In such moderation that 1927 1127 while proba proba- bly probably n not t so good as 1926 1326 will be ho a satisfactory isar tar ur It will however be bo spotty For that matter 1926 was waR spotty M Many ny lines and companies dId did not do at all well weil as IllS I explained at the outset During the coming cominS year ear we may expect more activity In some lines and territories orles which have had a rest period and less In certain others ethers which have been expanding too fast CO COMMODITY TRENDS Throughout the past year there h has s been one notable tendency In Informer Informer Informer former booms boome commodity 1 prices have smartly adv advanced During the past twelve month period the they have declined This Is but a con con- con confirmation or o what I have repeated repeated- repeatedly Iy that suggested suggested namely that prices as a whole must come down Not that I expect them to revert Im- Im Immediately immediately im immediately mediately to the old war pre level le Whatever downward donward movement there Isi Is will bo be h gradual but none less lesa persistent Ot Of f c course urso there will be temporary buoyant pe- pe pe periods nods Even Cven now agrIcultural prices may roay firm up It seems to tome tome tome me that current agricultural prices price are unjustified by present condi condi- conditions Ion The weakness In the prices price of cotton collon and wheat t must not be taken betaken as ax n a a criterion of ot the gener genera general agricultural al at price movement The part of 1927 should should witness an advance In th the price puce for grains A A survey of world orld crops IndIcates that they are not over abundant and a a little later Inter we should see a 0 better forel foreign n demand for Amen Amerl- can foodstuffs which will tend to bring a 11 better betler balance between supply and demand Industrial prices present Il a rather different picture more picture more jn In keeping with the longer trend above o noted The downward trend which persisted during 1626 1826 should continue In 1927 Upward Yard move move- movement ment mont of o any proportions proportion will proba proba- bly probably be con confined tined to a 0 few Individual products which may be affected by unusual conditions The general gentral price movement should be more or less orless steady but trending into low low- lower er ground nor J OUTLOOK Labor conditions throughout 1926 1026 have been n particularly satis- satis satisfactory satisfactory factor factory both front from the standpoint of the tho employer and that of or the Fow r were re- re reported reported re reported ported than III any year since 1 1914 1 Employment has haa ha been good and the purchasing power of ot wage earners the Ing ever known When iou ou comp compare re tho the union w wage Je scales cals with the tho cost of liv living ing Ing- you find a I remarkable In- In in crease creaso In what the Il crage wage earners earner's dollar will bu buy Take for Instance 1920 as a IL starting point with lI a a dollar buln buying worth of ot goods In 1921 the purchasing power Increased nearly 20 0 per cent an held about the same In 1122 au Since then It has risen almost t steadily so that tod today y tho the average union wage wage- wage earner earner carnel can ean buy at least bOat 46 45 per percent percent percent cent more goods with his wages than lie he Ie could coull seven years ago IIO Moreover employment has held up very well so that the total amount paid In Ip I wages during the past year was relatively large The Important p point er has been the bl big buying power of wages due duo to the tho fact th that t com corn commodity commodity 4 have gone Ione down whereas wages have at least held theIr own The labor outlook for the com coming In year tar is not quite so gOO good goodIn 1 In the first place pace there thore are a number of ot wage agreements ma- ma maturIng maturing ma maturing turing especially lIy during April May and Jun Juaa Junn which are Ie likely I to bring about some disagree dIsagree- dIsagreements disagreements ments meats Chief mong these thesa Is the soft coal dispute The Jackson Jackson- Jackson e agreement expires In April and m many ny authorities feel that Q a astrike astrike strike will bo ho resorted to The tact fact is how however l Cr that a anti I- I dently large portion of the soft coat coal mines are not unionized so that there li Jot not much danger danler or of fuel shortage The union non non mines can supply enough chough coal for the country county If it they have to Certainly it will be hard for or the mIners to mike any worth while worth gains through a strike this year car With th the tha general downward trend of commodity prices it Is 11 Inevitable that wages eventually ivill also have havo to o bo be lowered sonic some somewhat what We Ve the they will not have to be bo cut In proportion to com corn commodity pi Ices Business men have come to realize that reduction of wages is the ast step in econ econ- economy econ econ- economy economy omy and should be used only In inho inthe tho ho utmost necessity nce The wider we can keep the distribution of buying power the more prosper prosper- prosperous prosperous prosperous ous everyone will be In general it can be said that durin during the first part of 1927 business should be better in the tho Industrial centers th than In the all all- ag agricultural centers More specifically specifically specifically cally the east and middle west will ivill be he the mo most t favorable sections on which to concentrate sales Of course It is ia conceded that the purchasing power of the tile farmer will ivill be bo somewhat hat lower at first As already remarked however howe ag- ag agrIcultural agricultural ag agricultural prices may strengthen somewhat ani I this would later lead to improved sentiment In farming localities Even now po- po potato po potato tato lato stoning growing regions and to a aless aies aless less ies extent sonic some of the tho wheat regions and a few tew other beau localities ties should otter offer fair markets However the tha prices of o agricultural agricultural agricultural tural products now fall fait to show tho th proper relation to the general level of o commodity prices Those interested in distribution should energetically lt Leek c k lc sales In manu manu- manufacturing cities that when the prevent ent expansion pe- pe period pe period nod ultImately JY gives way to n a period of the tho man man- manufacturing manufacturing manufacturing centers will presumably presumably presumably ably be early to decline Such Sucha a 0 reaction not appear Im im- im Imminent but the sound basic policy Is I to secure business in these localities while the opportunity Is there Tendencies are fairly encouraging encouraging encouraging aging In the southwest including the southern gart of the Pacific coast cast territory the tho Pacific north north- northwest northwest west north west some 02 o the lake States portions of o New Kew England Englan and the ml middle dle Atlantic section s with sonic some Indications of In the Carolinas Parts of o Texas and New Mexico are very Interesting I believe bellevo Texas localities will be bethe bethe bethe the scone scene of noteworthy economIc developments lurIng the next few years IN 1927 1027 Activity In Industries varies considerably 1 nil as 11 wo we enter 1927 The margin of o profits has hag become narrower became becane of extreme corn com competition com competition petition low lowr prices etc Ac- Ac Activity Activity Ac Activity In th the agricultural Implements ments menta group Is Ic l declining because of the indicated ed lower purchasing ing InS power of o a farmers Production lion tion In the tho automobile Industry h has s fallen considerably and Is IB expect expect- expected ed Oct to be mor morr or less quiet Our Our- dur ing the tile first halt alf of I 1927 The posItion of this Industry durin during the second half halt wll depend upon the extent of competition and price cutting Mergers of some of the maller companies l should occur Tills This will Increase the m marginal profits by eliminating a certain amount ot of o Some Somo In- In Industries In Industries such ik is copper opper chemicals electrical products railroad equip equip- equipment equipment ment sugar leather Mid and textiles have a more stable outlook I 1 Itla Is interesting tc o note that the thelast thelast last groups leather and textiles are n a apparently emerging from Crom extended 1 depressions and are expected eel to show Improvement In Inthe Inthe inthe the future The Investment Is 11 1 inC In la C INVESTMENT T SITUATION a 3 most interesting po position An extraordinary abundance of funds and easy moey are preventing any ony crash clash In market values Wise Investors h have vo two separate funds 1 That which Is la use used for tor her her- per permanent manent Investment and 2 Z that whIch is used tor or and simI Biml simIlar elmi- elmi lar bar securities In the first class Investment bonds will wilt hold the stage although they have been bought very ery heavily all through 19 the 1920 tho 6 tho average of bonds accordIng to the Times Annalist list having hopped from 4 to per cent durIng the year ear Although the food flood of new v Issues both foreign and ind 1 domestic Is sure to 10 continue I am run of the tho opinion that bond prices will wilt nl not t be bo much lower for some time lime On the contrary as the months go on there may bo some somo firming in bond prices Stocks durin during this tills present per per- 10 iod period 1 are ale in a way dividing them selves Into groups I de depending upon whether speculative specula they are aro purely specula specula- Live tive or 01 whether the companies In question are arc making very heavy c earnings have I ve accumulated good gool I Ic surpluses and are paying good dIvidends In the stock averages most often quote quoted there a are e man many of the better elas class claM and these aver Ilver- averages averages ages now show a very high level It If one however should eliminate te these wealthier companies the bal bal- balance bal balance ance amice of f the stock averages tInges would show y a decline lecHno In 1926 I belle believe this tendency will VIII continue durIng the coming year A flood of In- In in investment vestment money is still causing a buoyancy in the stocks of these wealthier comp companies There Is n a temptation for most Investors to buy Luy Into them for a yield which they cannot get In bonds In certain Instances this may not t 1 1 so EO o bad provided the buyer Intends to disregard later fluctuations lions ions in business or security quo quo- quotations quotations quo quotations and arid continues with his pur pur- purchase chase cha because he believes In the theIon thelong thelong Ion long growth future |