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Show Slow Payments Hindering Business' Wellesley Hills, Mass. Sep-' tember 28, 1923. Koger W. Babson has been making a careful analysis of credit conditions con-ditions based on reports from his various correspondents thruout the United States. His findings reported today are of unusual interest to all business men and investors. "Careful students of the financial fin-ancial situation are surprised at the action of the 'Reserve Ratio Figures' of the Federal Reserve Banks and the similai figure for the Xew York banks," says Mr. Babson. ""With the tremendous amount of gold in the country and with new gold constantly being mined, it seems strange that this figure should decrease. Furthermore, even altho this is the crop moving season there seems no logical reason why our banks should put out additional addi-tional currency. There is an abundance of money in the : country for all legitimate needs. The onlv difficultv isi that too much of it is being j used in illegitimate ways, and too much is being hoarded in sections where it is not being needed. The country does not j need to issue more money, but the farmers and legitimate business instead of speculators in stocks, food stuffs, and wearing apparel sliould have the use of the billious already issued. Eliminate special and -unreasonable storage and there will be money enough for every legitimate need in every line of industry. j "Yet this speculation in stocks and commodities does not account for the clogging which is taking place today in our credit system. Of the various var-ious reasons advanced I believe the fundamental difficulty is, due to the fact that people are' not paying their bills. Ever since the decline in business,' which began a few months ago.i there has been a tendency fori manufacturers, jobbers, retail-' ers, and consumers to slow up in their payment of bills. Of course, the whole thing is an endless chain. Just as soon as one link stops the entire chain must slow down. Yet there is absolutely no reason for such action. It is a psychological or moral condition rather than an economic condition. Business Busi-ness and the flow of money is like the flow of blood in ones veins. Anything which regards re-gards curculation harms everyone. every-one. "An analysis of the balance sheets of our large industries shows that they are very largely large-ly 'made or unmade' by their 'Accounts Receivable,' which is simply the accountant's name for money being owed to them. For instance, the fertilizer ferti-lizer business, as a business, is perfectly sound. . Not only are feitilizers needed but they are needed more every year. It is a fundamental industry and yet most of the fertilizer companies com-panies are having very hard sledding at the present time, and their securities are selling very low. The reason primari-1 ly it that farmers are buying fertilizers on credit and are n! paying their bills. The chain stores, on the other hand, are very flourishing today and tln-'ir stocks are hi;h.. The main reason frtli is is that the rh'dn stores a"i c 'doing a cash business. They have no 'Accounts Receivable ' and are able to discount their bills and carry large cash balances. "In the case of almost every corporation the credit policy is an important factor and any investor in-vestor buying securities today should give it careful consideration. consider-ation. This is especially true today when industrial stocks are so much more popular than railroads and public utility stocks. Notwithstanding their troubles the railroads and public pub-lic utilities do a cash business This applies not only to trans portation companies, but also to lighting and telephone com panics. "All of this means that one 'of the best things we can do to bring back prosperity is to pay cur bills promptly. More over, this applies to wage workers as well as employers; to retailers as well as to manufacturers; manu-facturers; to people in small country towns as well as to people peo-ple in the large cities. T1k little bills musts be paid befon the big ones can be paid. Be fore the manufacturer can pa his bills, the wholesaler must pay the manufacturer; before the jobber can pay the whole saler, the retailer must pay the jobber; and before the retailei can pay the jobber, you and 1 must pay him'. Prompt settlements settle-ments will do much toward keeping the business from go ing lower. The Bahsoneharl now shows it at 10 per cent below be-low normal." |