ROSEBURC NEWS-REVIEW. ROSEBURC, DRF.CON, TUESDAY. JANUARY 1. 1929.
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5PTTT7 tt ir I lal t WRWi i
WHAT 1929 WILL MEAN TO U.S. BUSINESS
Sees Good
Half Uncertain, May
By NEA Service
fhRVELANP. O.. Dec. 27.
Wry Kood business for the first
three months of 1929. probably con
tinuing throughout the rirst half of
tli year, and follows! by a period
which now looks uncertain and
which may prove a time of busi
ness recession
That Is the forecast for
made by Col. lonard P. Ay run,
vice president of the Cleveland
Trust Co.. and one of the bent
known and most authorial Ive
business prophets In the country.
Outstanding among the ele
ment that ulU Ko to shape busi
ness conditions in 1929. as Cot
one Ayres sees It. In an extremely
heavy competition In the automo
bile Industry. It Is partly this ele
ment that, to his viewpoint,
caimes uncertainty about the out
look for the last half of the year.
"A few years" aj?o." Colonel
Ay res points out, "the Kurd plants
were producing almost half of all
the automobiles made in the
world. Then they were closed
down to prepare for the new model
and they remained cloned so lo.in
that he manufaeturinK capacity of
other companies was increased
Fufllcleiitly to produce all the cars
that this country uses, and, to take
care of the rapidly growliiK export
trade as well.
Price Cutting Ahead
"Now the Ford plants have
come buck into production with
a larger capacity than before
contemn for supremacy and Tor
survival will be under way in the
next few months. New hlnh rec
ord for output will almost surely
be established In the early months
of the year, and It seems likely
that they will be followed by a
period of price cutting, lower
profits per car, greater difficulty
in selling used cars, and smaller
margins of profit for firms supply
ing parts and materials. It does
not seem likely that the stocks of
nutnmoblte compiintes will be
market leaders In lltl!9.'
This. Colonel Ayres remarks,
probably will mean a degree of
keen competition tturh as the auto
mobile world has never yet ex
perienced. Fully as Important, however. U
not more bo, Is the credit situa
tlnn. "Most of Ihls discussion." says
Colonel Ayres, "may be summar
ised in the siatemcut that the con
tinuation of prosperity In 1929 is
dependent on the continuation of
credit expansion, which appears
to depend in turn on progressive
Increases In loan made to brokers
by corporations and Individuals.
for in the absence of such In
crease the tendency of bank
itredtt w Ul almost surely be o
contract, with consequences hu
verve In business
"The fact is that Interest rr.tet
are now so hlh. and they a .11
probably, be so liieh In l'29, ah
to raise doubts concerning the
continuation ot business expan
sion through all of next year. lie
cause of t be preai I ing b lh In
terest rates there has this year
lwen a simip decline In the vol
ume of lie bond Issues through
which corporation commonly a'
cure the funds for new construe
t ion and the purchase of new
equipment. There has been, more
over, a decline in the volume of
new mortgages which furnish
funds tor the construction of new
residences and ot many business
buildings. Moreover, many cor
porations are keeping funds in
the call market w hich should
normally h employed In additions
ami betterments to tiieir plant '
Eleven Predictions
Then Colonel Ayres swtur.s into
y V r-r
C00HTWWEACrTs4') id SOMEONE BLUNDER?
Times for Half Year; Second
ALL BUT ONE OF AYRES
PREDICTIONS FOR 1928
WERE PROVED RIGHT
In his annual business and in
dustrial forecast issued a year
ago. Col. leonard P. Ayres of
Cleveland made 14 specific pre
dictions about conditions In
u:x. at these, exactly III w re
proved correct.
The predlcltona tbut proved
accurate were these:
1 That Interest rates would
be low early In 19- and nigh
at the end of the year.
""2 That average prlren of
common stocks would rise to
new highs.
3- That the volume of new
construction would exceed that
of 3927.
4 That co:ds of building con
struction would have an advanc
ing trend.
5 That employment condi
tions would Improve as 19-H ad
vanced. 6 Thar Industrial wages
would remain firm, with an ad
vancing tendency.
7 That the cost of llvln
wouid not change much either
way.
ft That the trend of whole
sale prices would be an ad
vancing one.
9 That the iron and steel
output would be greater than
In 1927.
10 That prices In the steel
Industry would be stabilized
and Improved.
11 That the output of auto
mobiles would set a new bij-.h
record.
12 That the output of auto
mobile tires would set a new
Nigh record.
13-That the total of Indus
trial profits would be greater
than in 1927.
All of these predictions were
borne out by facts. The one
prediction that was not correct
was to the errect that the aver
age prices of high grade bonds
would probably advance during
a majority of the months of
192S. Records now show that
Mich prices advanced during
only five months of the year
ami declined during seven.
The proven accuracy of Col
onel Ayres' forecasts adds es
pecial value to his list of pre
dictions for 1929.
a series of 11 definlle predictions
for the coming year.
"Business conditions are now
good, and they will be good In the
opening months of the new year,"
he says, lint credit condition,
on which business depends, are
not equally favorable, and It
seems probable that they will pas
through important readjustment
involving some contraction in
lie.". Itecause of these prospects,
the following forecasts seem Justi
fied: "I- Short-term Intercut rales
will proh.ibly be higher In tin
first part of 1929 limit they Were
In the rtist part of 192S. nml
lowe- In tl-e closing months of the
year than thev were in the closing
months of V.'.
"2 Automobile output will al
most suiely be greater 111 the
early months of 1929 than In the
corresponding inonl bs of tills
er. lull less In the closing
' -on1 lis of next year than In the
c!o.inr inoittbs of this yeiir.
"?. The value of new
COL. LEONARD P. AYERS TELLS YOU
Bring a Recession
building permits Is likely to be
somewhat less in 1929 than In
1928.
4 The total tonnage of Iron
and steel produced in 1929 will,
probably not exceed that of 1928.
'5 The average price of com
mon stocks as measured bv tin
index of ibe Standard Statistics
Co.. will probably be lower at the
end of November in 1929 than It
was at the end of November in
1928.
"6 It Is not likely that the
cost of living will change much
In 1929.
"7 The average price of non
agricultural commodities, as meas
ured by the wholesale price Index
of the department of labor, will
probably not differ In December
of 192H hy more than 5 per cent
from Its level In January, 1929.
"8 There will probably be less
employment in the opening montiis
of 1929 than there was in ihe
early months of 1928, but more
unemployment in the closing
months of 1929 than in the clos
ing months of 192H.
"9 The average wage rate of
factory workers for 1929. as
measured by the index of the Na
tional Industrial Conference board,
will probably not differ from the
per cent.
"li The trend of the cost of
the hanks. Thus there has been
a kind of inflation Unit was quite
building during 1929 will prob
ably be a declining one.
Ml The ntt profits of indus
trial corporations as compiled by
the Federal Jteserve lUu of
Cleveland will probably be b-sa
In 1929 than in 192K."
In discussing the stock market.
Colonel Ayres lakes occasion to
explain a curious development
that 1928 brought the financial
world.
In times of prosperity, he
points out, many goods are being
bought and sold, which means
that greater volumes of hank
credit are used. Hut In 1928. with
rising prosperity and with a ter
rific amount of speculating on tne
slock exchange, bank statements
show that there was very Utile
expansion of bank credit.
What happened was that the
tremendous increase In credit
came through loans made to brok
ers by corporations and individ
uals. It was out ot the control of
outside the purview of the usual
banking safeguards.
Affects Stock Prices
Now. Colonel Ayres snys, the
course of stock prices for the next
few months, and the course of
general business through most of
1929, will probably be determined
by the manner in which these
brokers' loans increase or de
crease. The recent sharp break in
stock maiket prices he traces di
rectly to ibe fact that these loana
did not Increase, in late Novem
ber and early December, as theji
bad been increuslng previously.
If tills condition continues, be
predicts, it will be very difficult
tor stock prices to have any ex
tended recovery.
If this expanding credit does
slop, and prevent a sustained re
sumption of the advance In slock
maiket prices., says Colonel Ayres,
the results will be adverse to gen
eral business in two ways. Fhst.
t lie increase putobasltig power
that always goes hand in band
with a riidnu maiket will be cut
off: and second, corporations and
industries will curtail new finan
cing, and a little later on the new
construction and the purchasing
of new equipment witht the funds
comlnv from such new financing,
will decline In volume.
Keep Prosperity
Charles M. Schwab La; i
Down 10 Rules Foi
Permanency.
lt.-'-"-' ' ' ,: 1
4--
: MMtWMUft .' ''
.1 ha lies M. Schwab
HY CHARLES M. SCHWAB
(President, American Iron and
Steel Institute.)
NKW YOHK, Jan. 1. We have
reached in this country an amaz
ing depree of general prosperity.
American business on the whole
no longer faces an up-hill climb.
The problem today Is an entirely
new one. It is what to do to mako
prosperity permanent.
No one. of course, has any pat
ent rights to continuing business
success, but I venture to suggest
a few fundamental considerations
which all of us may find helpful to
keep In mind. These 10 rules seem
to me to hold the key to lastlnff
prosperity:
1. I'ay labor the highest possible
wages. Prosperity is Intimately
related to a liberal wage scale.
2. Treat labor as a business part
ner. Successful industry depends
more on human relations than up
on the organization of money and
machines.
3. Conduct bufdnesB In the full
light of day. Public confidence and
public suspicion may be separated
only by a door.
4. ltemember that the law of sup
ply and demand is Inexorable. It
would also be well to remember
that there is no necessity for pro
ducing an excess.
5. Live and help live. Even pros
perous Industries cannot afford to
have the backward Industries too
tar behind the procession. Pros
perity to be permanent must
equably distributed.
fi. Welcome new Ideas. To es
tablish permanent institutions we
must always be prepared for
change.
7. Never be satisfied that what
has been achieved is sufficient.
Smugness and complacency do not
promote progress.
X, Operate business on the most
economical basis. Price cutting,
over expansion, u n e c onomical
method of distribution are Just
as harmful to business and to the
public as price fixing, monopolies
and rebates.
9. 1-ook ahead and think ahead.
It is easier to avoid depressions
than it ts to cure them.
10. Smile, be cheerful and work
itiHtn the basis that the fundamen
tal puriMMn iNf business is to pro
mote the happiness 01 numaii
ings.
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THE SOWER, &&V5 B0CKUN2S
A Cartoon Review of Events in 1928 , j
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