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THE FRANKLIN PRESS AND THE HIGHLANDS MACON IAN
THURSDAY, JANUARY I, IBS
Looks For Rise In Stocks
And Pickup In
(Continued from Page One)
he has his "ears to the ground,"
he is as keen as a robin hopping
about a lawn listening '-for worms,
llie .solons were home for several
months this Fall, getting their con
stituents' reaction to "reform" leg
islation. So with every Congress
man and every third Senator up
for reelection this coming autumn,
I believe that business will -be giv
en the psychological relief that it
needs from Capitol Hill.
The biggest aids could be tax
revision and .a utility "armistice."
The undistributed profits tax will
be thrown put in. everything ex
cept, name. New tax measures will
be passed, easing up on capital
gains levies and perhaps cutting
down on the high income bracket
assessments. A lot of talk will be
heard about a general sales tax,
but it will not be passed. Extend-
ing' the income tax ; into lower
brackets wilt be proposed, but
- Spending to Continue
I look for a truce between the
government and the utilities. More
'' iu.ru control legislation will be
passed, continuing the huge federal
farm outlays. Wage and hour leg-
islation may, go on the ' statute
books, but in a milder form than
originally proposed. The President
will get only crumbs from his
government reorganization propos
al. Generally speaking, the marital
status of Mr, Roosevelt and his
big Democratic Congress will reach
the legal separation .. stage just
' short of Reno divorce proceedings
. The increase in unemployment re
lief and new pump-priming mea
sures will, keep public expenditures
at a high level. Budget 'balancing
cannot now be hoped for until the
i -r inin An r:-i u
earliest. Hence, the trend of the
past five years toward inflation
will continue. It is vital that every
body remember this. Just because
inflation is not making headlines
now, do not conclude that it' is
not making headway. Inflation is
the biggest factor in the long-pul!
business and investment outlook
Prices to Increase
, Inflation is .not simply a domes
tic issue. It is a world-wide in
fluence. It is one of the reasons
why T look for some increase in
prices in 1938. The sharp drop in
both farm and industrial commodi
ties since August makes, it easy to
forecast the price trend next year
: Sensitive commodities should begin
their rise some weeks' before busi
ness. Ihey afe at, or close ic
their bottom now. But I doubt i
the 1937 commodity price peaks
will, be broken next year.
In fact, next December an index
of 784 raw and finished materials
should average 'only around 5 per
cent above the current level. .Indus
trial commodity prices will be the
strongest Farm products prices do
not promise as much action. Lead
ing the' rise will be non-ferrous
metals, steel scrap, and hides. The
readjustment between supply and
demand is quicker in these indus
trial materials than it is in farm
, products. But the latter will move
upward somewhat from present
Farm Outlook Fair
Sharper control in' 1938 will be
seen " over cotton, corn, and wheat
acreage. Prices 'will end the . new
year well above today's levels.
Without a crop failure, however,
present carry-overs ' are so largt
' that " they can prevent any wild
boom , in quotations. Moreover, I
expect;, to see a further drop in
-beef, hog, 'and lamb prices, Butter,
milk,' ' eggs, ' and -poultry will also
be Cheaper next year,-due to lower
.'1 feed costs.
If woiild' be foolhardy to attempt
any '"fixed forecast of farm income
Barring crop disasters, however,
mv Mtimatp i for tntal' scrim ltiiral
rrreints next veaf tn ' drrin 5 ' to 10
rj r - - - o
cent' under the 1937' figures.
iw innsp rnr mm itasr vrar. nc
II II I Willi II I .1 1 I I IHI W III'IIXI I II I V W I i
otfbe much cheaper than they
e'rfe in 1937. while farm tirices will
during, the past 12 months.
ui me -aoove. sijuauan,
Roger W. Babson's Business Pattern for 1938
Business: Big gain over current levels.
Trend: Strong uptrend; average below 1937, .
Congress: Will give business needed relief.
Prices: Five per cent gain over present level at wholesale.
Farms: Income down; profits slightly lower.
Labor: Few .'wage changes; more jobs in fall.
Strikes: Big drop in strikes feature of year.
Retail Trade: Sales below 1937; price tags lower.
Living Costs: Clothing, food to lead minor decline.
Buiid.ng: Good pickup to begin by midyear.
Rej-d Estate: Values, activity to improve; rents firm.
Stocks: Strong rise as business picks up.
Bonds: Substantial advance in medium grades..
. Foreign: Trade to slow down; no European war.
Summary: 1938 to see resumption of recovery. I
farm land values will show little
change tor the year.
What About Wages and Strikes?
.Industrial workers, alter getting
away to a poor start, should have
a fair year., During the first few
months, unemployment will be ser
ious. Hundreds of factories haVe
slowed down or closed completely.
There are probably, a million more
jobless since last Labor Day. But
the unions are clinging to their
wage scaies ws,, ucbPc..iwjr
antique collector to a family heir-
loom. Despite poor business in the
first quarter, I do not foresee any
material change in industrial wage
rates next year, certainly none on
the upside !
One of the features of 1938 will
be the sharp decline in labor's in
fluence. After a year of almost
constant bickering and turmoil,
workers will quiet down. The labor
cycle has" passed its peak. Just as
1936 saw the zenith of the high
grade bond market, so 1937 witness
ed the pinnacle of labor's power
for this cycle. The reaction of the
public and the current slump in
business have given the labor
movement a rude set-back.
More Jobs in Fall
Employment will improve as 193b
works along, but should average
less than in 1937. The reasons '(
First, business activities opens the
year 23 per cent below" last Janu
ary. Second, labor-saving machin
ery is being installed everywhere.
Third, the railroads will employ
less workers. Finally, "merit rat
ing" systems in state unemploy
ment insurance laws will militate
against "hiring temporary help.
Hence, ... by next December, the
number' of jobless should total
about 6,000,000 against 6,500,000 now
and 5,500,000 at the 1937 business
peak. '. , .
Taken as a whole, 1938 will not
be as good a year for salesmen,
merchants, and ' advertising people
as 1937. Things are pretty slow
right now and will continue pooi
into 1938. However, as the months
tick away, the resistance clouds
should blow off and by late next
year the seller's market should be
on the way ;back. Then advertis
ing lineage will have another surge
and commission checks will again
bulge. The 1937 national income
estimated at $70,000,000,000 will not
quite be equalled despite 1938' j
strong second-half sprint.
Retail .Sales, Living Costs Lower
The national income roughly de
termines the volume of retail trade.
Hence, I expect retail sales will
average less in 1938 than 1937.
They will be slow during the early
months; but they will follow the
strong business . uptrend as the
monthly pages are torn off the
1938 calendar. By next Christmas,
volume of retail trade will have a
good chance of breaking all rec
ords since 1929. Shading of price
tags between New Year's and
Easter will help to boost sales.
This drop in retail prices is good
news for the' householder. It looks
now as though the cost of living
which has . beeri rising steadily
since 1933 will give ground early
in 1938. The average for the New
Year, however, should show only
a minor drop as food prices may
touch off -a new rise along about
Labor day; - - From current levels,
your clothing will register a mod
est decline by next Christmas;
food should be u slightly; coal
will show little change; fuel oil
will be firm to lower ; and rents
will be unchanged.
Why Building Slows Down
One of the major cogs in this
current business recession has been
the sharp letdown in construction.
Building material concerns and
building workers both shoved up
costs out of all reason during
936-37, A bouse which cost $5,
UAJ to build in December, . 1935
would cost nearly o.aou today.
Naturally., demand for new homes
inas slowed up in face of this un
warranted boosting ol costs. Home
building is down 4) per cent from
the i9j peak, is below a year ago,
und is still falling. .
My thought is that it will con
tinue to drop until after business
has begun to retrace its steps late
next Spring. Sometime next year,
however, home building should
again be humming along. The 1937
peak may even be topped so that
the average volume ot new homes
for the N ew Year could be above
last year's level. The new govern
ment housing program could also
give the industry a big lift. '.It is
even possible that the home build
ing boom which 1 really expected
to develop in 1937 will start late
this coming year.
Real Estate More Active
Private non-residential construc
tion, on the other hand, will be
lower. I now see little incentive
for new plant expansion next year.
Public utility work, however, may
take up th, 'slack caused by PWA
pulling in its horns on public
works projects. A decline in build
ing costs should help volume in
the early months! but before 1938
closes costs will reverse their field
again and be on their way to a
These higher costs will help real
estate values. New home prices,
which are now being shaded here
and there, will strengthen. How
ever, I hold little hope for an in
crease in old house values, barring
drastic inflation. Good vacant prop
erty and modest well-Iaid-out mod
ern homes are among the best inr
vestments a person can make to
day. For that reason I feel that
1938 is going to be a good year
for realty men with a slow start
and an active finish.
Stocks to Rally
This same rough plan should
also hold for stocks. I expect to
see the markets fly the revival
signal before 1938 is too old. It
would be silly to predict they will,
or will not, break through their
1937 March peak. It makes , little
difference whether they do or do
not, for good stocks at current
prices, in my opinion, offer excel
lent profit opportunities.
Furthermore, while selection will
again be important, diversification
will be the vital point in' 1938.
Some- groups will, of, course, do
better than others. If I had tc
guess the outstanding Industrie'
of 1938 from a market standpoint
I would pick the metals, oils, build
ing materials, aircraft makers,
steels, chemicals, electrical equip
ments, and mail orders. The util
ities may surprise investors and
the rails are so low that any poo
news could give them a tremendous
increase in value. The motors am"
rubbers offer less promise because
auto assemblies will be below 1937.
Feature of Bond Market '
The bond market will be influ
enced more by business in 1938
than it has been during-late years
Medium grades have registered r
terrific drop this fall and I look
for price increases in this group
to feature the bond market in 1938.
Gilt-edge issues are down much less
than these medium grades.
- This situation offers a good op
portunity to make a few. trades to
improve yields and increase profit
possibilities. I make this statement
for I believe that . the long-term
trend of high-grade bond prices is
definitely downward. Sound medium-grade
bonds should be a bet
ter purchase for ' the next few
months ' than senior obligations.
When .money rates start rising,
to filter away slowly.
Trend Toward World Inflation
Onc-oMbe major reasons, whjr I
1940 BATHING SUIT
7 ' J ?--t.
Hela Linda, Scandinavian actress.
Is one Jump ahead of Albert of
Paris, New York beauty culture ex
pert, who predicted that women will
wear topless bathing suits in 1940.
Miss Linda takes a, dip at Mallbo
Beach, Calif., minus "tops" to show
how beaches will look in 1940.
am so confident that higher money
rates are inevitable is the world
outlook. None of the major nations
and few of the minor powers are
today operating on a balanced
budget. Billions of borrowed . dol
lars, yens, marks, and francs are
being spent in a mad armament
race. National currencies are des
tined to become steadily cheaper
in terms of goods. Furthermore,
there, seems to tie only a' remote
chance of averting world conflict :
Through" reciprocal trade agree
mentsand a genuine spiritual re
vival! Pre'sident Roosevelt and Secre
tary Hull have done more for world
relations in the last five years than
all the niternational peace confer
ences of the past two decades ! In
spite of terrific pressure from
groups at home, the State Depart
ment has pushed steadily ahead
with its trade agreements. They
have negotiated 16 treaties and are
now working on the most impor
tant of all with Great Britain.
Vast amounts of data have been
culled over and the treaties have
had as their sound goal "the most
good, for the biggest number."
World Trade Outlook
As a result, our share of for
eign commerce has shown a much
sharper increase than that of the
world at large. In 1937, for instance;
our exports and imports were 34
per cent higher than in 1936, whiile
total world trade was up only 25
per cent. This year there should
be modest gains in overseas com
merce, but the rate of increase will
slow up. I expect that Scandinavia,
South America, Great Britian and
her Dominions Wjill again be our
International relations will not
improve noticeably in 1938. I think
Calls Promptly Answered
JDay ot Night
At Prices You Can Afford
FR ANKLIN, N. C.
that gangster . diplomacy will con
tinue in vogue tor another' year at
least. But i atti convinced , from
my trip abroad this fall that 1938
will see no general war. I am not
very hopeful over the long-term
future, however. A bitter, conflict
seems inevitable .unless a new
Christmas spirit invades the hearts
of men all over the world.
Great Bargains Today
The above is a good outline of
what I feel readers can expect in
1938. We have come over a long
hard road since 1933. I am confi
dent that we are hot going back
to -those depths this year! America
is suffering just now from an at
tack of business indigestion com
plicated by a severe case of jitters.
The ups-and-downs of business
seem to have been growing deeper
rather than shallower during the
past 10 years. This is because the
country is swept by succeeding
waves of emotional distrust and
confidence, due to a weaker spirit
Just as in the fall of 1937 optim
ism changed overnight into black
pessimism, so the current gloom
can be transformed into confidence
again by the stroke of a pen. For
that reason, I believe that there
are now some wonderful . buying
homes and furnishings, food and
clothing, are,f or soon will be, on
the bargain counter. Hence, my
closing message today is: Work
for a more honest and less selfish
America ; but do not let present
timidity scare you away from to
day's great opportunities!
Growing Body Needs
Growing a strong, straight body
requires that the skeleton be form
ed properly with normal bone
built from the necessary minerals,
says Dr. J. O. Halverson, animal
nutritionist of the agricultural ex
periment station at State college.
Dr. Halverson explained that the
skeleton consists largely of calcium,
phosphorus connective tissues, and
cartilage. .In order that the body,
may deposit the calcium and phos
phorus in the cartilage, a third
substance obtained from food eaten
of these elements in the formation
If this essential substance is not
present, rickets result, Dr. Halver
son said. If a part only of these
necessary minerals . is laid down,
partially formed bone or soft bone,
which is a form of rickets, occurs.
Sometimes the opposite may oc
cur. The- skeleton may be well
formed, hut certain kinds of wast
ing sickness may cause a person to
eat . insufficient food. Under such
conditions, calcium and phosphorus
are not supplied in proper amounts
and may actually be withdrawn
heeds. When this occurs, the bones,
become soft ' ' .-
If a person is growing, then
more calcium and phosphorus are
needed, Dr. Halverson declared.
This necessity can be . supplied
readily through the daily use of
milk which contains large amounts
of these substances as well as a
third necessary -dietary factor call
ed Vitamin D.