THE WAYNESV1LLE MOUNTAINEER
THURSDAY, DECEMBER 29, 1938
Business Conditions
To Be Better In '39,
Predicts Babson
(Continued from page 1) J
thy jrain over the January levels. The
entire first half of the New Year
should show a 25 per cent increase
..ver the gloomiest Months of early
1938. , .
The second half of 9M should see
a continuation of the gains. My fore
cast, however, is contrary to the ex
pectations of many people. They look
for business to taper off and even to
dide backward when government
pump priming; ceases next May or
Tune Nevertheless, I am willing to
predict that the second half of the
uear will be better than the early
souths and will run 15 per cent above
,he last half of 1938. The entire year s
coin should average around 20 per
rent This would put the Babsou
rhhrt at 106 fo 108 by next Christmas.
nisTURRIXG LEGISLATION
The absence of disturbing: new leg
islation may well spark this advance
o:- iow fh rues for my annual
forecast have been found on Pennsyl
vania Avenue. This year, we
., new set-up. The marked increase
in the Republican delegation on Capi
tol Hill, wlus the unpurged uemocrai
. t. t.,tv,nr N Deal re-
can I1CK any iui.m..
fornix. On the other hand, the Presi
,i..r,f tili retains enough "100 per
centers" to block any serious revision
of existing laws.
The Wagner Act, for instance, may
be amended, but only if the President
agrees to the amendments. Many tax
law changes will be proposed, duc hw
will go through. The biggest fiscal
-reform may be the elimination of tax
exemption on new government bonds.
Moreover, it is possible that public
employees will be put under the same
income tax laws to which other individuals-are
subject. A lot of talk
about "incentive" taxes to foster nrof-it-sVinrinir
nlans will be hear. Some
,.hnnm in t'ni in letrislation is ' in the
wind.
SP FT)ING TO GO ON
A a result of my recent poll of
reader opinion on the Patman Chain
Store Bill, I predict its defeat. The
defense program will go ahead full
blast after a strong debate in Congress,
but I doubt if any special taxes will
be levied to support it. There will
be a drive to abolish the big Social
Security reserve fund and put the
program on a "pay-as-you-go" basis.
The only change I see in this program,
however, is the stepping-np of the
hniefit maximums and the applying
of the Act to more people
.Because of the heavy defense pro
gram, the spending faucets at Wash
ington will be Wide open. Although
the average citizen wants economy
his wishes are not heeded by Congress
utatr. lnfrisl:itm-ps. I think that
public extravagance is one of our
three biggest long-term problems.
History proves that, Once -spending
starts, it is almost impossible to stop.
Our experience so far bears this out.
A balanced budget is not in sight. By
the end of the next fiscal year on
.lone 30, 1940 our national debt may
reach $42,000,000,000, compared with
SI 6,000.000,000 in 1930.
MORE JOBS AND STRIKES
Better business next year natural-
ly means more jobs. There are about
0,000,000 jobless today against 7,500,
000 last Christmas. This total ought
to drop at least 2.000,000 during 1939.
New building, railroad equipment, fac
tory machinery, and the tool indus
tries, plus the service businesses,
should provide a good portion of these
iobs. As business increases, labor
trouble may likewise increase. How-
rrer, I now foresee no widespread
.t likes such, as 1937 witnessed.
Wag-en may edge higher in 1939,
hut I do not expect any general in
ci enses, such as ire had tiro years ago.
Hourly rates will be marked up only
in special instances later in the year.
More, jobs-' and slowly rising wage
rates should add up to the biggest
pavrolls and best urban buying power
since the Boom. These payrolls would
even exceed 1020 were it not for the
rew "Wage and Hour" Act which is
a ball and chain on most workers.
FA RM OUTLOOK BETTER
Farm income should also be better.
Fa I'm products' prices can score mod-
erate advances led by wheat, corn,
fresh vegetables, and potatoes. Butter,
irgs, and milk should hot sell for
much more than they did in 1938.
Cattle", will feature the livestock pic
ture, while bigger supplies of lambs
and hogs will hold down their prices.
With wool demand high, and world
supplies not burdensome, higher pric
es are logical.
Indications now are that produce
t ion of farm products, while less than
last year, will again be above ave
rage. So barring drought or other
abnormal Weather Conditions, farm
income may jump 10 per cent above
1938. Farmers' profits will be some
what better than this year even though
the goods which farmers must buy
will cost more. Because the outlook
is only moderately better, I see no
reason for farm land values to change
greatly.
FOOD TO BOOST LIVING COSTS
Food eats up practically 40 per cent
of the average family's budget. Hence,
the strengthening of farm products
prices is the biggest factor in the
Jiving; cost outlook. In addition to
bigger food bills, clothing will also
cost more in 19C9 perhaps 5 per cent.
An advance in fuel oil prices from
current low figures by Spring is a
distinct possibility. Soft coal price
mav rise slightly. The demand for
coal may increase as people find that
a fully automatic stoker gives certain
sections cheaper heat than does oil.
Rents should not move in either di
rection except in the case of especially
desirable urban properties. Taxes,
of course, will be no lower. Electric
light and gas rates will continue then-long-term
downward trend. Home
furnishings, in general, will cost more.
Adding up all these carious items,
my estimate is that by next Christmas
ti e may find total living costs 5 to
per cent above present figures.
HIGHER WHOLESALE PRICES
Before leaving living costs, indus
trial commodity prices should be men
tioned. They have been trailing re
covery to date. In fact, they are ac
tually lower on the average than they
were when business started to .sky
rocket last June. .S" an advance is in
the cards for prices of such raw ma
terials os hides, leather, rubber, gray
goods, sine, lead, lumber, and the like.
These gains mean that retail prices
during 1939 will reverse their long
down-trend. That is why I predict
that home furnishings and clothing
will cost more next year.
A jump in retail price-tags and in
household bills ordinarily means cut
ting into consumer purchases but
the 1939 increase in payrolls and farm
income should offset them. Conse
nnentlv. I exnect merchants, whole
salers, and jobbers to have a better
year than in 1938. Dollar retail sales
ought to average 8 to 10 per cent above
the last twelve months with the best
comparisons coming in June and Oc
tober. Unit sales will not rise quite
so much because of the higher pt hes.
Stole profits .should increase even
more than dollar volume of trade be
cause there need be no stock write
downs in 1939 as there have been
during the past twelve months. A
heavy demand for luxury and semi
luxury merchandise is logical. Charge
account business will expand and,
while I do not like to forecast it, I
think that instalment sales will probably-
increase faster than cash busi
ness. With the outlook for higher
retail prices, wise shoppers-' will stock
up during early '39 "clearance'' sales.
GOOD YEAR FOR SALESMEN
While 1939 looks like n GOOD year
for merchants, it sail be n BOOM year
for salesmen. As one prominent busi
ness man recently put it, "1939 is go
ing to bo a salesman's year if it is
going to be anybody's." Big things
are ahead for salesmen who have been
patiently doing their spade work
through the last four or five years.
Many jobs and orders that were kill
ed by the Recession should "break"
in 1939, Salesmen in the outomobile,
machinery, building materials, air
conditioning, advertising, leal estate,
household equipment, and other lines
can look forward to a real year.
Best sales areas should be the in
dustrial sections. Cities like Detroit,
Cleveland, Pittsburgh, Chicago, Birm
ingham, Toledo, and Buffalo may show
the biggest percentage gains, but
trade in the agricultral sections should
also be brisk. The Southeastern and
Southwestern farm areas look par
ticularly favorable. I advise stepping
up advertising budgets and sales
quotas by at least 15 per cent. In
reaching 1939's good markets, adver
tising managers should not forget that
newspaper coverage is still the best
and cheapest medium.
BUILDING TO PACE INDUSTRIES
Nearly all industries can look ahead
to better business in 1939. A possi
ble 25 per cent gain in building (with
costs creeping slowly upward) will
be the most important Sharp increase
a round 40 per cent in auto assem
blies will stimulate activity-in ' many
related industries. Railroad material
and equipment buying should improve
as the current upturn in cailoadings
continues.
.Gasoline consumption, electric pow
er output, and aviation .manufacturing
will hit all-time record highs. Steel
operations should average around 60
per cent of capacity for the year.
Textile mills, mines, shipyards, office
equipment plants, building supply
houses, rubber goods and tire fac
tories should all be from 15 to 25 per
cent busier than in 1938.
STOCKS TO RISE
With industrial activity rising, it
is only logical to expect higher stock
prices. Increased : business, better
earnings, pressure of idle cash, heal
thier trends at Washington should all
help to strengthen the market. How
far the advance will go, I am not pre
pared to say. There is art outside
chance, however, that the March, 1937
Recovery highs can be broken during
the coming year. Naturally, transac
tions on the various exchanges should
be much more active than in 1938.
Readers ask that I name those stock
market groups which I feel have the
best. outlook..' do not like to do so,
but will mention the CHEMICALS,
OILS, ELECTRICAL EQUIPMEXT,
RAIL EQUIPMENTS. BUILDIXG,
MACHINERY, and STEELS as hav
ing good prospects. For ten years, I
have never recommended a RAIL
ROAD common stock and I do not in
tend to get messed up in this sick in
dustry now. However, I believe that
the RAILS may have the best chance
of all groups in 1939 for percentage
gains. This especially applies to cer
tain defaulted bonds,
SHARP PROFIT AXD DIVIDEND
gains "
During early 1939, I would prefer
Rope W. BaAuttJi
BuiUieli MuepAud 4kt 1939
BUSINESS Twenty Per Cent (Jain Over 1938.
TREND Gradual Uptrend With Second Half Best.
CONGRESS Relief from New Anti-Business Legislation.
PRICES Moderate Increases From Current Lows.
K ARMS Produce Prices To Rise; Income Higher.
LABOR More Jobs, Steady Wages, Increased Strikes.
RETAIL TRADE Ten Per Cent (JAIN; Price-Tags
Marked Up.
LIVING COSTS rood, Clothing To Lead Five Per Cent
Rise.
BUILDING Major Prop To 1939 Gains In All Industries.
REAL ESTATE Rents Steady; Values, Activity Higher.
SECURITIES: Stocks and Medium-Grade Bonds To
Advance.
FOREIGN No War For U. S.
SUMMARY 1939 To Be Far
, England, Or France.
Better Year Than 1938.
to buy securities of companies in strong
financial condition, witnout iimueu
debt if possible. But no security can
be put away in a safe-deposit box and
forgotten. Sharper control over oper
ating costs, brought about by the Re
cession, should produce the best pro,
tits since 1929. excepting mill lute
193( and early 1937. Only higher
taxes and labor costs will prevent
earnings from being the best since
the Boom. With a" big-set-up in pro
fits, investors can expect, many pleas-
gresses.
The same factors which will help
stock prices will also rule bonds. Second-grade
issues may be the sensa
tion of the market. Force of capital
seeking investment can keep high
grade bonds steady but by year-end
the pressure will be un the downside.
I forecast no material change in 1939
in our abnormally low money rates.
We are one year nearer the time, how
ever, when those investors who have
over-concentrated in low-coupon, high-
ernment bonds will be very sorry!
PEACE PROSPECTS GLOOMY
1 urge investors to leave foreign
bonds alone because international re
lations will continue in a turmoil.
The Munich Pact merely postponed
war for how long, no one knows. I
am more optimistic than most observ
ers, but I am not willing to predict
as I did a year ago that there will
be no war in Europe during the New
Year. feel,' however, that Great
Britian, France, and the United
States will get twelve mouths more of
peace.
Despite unsettled foreign relations,
our overseas trade will be better than
in 1938, but not so good as in 1937.
The biggest gains will be with Great
Britian and the Dominions. The im
provement in South American com
merce will also be considerable. Sec
retary Mull's reciprocal trade agree
ments and the recent Latin-American
talks at Liman, Perue, should further
these trade gains, Germany and Italy
will remain poor markets and our
trade with Japan will suffer.
LONG-TERM OUTLOOK
UNCERTAIN
The above is a good outline of what
I figure the New Year has in store
for us. While 1939 and perhaps 1940
should be better, readers must not
think that I believe we are out of the
woods. Our standards of living must
sooner or later be readjusted to actual
conditions. Subsidies and other forms
of government relief must some day
cease. Many communities are now
living in a fools paradise. Ultimately,
we must get back to fundamentals.
I am convinced that we cannot have
any lusting prosperity in America
nor peace throughout the world
until we have a rebirth of character,
a revival of unselfishness, and a re
newal of our love for our fellowmen.
When this takes place we will have
truly "Happy New Years."
"Yes, the smallest thingrs seem to
upset my wife. The other day she
was doing a crossword puzzle and he
asked me, 'What is a female sheep?'
I said, 'Ewe," and she burst into
Local F.F.A. Club
Declared Outstand
ing IivNJCarolina
(Continued from page l) t
mie Boone, Ralph Boyd, Ted O-v
bers, Corbett Chambers, Joe Ca-hj
Roger Davis, Ray Deitz.
Troy Franklin, "Walter Ft art '
Harold Francis, James Franc!-,. K
Galloway, Marion Green, H-h,
xiooper, timer Meminx, Lestei H...
er, Clyde Lyle. Dave Leatho.-.u. .""
Robert Mehaffey, Edgar M,-;..,: :
William McCracken, James Mrt'i,
Spillmon McClure, Rav Nolan, 1 v
rion Norman, Edgar Norman, .1
Rabb, Bonner Rabb, Sam Que'n.
Bill Queen, Hayes Singleton, v
Underwood, Wayne Wright. Jt:.
Carver, "Raymond Coward, (iain,
Lancaster, Waynes Hyatt, H:ii
Queen.
ant dividend surprises as the year pro- grade, long-term corporate and gov-tears." Wall St. Journal.
Bird Banding Is
Interesting Hobby
(Continued from pace 1) ,i
history can be made.
Miss Boggs has banded about l.n'n
different birds in Waynesville ar. i
somewhere today these birds, or ;,
great many of them, are flying alor:
the migration lanes. This summw.
Miss Boggs succeeded in capturing :-i
brown thrasher that she originally
banded in 1926. By this capture, th,
bird is proven to be not less than 1:
years old and sets a new age record
for this species. Such happening
help to make this work one of t!i
most interesting of. natural lii:t
hobbies.
Bird banders consider the biids v
have banded as their personal irieini.
If anyone should find a banded bit i.
Miss Roggs asks that they report it
either to her or to the-Biological Su1
vey in Washington, I). C. Sonic hn :
bander, somewhere will appreciate
the thoughfulness and it will be tii
means of locating one of his friend-
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