Current Situation

Labor Day--conventional beginning of the fall business season-- is now at hand, and there is little reason to question the prophecies made earlier in the year as to prosperity during the remainder of the year.

Production rate in the basic industries during July was 2% over June and 20% over July, 1924, and there is little doubt that August has maintained this favorable showing. While crop production generally has fallen off, agricultural prices are up considerably, and rural prosperity in most parts of the country seems assured. Freight traffic in the railroads is both heavy and profitable. Lastly, retail sales have held up unusually well over the summer.

On the surface, all is rosy. Beneath the surface are many comforting signs, such as tax-reduction, ample money supplies, moderate inventories and fairly stable price levels.

Yet there are certain clouds on the business horizon which later on may or may not blow up into stormier weather. The chief of these is the tendency of individual and institutional investors alike to place funds in fixed rather than liquid assets. This tendency accounts for much stock market activity, and for the even wider and greater speculation in land and improved real estate. So far has activity in both these fields gone, that the wiser heads in Wall Street and the more hard-bitten realtors of Miami are now wondering where the limit is. It is not yet clearly discernible. Yet many traders are definitely planning on "cleaning up and getting out" both in shares and town-lots. Some day many of them are going to try to do it, and perhaps on short notice.