The Review of Economics and Statistics Vol. 3 No. 10 1921

Review of the Third Quarter of the Year

Charles J. Bullock

Abstract

T HE third quarter of the year probably witnessed the beginning of a slow recovery of industry from the depression which commenced in the late spring of I920. The dullness natural to the summer months obscured the trend of events, and belated liquidation in certain industries which had been slow to readjust themselves added to the perplexities of a trying situation. Looked at from one point of view, business never was worse. It was in a state of comparative prostration after a shock of unprecedented severity. In a few industries there was a fair degree of activity, but in the larger number production had been curtailed or even suspended; and it was evident that there was no immediate prospect of radical improvement. Financial sentiment continued generally pessimistic, in large part because the time had come for reckoning the losses which banks had suffered and for rehabilitating a few institutions which had been most severely hit. There was apparently little reason for optimism among investment committees, and there were many reasons for gloomy estimates of current conditions. It was indeed dangerous to -suggest that business ever could or would be any better. But while pessimism continued rampant, wholesale commodity pric,es, both in the United States and in the leading European countries, had rebounded from the low points reached in the late spring, giving evidence that the precipitate decline had come to an end. In August came the first indication of improvement in the iron and steel industry, when the output of pig iron increased io per cent over the figures for the previous month, a change which was presently followed by similar upward turns in other branches of the trade. More spectacular was the sharp rise in the price of cotton, which between July 30 and September i advanced from I2.I to I7.5 cents per pound. By September there was sufficient visible improvement in a majority of industries to bring about an upward turn in most of the indices of business conditions, including the statistics relating to employment. Whether the change was more than the seasonal increase of business activity, which apparently had begun in August, is not clear at the time of writing. Curve B of our index chart shows, after being corrected for the seasonal factor, a slight upward movement but not enough to justify a very optimistic forecast. The most that can be said is that business is slowly rising out of the trough of industrial depression and will probably continue to show a gradual improvement unless further untoward developments occur. But improvement~ does not mean that conditions have been or are now good. When the patient has been very sick, one can pronounce him better when he could not possibly call his health good. Copper mining is practically suspended; in many factories not a wheel is

DOI

10.2307/1928593

Volume

3

Issue

10

Pages

334

Sources

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