November 1, 1949
 
                       BUSINESS AND INVESTMENT PROSPECTS
 
          The business corrections of 1949 have received
much more
emphasis in published statements and articles than the
actual facts to date appear to justify. We present below
figures covering several aspects of genearl business
compared with six previous good years.
 
                               Representative Business
Indexes
 
[table indicating indexes for years 1929, 1936, 1941, 1946,
1947, 1948 and 1949]
 
              Examination of these figures indicates that
1949 is likely
to be an excellent year, exceeded only by 1947 and 1948. It
is evident that national income, employment, construction
and other capital expenditures have been essentially stable
and that industrial production, wholesale commodity prices
and corporate profits are lower.
 
               As stated in memoranda ever since the war, we
have expected a series of readjustments from wartime and
immediate
postwar excesses in various commodities and industries. We
expected that in the early postwar years these readjustments
would be sufficiently staggered in time and sufficiently
moderate in amount to prevent cumulation into a severe
general depression. In each of the past three years
correction of certain prices and industries has caused some
alarm among businessmen and investors lest the trouble
spread. This year a larger break in prices of a number of
raw materials induced a drastic attempt to cut
inventories and commitments throughout business. This
resulted in curtailed production in many industries,
increased unemployment and part-time employment, further
decline in commodity prices and substantial inventory
losses to be deducted from profits.