PESSIMISM.

Press, Volume LXVI, Issue 20084, 13 November 1930, Page 4

PESSIMISM.

PSYCHOLOGICAL FACTOR.

BUSINESS NOT REALLY BAD.

In an interesting article in the ".New York Times" a real estate agent advances the opinion that business 13 not really, but only psychologically, bad in the United States. Many of bis observations might be applied with equal truth to .New Zealand. Ho atatos: What lias been the moat common question asked this year? "How's business?" And what has been th-3 in\ariable answer? "Business is rottoiu " That answer is one-tenth fact and nine-tenths psychology. This has notbeen a bad year for business—it is an unusually good year when compared witii any ten-year average. But comparisons" aro made with 1929, which was a thoroughly abnormal year. .Last year was a bad year for busi ness. It was one of the most destructive periods in America's economic history, because thousands of ordinarily sane business men gave tip their businesses and played roulette., in Wall Street. The inevitable result followed, the market crashed, and then what happened? Were underlying business conditions any worse in November, 1929, than in September? Not a particle. Business men becamo victims of the psychology of fear. Business became "rotten" because our thinking was ''rotten;''

Someone has said that the only things 1930 has produced have been the Tom Thumb golf course and the Austin car. That is just an example of over-contraction following a period of over-expansion. Constructive optimism is very good, but we must be sane and sensible about it. What t&e Bible Says. The Bible refers to seven fat years and seven lean years. We have had seven fat years from 1919 to 1926. The four years since 1926 have not been so lean for real estate, and if we worry through the next three years with no greater hardships than the last four I think wo can consider ourselves most fortunate. Of course, I don't want this considered as a preachment, but with this general business slump it should behove us to concentrate more and watch the 10,000-dollar and 100,000-dol-lar deals instead of seeking only the 1,000,000-dollar transactions that were so numerous during the past. I believe that the thing which has made the United States the greatest nation in the world to-day has been our national psychology of optimism. No one knew this better than tho senior J. P. Morgan when he gave his famous advice, "Don't gel! tho United States short! ' *

Tho trouble with 1929 was that so many business men had not the psychology of optimism, but tho psychology of recklessness. Tleaso distinguish between the two. Outsiders think they go into Wall Street with their margin accounts to make money. They don't, really. They go there Yor a thrill—the thru) of getting something for nothing —and it cau't be done. 140 not claim be that kind of optimist. 7 «an think of no profession in whi?h the psychology of. optimism is more iiimportant than in real estate, and none whore tho psychology of recklessness is more misplaced.

Faith in Realty Justified. Last year was a year which furnished the sound real estate man with few causes for optimism. Not many of us could realise it fully at the time, but during the stock market boom of lest year almost <;vcry factor favourable to real estate was conspicuous by its absence. Money that should have been available <o finance real estate was in Wall Rtreet. Savings bank deposits wore dropping for tho first time in iliany years. People who should have been willing to pay for honest values were trying to got something for nothing.

To-day the situation is completely reversed. Money is cheap and there are ample funds available for real estate financing. Savings bank deposits have been steadily increasing all the year uni.il now they have reached an «'«alltime high." Stock market activity for the most part is confined to large investors ami professional traders. The general public has a renewed appreciation of the basic soundness of real estate, and the fact that it is tho oldest and safest of all types of investment. Many Concerns Making Money.

I recently saw a list of fifty large concerns whose earnings have shown an increase during 1930 as compared with the same period in IJ)2S>. Practically every one of those firms deals in what may be described as a basic necessity of life. Now real estate conies under the head of basic necessities. Both literally and figuratively it is the foundation upon which all businoss rests, and is the fundamental commodity in every community and in every phase of our economic life. The experience of those fifty basic-necessary businesses proves that people are able and willing to buy fundamentals. I think they are now more nearly | ready to buy real estate than many of us suspect. But we cannot sell them unless our own psychology ia right. No I salesman was ever successful if he did not whole-heartcdlv believe in the thine ho was selling. Optimism is contagious, and the successful salesman, whother lie knows it or not, radiates an optimism which is more persuasive than ail the logic in tho world. It is time for our psychology of optimism to reassert itseif, for tho real field has more solid ground for optimism concerning the next few. years than has been the case for a long, long while. Large bodies move slowly, and naturally real estate, representing by far the largest investment body in the country, cannot be expected to pick up speed with the swiftness of "n. small business. I3ut that condition is merely t indicative «f the stability of real estate, for when it gathers headway it gains a momentum which no power under heaven can stop.