3. Statistics of the steel statistics of the steel trade include the production of pig iron, the prices of Bessemer pig and other kinds of pig iron, as well as of billet steel and of various steel products such as pipe, plate, rod and structural shapes. These statis tics are given in great variety in the Iron Age, the Iron Trade Review, and other journals devoted to the iron trade. The production of pig iron conforms very closely in its fluctuations to the general state of business as revealed by compoSite barometers. It lags behind stocks and makes its highest record of the cycle a little before banking resources have reached their lowest point. Pig-iron prices corre spond well with changes in pig-iron production, ex cept that prices usually continue to decline and re main low subsequent to a crisis and for some time after production has revived. In the cycles 1900 1903 and prices did not make a sharp ad vance above normal until the period of high produc tion of pig iron was about half over. When pig iron is very high in price a recession in trade is due. The price of Bessemer billet steel corresponds so closely in its changes to that of pig iron, that it is hardly necessary to follow both barometers.
By reason of the enlightened policy of the United States Steel Corporation in making public its records, it is possible to follow the net earnings of the com pany by quarters, from the second quarter of 1901 to date. The unfilled orders may be followed by quar ters, from the second quarter of 1902 to date, and also by months from July, 1910, to date. Unfilled orders fluctuate in close conformity with the prices of pig iron. Net earnings recover more promptly after a crisis than orders or prices, but they make their maximum for the cycle at a later time. They also correspond more closely to pig-iron production.
4. Railroad statistics are given in great elaboration. This is due to the non-com petitive character of the business, which promotes an open policy about information, and also to the re ports of the Interstate Commerce Commission, and of various state commissions. The voluntary informa tion is compiled and issued thru various interline rail way associations, such as the American Railway As sociation at Chicago, which publishes the records of car surplus or shortage every two weeks, and the Bureau of Railway Economics at Washington, which publishes monthly statistics of gross and net revenue and expenses, carefully analyzed. The Commercial and Financial Chronicle publishes operating statis tics which include practically all the railroads in the country.
Railway gross income is a good barometer of gen eral business. It represents the income from freight
and passenger service, and so represents a traffic which cuts across all other forms of economic activity, in so far as they involve the production of place util ity. These charges are so basic that they may almost be called a tax upon industry. Net income is more specifically a barometer of the prosperity of railways. Railway operating expenses throw light upon the la bor and material costs of doing business. The grad ual increase of these expenses, to which reference has been made in the chapter on Railway Securities, con stitutes a great problem of railway operation. Net railway earnings calculated as a percentage of gross earnings, have been decreasing for some time. For ten representative railroads the percentage for the five years was approximately 32 per cent; for the five years it was about 27 per cent.
All these barometers are slow in movement as compared with securities. Railway earnings possess the peculiar property of making a sharp advance and then a decline during a period of active liquidation. The business generated at this time undoubtedly arises from the efforts of embarrassed business con cerns to realize upon their working capital. There is a shifting of commodities from weak to strong hands, similar to that which takes place with reference to stocks and bonds on the security market.
Car surplus and shortage is a more prompt ba rometer than railway earnings. It is estimated that an average interval of three months occurs from the time a car is taken from the siding to carry freight, before the freight charge earned by it appears in the published earnings. Car surplus and shortage fig ures are a very erratic barometer for the purposes of the investor in general securities. The figures are absolute statistics of cars, and not percentages of the cars in existence. The number of roads reporting to the American Railway Association is never alike for two months in succession.
5. Building statistics.—The statistics of building operations originate from two sources—municipal building permits and contracts awarded. Building permits are less accurate, since they are estimates made, often, before contracts are let. They often include permits which are never subsequently utilized by the erection of buildings. They do not include structures in municipal areas for which permits are not required, such as city, state, county and Federal structures, nor do they include structures built out side of municipal areas as in suburbs, villages and the open country.