As was stated in the opening introduction, economic conditions are perhaps the greatest factor to be considered in constructing any forecast for the operation of such an industry as that of the motor, motor accessory and tire group.

These economic conditions have mainly to do with:

(a) Following is a chart which shows graphically the comparison between the growth of population, increased registration, and increased automobile production since 1911.

This would indicate that, while the population is gaining slowly and consistently, the production of automobiles has taken a decided jump, and a natural inference is that, even with so remarkable an industry as the motor group, it is beginning to prove food for speculation as to whether or not manufacturers, at the present increasing ratio of production and distribution, will bring a more or less complete saturation of the public, able to buy and support pleasure automobiles.

Many conservative judges have figured that this may not come for some years, possible five or more. It may be that new conditions will arise to put that period further ahead, or indefinitely postpone it.

(b) In this connection, the following chart is of interest. This shows the ratio of voting men to each registered automobile in the United States by states.

The following chart shows the ratio by states of men over 21 to each registered automobile:

Attention is invited to the diverging range of distribution. Territorial and community economics account for this very largely. For example, an analysis of three sections will show a decided variation, say for New York (with one automobile for 15 voting men); Arkansas (with one automobile for every 54 voters); and Alabama (with one automobile for every 43 voters).

The state of New York is very largely industrial, and one might commonly infer that, due to the great wealth represented in this state, the ratio should be much smaller. States like Arkansas, Kansas and Iowa are distinctively rural sections—where the population is not so clustered as in cities like New York, and automobile transportation is more utilitarian than a luxury or pastime. For this reason it is estimated that practically every voter, almost, in Kansas and Iowa is a possible prospect in figuring future consumption.

Still another diversion notably exists in the ratio shown for the Southern states, and this is readily explained by reason of a paucity of buying power, since the majority population is negro.

To indicate how the various types of automobiles have been distributed in three different states, the following chart is included in this report.

The following chart shows the distribution of leading motor cars in different states:

The following factors may be instrumental in the automobile industry in preventing the reaching of an absolute saturation point:

In making up a quota for the possible consumption in the automobile industry, the following chart may be considered as a conservative basis to work on.

The following chart shows the estimated automobile market for 1917:

There being, therefore so many elements entering into the question of influence upon this group of securities, it is rather venturesome to presume any prediction for their future, for fear such prediction may prove unfounded, as have many former guesses on their probable rise and fall.

The immediate outlook for 1917 is at present somewhat baffling, aside from the economic tendencies, charted in this chapter, but there may be a change for improvement at any time in the motor car industry, especially if our government should place large orders for cars and supplies in the event of war, or the foreign trade should take on large quantities for the remainder of the year.

It must be remembered that the supply of parts for cars is now, and will be more and more, an extensive business of the motor car industry.

One prominent New York newspaper which censors very carefully its advertising is very cautious in handling offerings on motor stocks.

It might be safe to assume that motor stocks in well managed companies making popular cars will be as secure an investment for reasonable earnings on products as other industrials for some years to come and possibly indefinitely.

The future of automobile accessories is possibly not subject to fluctuations in the same degree, nor as apt to reach the saturation point as might be the development in the automobile industry, for the reason that with the increase in the number of cars in use, the purchase of many accessories will be made by car owners, even though the manufacturers should not continue to buy an increasing, or even equal, volume.

It is natural to expect that the earnings on and the price of automobile accessory stocks should therefore remain firm, if conditions of trade or competition do not unduly affect them.

The future of the tire industry and stocks seems reasonably secure, as unless some satisfactory substitutes for rubber tires are discovered, apparently an increasing number of tires for replacements, if not new cars, should be demanded each year.

The present earnings of the tire companies are very large and should continue favorable. It must be remembered that the cost of material and labor are as important considerations to this class of manufacturers as to all industrials, and that their undue rise in cost might affect the industry more or less temporarily. But as they have come to be classed as necessities, the prices would naturally adjust themselves to the cost of manufacture.

With all popular cars sold far in excess of their capacity, barring the interference or lack of transportation, labor friction, or other unexpected or disturbing elements, it is safe to assume that 1917 should be a record year in the motor, motor accessory and tire industries, and that their earnings should be reflected in the intrinsic and probably the market values of their securities.