PRODUCTION RAN AWAY FROM ESTIMATES. Note that this was written at least three months before the close of the year 1915. The production of automobiles for that year, as we have seen, was 139,249 greater than that given by Mr. Frederick at the time he wrote. The interesting thing in Mr. Frederick’s prediction for the future is that the industry ran away from his estimate the first year after he made his prediction. He prophesied a production of 1,000,000 automobiles a year for the next five years. The following year, 1916, the production reached 1,617,708 cars. This is not against him, because the automobile industry is going forward by such leaps and bounds as to smash all conservatism. His estimate but indicates that his further prediction of a probable production later of 2,000,000 automobiles a year is likely to be more than fulfilled. In this connection we must take into consideration that the earlier made cars are beginning to wear out and are being replaced by new ones. Also that many persons who bought so-called cheap cars at first are discarding them and buying higher priced new ones. The time will come, of course, when the sale of automobiles to new users will begin to decrease, but as these sales decrease the sales of cars to take the place of old ones will increase. When we reach the time when the decrease of the one will equal the increase of the other we will arrive, approximately, at the point of saturation that is now worrying timid and unimaginative persons, and not until then. Every feature of the industry indicates that we have not travelled more than half the distance to reach that point. A more rational estimate is that we have not travelled much more than a fourth of the distance. Until we reach that point the automobile industry will be in the formative period, in the creative state. It will be growing larger and larger, and will be earning more and more from year to year. But some of the earnings will have to be kept in the business to acquire additional equipment and as a greater working capital. But earnings used in this way will become additional assets back of automobile securities to enhance their values—to create accretive values. When the saturation point is finally reached the industry will settle down to be one of our most stable and profitable manufacturing lines. Not until then can the tremendous profit possibilities in it be definitely reckoned. EARLIER THE INVESTMENT, GREATER THE PROFITS. These conditions being true, it should be clear that the earlier an investment is made in the industry, the greater will be the profits. Spectacular profits will be made before the saturation point is reached, and to get all the tremendous accretive values that accrue in this industry the investment must be made at the beginning. The further removed from the beginning the investment is made, the more the investment will cost and the lesser will be the accretive value as well as the income on the investment.