New-York tribune., 1918-11-25
Wealth Markets and Commerce

Il ia Il AA 49, &. -
adequate. and therefore. on the prin-
ciple of Oceans razor. we have no leave
to look for any other.
When Prices Fall
Now, If all this is in a broad way
true. the bearing of this on the course
of prices IN this country Is very clear.
1T means that unless there is a great
outflow Of gold or a very great con-
there will not be any severe or pro-
longed fall in prices, at least in the
next year or two. There may be, in
the readjustment to peace conditions,
time Of great uncertainty, and this
may result In q general lowering of
prices. And obviously one would ex-
pect very sharp fall in those things
for which there has been an intense
war demand. So in varying degrees
we might expect fall in steel, copper,
cotton. lead and many other materials
i until the peace demand for these be-
gins to make itself felt
But, on the other hand, there has
been very sharp contraction of
business and trade in many lines,
which possibly is much larger than
even the great majority of people
realize. For example, our exports
abroad of foodstuffs have been enor-
mously increased. And yet the actual
supply from the fields, alike in grains
and cotton, has not averaged in the last
two years very much above the aver
age of the four years preceding the
war If we have sent more abroad,
eata lace
The actual volume of traffic carried
by the railroads, the ton mileage, has
not at all increaced this year over the
corresponding period of last year This
is In the face of our increased exports
and very intense developments of the
war Industries.
And again. We know that huge gov
ernment purchases, totaling fourteen
or fifteen billions of dollars, have Gre
ated an enormous volume of what
might be called war business. Yet the
increase in bank clearings for the
whole country for the nine months of
the, present year over the same period
OF last year has been practically moth
ing. The volume of war traffic and
war business exchanges is fair meas
ure Of the amount of contraction in
other industries. For example, the
building permits of one hundred large
they were as late as October, 1916
There are other factors, and it would
seem that their influence may be con-
siderable. One is that under our new
banking laws and the establishment of
the Federal Reserve system the re-
serve requirements of the banks have
been greatly lowered. This has per-
mitted of an enormous expansion of
bank credits. This has meant CORE
r Go, l.
banks themselves. Bankers are not go
ing to reduce their profits or their vol
ume of business as long as they have
solvent borrowers to loan money TO-
In other words, if business in many
lines should contract sharply and so
release a large amount of credit this
would have the effect of making the
money market very easy and encourage
other borrowers who have been shut
last year to make loans.
Nor is there any evidence that the
Federal Reserve Board will enforce a
severe policy OF loan restrictions at
the present time. SO far from that, the
whole drift Of the Administration at
Washington seems to be to encourage
expansion and thus keep money rates
low until all further government bor-
rowngs are out of the way.
Which leads to yet another ques-
ton. That is the sudden creation of
100000 of new and simply gilt
edge securities, namely, the Liberty
loans, and the placing of these in the
hands of the great body of the people
Now it is a statistical fact that fully
four persons out of five, and possibly
nine out of ten, are unable to hang on
to money even when they get it. 1t
will not be following human nature if
IL IN, n,-11
with the people who have them now
They are easily sold. They are ex-
cellent collateral. They can be traded
/ for houses or farms, or even for cloth
ing and food
And every one is more or less familiar
with the difficulty of reducing expendi-
/ lures below a level to which we have
become accustomed. 1t is irksome and
! depressing. For two or three years this
country has been living high An enor-
/ nous number Of people have been get
ting wages and prices for their prod
ucts they never dreamed of BEFORE
Their expenditures have to some ex-
tent expanded accordingly. minus the
amount subscribed for the Liberty
loans. In the case of setback in
business and widespread unempoy-
ment it might readily happen that
funds accumulated in the shape of
Liberty bonds might be used to tide
over this interval
Where Politics Enter
There are also political factors. 1t
is human nature, and political nature,
that the Administration in power will
do everything It can to maintain pros
perity, and that to very large extent
means the maintenance of high wages
and high prices. The government has
guaranteed great purchasing power to
the. largest single group Of the popu-
latlon-the farmers. And the probable
demands for cotton abroad would sug-
gest a relatively high price for cotton.
even If not present prices. And so with
other thngss
Unless the close OF the war should
bring political catcaclysm in Europe
and the insanity which has prostrated
Russia should penetrate other coun-
trles, there seems no reason WHY the
united States should not find large
market, at scarcity prices, for great
number of its principal staples for at
least the next year to come.
Trust and Surety Commando