The Birmingham age-herald., 1920-08-30
TRADE MUCH BETTER THAN EVER HOPED FOR A MONTH AGO
Drop In Cotton and Credit Restriction Are Still the Only UnfavorabIe
  Factors

New York, August 29.-(Special9-
 It is said that the pleasure of anticipa- ton is greater than that of reaIiza- tion.e It is equally true that the fear of trouble iSs generally more disturb ing than the fact. for the troubles that we expect rarely happen.
 Four weeks ago the country xva. worrying over probable coal famine
 but the alarm is over. n sufficiency if
 not an abundance of coal seems assured und prices in the Baltimore market fell more than 30 per cent last week.
 Two weeks later the world was scared to death lest the bolsheviSi should inun- date Europe and submerge civilization. 1 but the tide has turned The soviet armies are now retreating and it is pos sible that the Lenine-Trotzky government may soon collapse, for pride generally goeth before a fall
 But life Is just one thing after another. and with these two troubles out of the way the south and southwest are now worried by the decline in cotton and alarmed lest 1t may impair the deht-pay- ing ability and purchasing power of large section of the country. When we recall how loudly everyone was preachiug economy and the need of lower com modity prices six months ago 1t seems little Illogical that we should be dis concerted now when the very thing for which we were praying has arrived.
 DROP IN COTTON
 It is, however, to be admitted that the drop in cotton has been rather precipi- tate, and 1t is well to remember that while men can adjust themselves to all most any changesif it is gradual. 8. sud den wrench is certain to cause harm and distress, even though it be designed to effect a desirable readjustment. The present depression In the textile trade and cotton and wool is largely due to forgetfulness of this truism and to the attempt that is being made under the leadership of the federal reserve board to undo the imitation of five years in few months.
 It requires twelve months or longer to convert the cotton and wool grown in one season into goods and distribute them A large amount of capital is absorbed in
 the process. Most of it must be borrowed and the recent decline in the price of textile and the raw materials of which they are made is largely due to the un- willingness of manufacturers to buy be- , cause credit has been difficult to ob- tain. This scarcity of credit has in turn been caused by the unwillingness of the federal reserve board to reduce the per centage of reserve which the federal reserve banks are required to carry. The
 board has the power to make such re- duction, but it has not done so, and as a result America is finding it difficult to
 finance her domestic commerce, while
 England by boldly disregarding reserve
 traditions that are archaic is capturing
 the worlds trade through the freer use
 of her credit.
 GROWTH IN TRADE
 Tho facts are that since 1900 our do-
 nestle trade measured in dollars has in-
 creased from about s12000, 600 annually
 to s70,000, ,o00000, or nearly 800 per cent, and our foreign trade from 2,250 000,000 to
 nearly s1oSo0, ,ooO,0o0. or about 36o per cent. l In the same period the worlds gold sup ply has been increased by only T per cent. and the total stock of monetary gold by only 63 per cent. Thus 1t is evident that if we are to maintain nine
 teenth century gold reserves we must re-
 duce our trade to nineteenth century dt-
 mensions. This would be ruinous, for 1t
 would involve a reduction in wages and
 the price of farm products that would further impoverish the poor and enrich
 the wealthy by enormously increasing the value of money.
 | It is therefore to be hoped that those l who are responsible for the financial pol | icy of the country will soon realize that | it is impossible to put new wine in old
 bottles. and 1t is highly desirable that | they SnOul0 pc made dWdIS ul PubiiS
 opinion on this all-important subject. l ENCOURAGING WEEK Aside from the dropping tendency Of
 the cotton and dry goods markets, both of
 which have recovered slightly, the record
 of the week is generally encouraging. The
 coffee, silk and rubber markets seem in- , fnite,y to have turned the corner. Iron 1 and steel, which are sometimes regarded
 as barometrical, have both advanced, and l 1,a ft,rf and mills rennrt active
 demand for an output that is increasing
 as the railroad congestion clears. The credit clearing house reports a further en-
 largement in the merchandise turnover
 and bank clearings IS compiled by Brad streets strikingly sustain this report, for
 they show an increase of F per cent