Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1920-05-21
A TIME FOR SANITY.

We have all wanted prices OF living to be lowered
There are evidences that downward slide Of prices
has begun and will probably continue 81. .t 81.
This readustment is difficult. Some people are
going to be more or less hurt in the process. II
this hurt should become sufficiently severe business
failures would result and panic or near panic
would follow in its wake.
The most severe sufferers from financial panic
are the wage-earners and the poor, Rich men may
lose surplus wealth hut few will actually go hungry
or uncothed. These things could easily happen to
the family of the average wage-earner if bad bust
ness conditions resulted in prolonged ideness.
Therefore it is prudent to understand two things:
The first is that the decline must not be made 100
abruptly; a protracted period Of gradual decline
which gives manufacturers and merchants chance
to unload goods manufactured or purchased at
high price without too radical loss is imperative
The second fact to remember is that a panic now
would be entirely manufactured product. An
unwise banking policy by the Federal Reserve Board
superinducing fear in the minds of people, is the
only thing which could radically upset conditions
A panic would be psychological and not due to the
ordinary economic conditions which produce panics.
Panics come naturally only in periods when pro-
duction is far in excess of consumption. If more
wheat corn hogs beef and clothes have been pro-
duced than the public consume, prices break
dsastrously and panic results. No such conditions
prevail today We are in a period of under produc-
ton and over consumption which precludes panic
based on economic conditions. ..
Prices have been kept high by some manufac
turers and jobbers by the undue holding of stocks
for still higher prices To hold these stocks it has
been necessary to ask the banks for extensive lines
of credit. In order to compel the sales of these
stocks to the public needing them the Federal Re-
serve Board has been pressing the banks to reduce
these loans thereby compelling liquidations of
stocks a.... .-. r.- .a.,
In some Reserve districts where the banks have
notop pIiad wifi tha
Board has refused to allow the banks any re- dis
counts, thereby limiting the capacity of the banks
to make loans and consequently compelling them
to call these profiteerng loans
This is not due to the inability of the Federal
Reserve system to meet the need, but rather to a
premeditated design to force these goods on the
market.
AS result of such policy many banks find
themselves in a financial srngency deliberately
brought on them by the Federal Reserve Board
,- If that board acts wisely it can bring definite
results without harm.
Business men and the public have occasion
for alarm. There is nothing facing us that our
government administration Is not deliberately fore
ing. No doubt the pressure would be instantly
lieved by the board If disaster were impending This
could be done in a moment by accepting re-dis-
counts.
The public will. generally, understand all this
only In a hazy way But people may know that the
board is doing it deliberately in order ITO lower
prices. -.-
New Mexico is unaffected yet by this strn-
gency. However, should avoid asking bank
for long-ti loans for speculative purposes
They must keep their assets in liquid shape. They
good bankers and deserve confidence only
when they do so. 3
Pose, confidence and reasonable economy
all that is needed for everything to run on usual
in New Mexico during this period of declining prices
which seems just ahead.
Merchants must rely upon the quick turn over
of large amounts of goods at small percentages of
profits until reach new and sounder basis