Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-05-20
NOW TAKING STEPS
TOWARD ENDING LNFLATION
Indications Here andThere That Era Of Reckless Buying Has
Passed and Business viii Get Back to Normal
BY CLINTON W. GILBERT


Washington. May 20-WashingtOn
is full of comforting bankers and Fed
cral Reserve Board and Treasury otti
ciuls. Department stores all over the
country are cutting prices 20 to 80 per
cent. Liberty Bonds are being dumped
on the market and their prices are
falling.
What does it all mean? Have we
reached the turning point in the high
cost of living? Have the people stopped
buying? Has production caught up at
last with consumption?
A banker summed the whole thing up
by saying:
The whole country has come to its
spnscs--the buying public, the bankers.
the government officials, We were all
more or less carried away by the war
and the victory. We arc getting sober.
A chart hanging in the Treasury
Building indicates just how the country
was carried away into an orgy of buying
and speculation after the war. 1t con
tains line illustrating the growth of
commercial paper held by the banks
which are members of the Federal Re-
serve. 1t started before the war at II
little less than $4,000, ZOO. 900; during
the war it ran UP billion or two.
only to drop n year ago last April 70
n little more than $4,000. 600 900,
about where il was before the war.
Then n tremendous expansion started.
and when the reserve boards and bank
crs began to check the thing the COM
mcrcial paper held by the reporting
banks had become $14 900 900 900.
As only 40 per cent of the banks re-
mort. this may mean that the total jump
in commercial paper held by banks Of
tho country may have been 10000
100000.
To Stop Imitation
Public officials will not admit that
what the bankers Of the country and the
reserve board leading ihcm are at is
dchation. But it is pretty generally
agreed that at least they are bent upon
stopping imitation. They are stopping
BY drawing the wartime distinction be-
tween essentials and nonrssCntialS. tho
line the war industries board used to
draw.
Had the government enforced that
distinction during the period of recon
struction the great jump in loans on
commercial paper Of perhaps $40. 600
OOO. 900 in n year would not have taken
place. The government might have
maintained that distinction by keeping
some Of its wartime regulations. Or it
might have done it as the banks are
going to do it now. by making credits
for thp production of essentials cheaper
than credits for the production of
luXurics.
But the government was living in II
FOOLS naradisP. It believed that the
country would recover from the shocks
of thc war easily and jump to u now
high level of production and prosperity.
II threw caution to tho winds That
part of it which is known AS the Fed
cral Reserve Board was apparently in
Hucnced by the general optimistic psy
cbology. 1t offered few obstacles to the
expanding of commercial credits by
probably SIC. ZOO, 200, 600 in n year.
Two factors seem to have brought
about the present move toward greater
CautiOn. Defation 49, If it is dcfation
that the country is up to-is stopping
imitation. at any rate. The public has
stopped buying as wildly and rPcklcssIy
aS il was buying n short time ago
TRANSFORMATION has become dcmoraliacd
as result of the strikes aud of the
delay in raising the railroad employees
wages and their consequent seeking
other employment,
Credit Badly Strained
Both these factors caused sudden
strain on credit Owners of goods
which began to lie on shelves and
couldn't be moved because buying slack =
pned. and owners of goods DELAYED in
transit or kept in manufacturers hands
for lack of train facilities, began asking
to have credit extended. The big bubble
of commercial paper loans which had