The Barre daily times. (Barre, Vt.) 1897-1959, 1920-02-02
EXPECT PRICES TO DROP
BUT NOT nv 1920
Harvard Committee on Economic Re
search Also Declares There May
Be Check of Business
Activity.

Cambridge, Mass, Feb. 2.-The Har-
ward committee on economic research,
appointed by Harvard university to
make special studies of economic condi-
tions, has just announced that the
United States may expect a check in
the upward movement Of prices and of
business activity, which has been in
progress since last April and perhaps a
drop in prices. AT the present time,
however, the committee states. and on
the basis of the November and Decem
Der figures, it would be premature to
conclude that a violent recession in
commodity prices IL probable.
The committee was appointed by
Harvard university in 1917 to assist in
the solution of the fundamental eco
nomic problems which underlie modern
commerce and finance. 1t provides sta
tistical information to federal reserve
banks, for banking houses and large
corporations and includes among It's
publications review of economic sta
tistics which contains a price forecast
er.
The COMMITTEES bases its present
forecast upon statistical material repre-
senting the decline in the New York
bank clearings, the volume OF sales on
the New York stock exchange, the
prices OF industrial stocks, and analysis
of the banking and trade situation, do
mestic and foreign.
Professor Warren NJ. Persons, editor
of the statistical service published by
the committee, says that the statistics
collected by the committee indicate
that the farmers will continue to prosper
in 1920 and that the prosperity Of this
industry viii contribute to that Of all
Others during the coming year.
The beginning of the new year, he
declares, finds American manufacturing
industries in sound and prosperous
condition.
1.-THE tightness of the money market
and the announced policy, already in
augurated, of the federal reserve board
of increasing discount rates have
caused many observers TO have grave
misgivings for the financial outlook for
1920" he saws. Instead OF causing
alarm, the action of the federal reserve
board should in fact be regarded as q
favorable omen. High interest rates
are the main reliance for protecting
bank reserves and they spell not dis
aster but safety, provided they are ap-
piled in time Control OF interest rates
is the safe and effective way of dealing
with such a situation as we now face,
and il is to be hoped that nothing OF
even the needs of the United States
treasury-will divert the reserve board
from pursuing the only sane and con-
servative course.
"The outlook for 1920 is for a con-
tinuance of large demand for credit
that will not be supplied except at in.
ereasing rates. High rates for bank
loans viii eventually tend to check the
upward movement of commodity prices,
AZ they have already checked the up
ward trend of security prices and the
volume OF speculation on the New York
stock exchange"
OF the belief of some business men
that the whole economic situation now
is abnormal, the committee says: Alb
normal il certainly is in many respects.
Prices are very high; there has been
great expansion of bank credit; ex-
travagant expenditure, both public and
private, is found on every hand and
our abnormally large export trade is
likely to suffer eurtailment. A
wear ago many observers expected a
violent drop in prices and crisis in
1919. To-day there seems to be less
reason for expecting such developments
in 1920"
The Harvard committee on economic
research is planning to publish this
year monographs embodying special
studies of the principal economic condi-
tions and forces that will affect prices
and trade throughout the world during
the next five years The committee
also will study and classify the annual
statistics Of industrial commerce and
finance and will construct trade indices
based upon them. The committee Is
composed Of university professors and
men of affairs with Charles J. Bullock,
professor Of economics at Harvard, as
its chairman.