Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1920-02-02
CHECK AND DROP
n Price S NJ a Y Be
Looked for Soon
Belief Harvard COMMITTEES on Eco.
nomie Research - Bases Forecast
on Bank ciearinss, Exchange Sales
and Analysis Of Banking and Trade
Situation

Cambridge. Mass. Feb. The
Harvard Committee on Economic Re
search, appointed by Harvard Univ
ersity TO make special studies of
economic conditions. has just an
nounced that The United States may
expect a check in the upward move
ment Of prices and Of business activ-
Ity, which has been in progress since
last April and perhaps a drop IL
prices. At the present time. however,
the committee states, and on the basis
of the November and December fig
ures. II would be premature to con-
clude that vidept recession II com
modify prices is probable.
The committee was appointed by
Harvard University II 1917 10 assist
in the solution Of the fundamental
economic problems which underIie
modern commerce and finance. 1t
provides statistical Information to
federal reserve banks, for banking
houses and large corporations and in
cludes among its publications q re-
view Of economic statistics which
contains d price forecaster.
The committee bases its present
forecast upon statistical material
representing the decline IN the New
York banking clearings. the volume of
sales on the New York Stock Ex-
change, the prices of industrial stocks
and analysis Of the banking and trade
situation, domestic and foreign.
Professor Warren NJ. Persons,
editor Of the Statistical Serv-
ice published by the commit
tee, says that the statistics COL
iected by the committee indicates
that the farmers will continue to
prosper in 1920 and that the prospect
" of this industry viii contribute 10
that Of ali others during the coming
year.
The beginning OF the new year, he
declares, finds American manufac-
turing Industries in sound and
prosperous condition.
The tightness of the money mar
ket and the announced policy. al
ready inaugurated, OF the Federal
Reserve Board Of increasing discoun.
rates have caused many observers to
have grave misgivings for the fnan-
cial outlook for 1890" he says. In
stead Of causing alarm. the action Of
the Federal Reserve Board should IN
fact be regarded Is favorable
omen. High interest rates are the
main reliance for protecting bank re-
serves and they spell not disaster but
safety, provided they are applied in
of WV 20
safe and effective way of dealing with
such q situation as We now face. and
il is to be hoped that norhing-not
even the needs Of the United States
1reasury-win divert the Reserve
Board from pursuing the only sane
and conservative course.
The outlook for 1920 is for a con-
Iinuance Of large demand for credit
that will not be supplied except al
increasing rates. High rates for bank
loans Will eventually tend TO check
the upward movement Of commodity
prices as they have already checked
the upward 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:
abnormal il certainly is in many re-
spects. Prices are very high; there
has been great expansion Of bank
credit: extravagant expenditure.
both public and private, is found on
every hand; and our abnormally
large export trade is likely to suffer
curtailrnent. A year ago
many observers expected violent
drop in prices and q crisis in 1919.
To-Day there seems TO be less reason
for expecting such developments in
1920"
The Harvard Committee on Eco
nornic Research is planning to pub
lish this year monographs enbocy-
ing special studies Of The principal
economic conditions and forces that
will affect prices and trade through
out the world during the next five
wears. The committee also will study
and classify the annual statistics OF
industrial commerce and finance and
viii construct trade indices based
upon them. The committee is COM
posed Of University professors and
men of affairs with Charles J. Bull
lock. professor of economics at Har-
ward. as its chairman.