The Washington herald., 1920-05-03
E .cessiOe Money Rates May
Eventually Spell Trouble

money excessively high the following
Because the doubling and quaduplng prices
doubling and quadrupng of conduct the
volume of business
Because credit being extensively speculative opera
Because of extravaganza public and private life
and the lack of thrift economy by people.
The last of these reasons is NOT the Ieas. in inno.ro, or
government will spend billion dollars year.
is a,tested by the unnr.e.d.nt.d uun f Su-u,; veg &c
jewey cigars, Photographs silk stockings automobiles etc.
According Byron Newton collector port York
than twods of the of the world diamonds
rubes, the pearls and such, now in America
Commenting this fact Mr. Richard Splane says
merce and Finance of April "a:
There is no particular occasion for celebrating
ing because America has drawn the jewels
in such volume. Some might think sign
4 Barbarc splendor pecedes decay"
That immense in speculation is beyond
question In England wildcat schemes
moving pictures partly The
present panic Japan credited initiation
In this country there has been speculation
estate and commodities especially sugar
industrial stocks has also been authority estimates
that 10000 oil companies have been United
States The total capitalization of those since the aris
iee was signed is close to four billion dollars.
These sufficient are high Exn.r+s
expect them high until financial COLLAPSE
followed by business depression This they say may occur
weeks months for They say
there are many signs that crash is not far off, There
(notaby mderproducon) serious financial trouble
may We however, living in new world and
we should not be guided too much by precedent
High Money Rate. Spell Trouble
There to be general underestimate of the seriousness
the present unprecedented high money rates. Even
some financial writers bee the meaning present rates
They that because the everything else have
doubled that should keep Apparently
they that because prices doubled twice as much
lis required same volume of business and tb.
FORE the interest bill will be doubled money rates remain
unchanged interest bill will be
four times what it before prices 4,
Thus, merchant has borrow he
mery borrowed but 100000 the quantity soods
his interest BILL will be instead of Sxooo
as formerly But he must per interest bill will
be $4,000, instead of $1,000 as formerly.
1t clear, then that
hardship to industry per cent rate
heavy drag business 1907 stopped the wheels
Ia similar effect at the present time. - ~ ~
This effect be demonstrated than most peone
think rr
This time of however, demand for credit is
usually slack and be that the
tight enough to kill until next fall should though that
the deHaionay efforts of the governors Federal Reserve
Board. This fact is very significant.
Perhaps the only why
las much killing and producing has
be in the past hundred average
profits greater than they periods
high several They will until the war
has been made far credit permit
Credit conditions continental Europe imports
must in future be paid for by With imports
and increasing exports the profits goods
side of Europe are likely to decrease rapidly.
Consequently look for sudden falling off
mand for goods for decline profits most
mann ring iudusfric