The Alaska daily empire., 1920-06-18
CONFIDENT THE UNITED STATES IS
 PANIC PROOF

Confidence that the currency and banking system of the United States dhas made the country panic proof under wise financial leadership is expressed by the National Bank of Commerce in New York in an article bearing the title "The Normal Busi- Cycle,' in the June number of its magazine, Commerce Monthly. The Federal reserve system, the bank says has been devised to make pancs impossi- ble the future, and there is abundant to expect that shall not again in this country such demoralization and chaos in the money market the years 1893 or 1907 witnessed
 No currency and banking system can avoid the recurrence crises in the of liquidation per ods. periods of readjustment, but have strong grounds for confidence that, under wise financial leadership our currency and banking system has made panic-proof," the bank states.
 Periods of reaction and liquidation, unless to violent and prolonged wholesome rather than harmful the bank It explains that such crises merely phases of the general rythmic movement in business. It dfferentiaes however between crises and pancs. defining crisis "an affair of indus try generally and panic 'an affair of the money market" It declares that sound bank policy and does prevent crises from degenerating into panics
 AS our understanding of crises has increased,' the bank states, we have substitute for the notion of crises the notion of business cycle and to recognize that the crisis is merely phase of the general rythmic movement in business-crss fol- lowed by depression. depression by prosperity perity by crisis again, and There is good for believing, too that with better under standing of the business cycle gaining better control of it, that the period of prosperity be heightened, that the crisis be made less and that the period of depression be shortened If we can minimize the extravaganza and mistakes of the prosperity period make the reaction from it less This relates the normal crisis.
 Great disasters, such a world war, will bring Arrangement under any system imaginable Natural disasters s-earthquakes fires, tidal waves crop fail ures and the lke-striking at great and rich ters of population, may bring unexpected business and financial shocks. But the normal crisis which brings every prosperity period to close uti- mately be reduced a relatively painless process of readjustment.
 "Crises when active business find that their creditors, whether banks investors or other business begin insist upon a contrac- tion of credit and liquidation of debts. A crisis the end of boom period the inauguration of a period of slow business and depression accom- panied by settling of debts and a readjustment of prices"
 Periods of reaction and liquidation" according to Commerce Monthly, relieve maladjustment and strain They prevent unsound policies from being carried too far. They give time for the maturing of plans and for the careful introduction of new processes They check wastes and restore efficiency They allay financial levers. They need mitigation and control-but progressively learinng to mitigate and to control them"
 When the banking and currency system is sound