Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1920-02-02
PROF ESS0RS SEE
CUT IN PRICES
Of NECESSITIES
Reduction Will Be Graded
Say Men Appointed BY
Harvard University to In
Vestigate H. C. of L.


tnY MORNING JouRNAL SPECIAL LEASED ~IRUI z
Cambridge Mass, Feb 1.-The.
Harvard committee on economic.
research. appointed by Harvard
university to make special studies
of economic conditions, 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
December figures. it would he pre-
mature to conclude that a violent
recession in commodity prices IS
probable.
The committee was appointed by
Harvard university in 1917 to as
sst in the solution of the funda-
mental economic problems which
underlie modern commerce and
finance. 1t provides statistical in
formation to federal reserve banks,
for banking houses and large cor
porations and includes among its
publications. a review of economic
statistics which contain price
forecaster.
Basis for Opinion.
The committee bases its present
forecast upon statistical material
representing the decline in the
New York bank clearings, the vol
ume of sales on the New York
stock exchange, the prices of in
dustrial stocks, and analysis of the
banking and trade situation. do
nestle 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 farm
ers will continue to prosper in 1920
and that the prosperity of this in
dustry will contribute to that of all
others during the coming year.
The beginning of the new year,
he declares, finds American manu-
featuring industries in a sound and
prosperous condition.
The tightness of the money
market and the announced policy,
already inaugurated, of the federal
reserve board of increasing dis
count rates have caused many OBJ
servers to have grave misgivings
for the financial outlook for 1920"
he says. Instead of causing
alarm, the action of the federal re-
serve board should in fact be re-
garded as a favorable omen. High
interest rates are the main reliance
for protecting bank reserves and
they spell not disas ter but safety,
provided they are applied in time.
Control of interest rates is the safe
and effective way of dealing with
such situation as we now face
and it is to be hoped that nothing
NOT even the needs of the United
States treasury-will divert the re-
serve board from pursuing the only
sane and conservative course.
Higher Interest Rates.
"The outlook for 1920 is for a
continuance of a large demand for
credit that will not be supplied
cept at increasing rates. High
rates for bank loans will eventual
ly tend to check the upward move
ment 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 sit
uation now is abnormal the COM
mittee says: Abnormal it GER
tainly is in many respects. Prices
are very high; there has been great
expansion of bank credit: eXterava-
CANT expenditure, both public and
private, is found on every hand;
and our abnormally large export
trade is likely to suffer curtail-
ment, A year ago many
observers expected violent drop
in prices and a crisis in 1919 To-
day there seems to be less reason
for expecting such developments
in 1920" @.NN
The Harvard committee on eco
nomic research is planning to pub
lish this year monographs en-
hodying special studies of the prin
cipal economic conditions and
forces that will affect prices and
trade throughout the world during
the next five years. The commit
tee also will study and classify the
annual statistics of Industrial COM
merce and finance and will con-
struct trade induces 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.