The Breckenridge news. (Cloverport, Ky.) 1876-1955, 1920-05-12
y . y y y
= DEFLATION BEGINS
NEXT is LOWER PRICES.
From Sun and N. Y. Herald.


In the abnormal economic situa-
ton of back breaking taxes, egregious
initiation and predosterous costs the
meaning of Comptroller Wiliams's
report that the country's bank depos-
its have recently fallen by a billion of
dollars is clear and significant. Bank
deposits in the main move up and
down with industrial and mercantile
loans. Prodigious bank deposits, in
other words, represent prodigious
borrowings by the industries and bust
nessess going to the banks to get the
money to do their work.
A fall in such loans, whether OPP
tonal with the borrowers because
they don't need them any more or
compelled by the banks because they
must restrict credits, indicates
slackening of activity in business and
industry which previously required
those funds.
AT this particular moment reduc
ton of deposits due to a reduction Of
credits is specially significant for this
reason: Higher wages and higher pro-
duction costs generally have been
calling for more and more money to
meet payrolls and other bills even
though no more materials were being
produced, no more goods were being
handled and no more business other
wise done. With labor and other pro-
duction costs still up, therefore, the
drop in loans and deposits is nothing
less than startling 1t shows the vol
ume is down more than the value,
expressed in dollar marks, reveals
But it is not necessarily a danger sig
nal On the contrary, it may be a
safety signal Costs of getting the
nations food out of the soil, costs
of getting houses built to shelter the
public costs of doing business or OF
doing anything have been mounting
at so terrific pace that the real dan-'I
ger has been in the possibility of that
flight continuing upward.
But that very rush of costs into
the clouds has been putting an auto
matte brake on the bank loans and
deposits which Comptroller Williams
now calls to the attention of the pub
lie. Excessive prices paid for labor,
excessive prices paid for raw material
and excessive prices charged to the
consumer have not merely checked |
the public's buying for lack of buying
but have been tending to make it not |
worth while to do more business than
power to keep up in the mad race
was being done, not worth while to |
maintain even the existing volume of
business. 1t could not be made to |
pay. All the wheels of industry and |
business, in truth, have been tending
to become deadlocked.
With the shelves of merchants bare |
everywhere in the country, with the
warehouses of producers yawning !
their emptiness of supplies, with coal
and iron mines, oil wells and lumber
camps, steel plants and textile mills |
behind in their output. lower loans
and deposits spell no disaster if, by |
very reason of the lower costs that |
they foreshadow, production again be-
comes able to pick up speed.
The lower loans and deposits do |
herald an inevitable economic read |
justment of labor and other produc-
tive costs. Lower prices are coming |
They can come through gradual de-
flation without shock to the country |
or real hardship to individuals.
In money market staggering un-
ton paves the way for a return to
der mountain weight of loans deha-
earn wage on reasonable basis and !
give a return for it, to do business |
on a reasonable basis and make it
pay, to eat, drink and live on a rea-
sonable basis and make both ends
meet
The worst thing that could happen
to the country would be to go on
lacking up costs and prices until all
industry and all business should be-
come frozen stiff And the best thing
that can happen to the country will
be for the gradual resumption of nor
NAL costs and normal prices to make
It possible for industries to do bust
ness on a paying basis and for indi-
viduals to meet their costs of living
On the basis of dollar that is worth
100 cents when you get it or when
you spend it.