The Winslow mail., 1920-05-28
A TIME FOR SANITY.

that a downward or prices has Degun
and will probably continue.
This readustment is difficult. Some
people are going to be more or less
hurt in the process If this hurt
should become sufficiently severe
business failures would result and a
panic or near panic would follow in
it wake.
The most severe sufferers from a
financial panic are the wage-earners
and the poor, Rich men may lose
surplus wealth. but few will actually
go hungry or unclothed. These things
could easily happen to the family OF
the average wage-earner if bad busi-
ness conditions resulted in prolonged
idleness,
Therefore, it is prudent to under
stand two things: The first is the de-
cline must not be made too abruptly;
a protracted period of gradual de-
cline which gives manufacturers and
merchants a chance to unload goods
manufactured or purchased at high
price without too radical loss is
imperative.
: The second fact to remember is
that a panic now would be entirely
a manufactured product. An unwise
banking policy by the Federal Re-
serve Board. superinducing fear in
the minds of the people, is the only
thing which could radically upset
conditions. A panic would be psy-
Geological and not due to the ordi-
nary economic conditions which pro-
duce panics.
Panics comes naturally only in
periods when production Is far in ex-
cess of consumption. If more wheat
corn. hogs, beef and clothes have
been produced than the public can
consume, prices break disastrously
and panic results, No such conditions
prevail today. We are in the period
of under-production and Over-con-
sumption which precludes panic
based on economic conditions,
Prices have been kept high by
some manufacturers and jobbers by
the undue holding of stocks for still
higher prices. To hold these stocks
1t has ben necessary to ask the banks
for extensive lines of credit. In or
der to compel the sales Of these
stocks to the public needing them the
Federal Reserve Board has been
pressing the banks to reduce these
loans. thereby compelling liquidations
of stocks,
In some reserve districts where the
banks have not complied with the re-
quest the Federal Reserve Board has
refused to allow the banks any re-
discounts, thereby limiting the capa-
city of the banks to make loans and
consequently compelling them to call
these profiteering loans.
This is not due to the inability OF
the Federal Reserve system to meet
II
design to force these goods on the
market,
AS result of such policy many
banks find themselves in financial
stringency. deliberately brought on
them by the Federal Reserve Board.
II that Board acts wisely it can
bring definite results without harm,
Business men and the public have
no occasion for alarm. There is
nothing facing us that our govern
ment administration is not deliberate
ly forcing, No doubt the pressure
would be instantly relieved by the
board If disaster were impending,
This could be done in moment by
accepting re-discounts.
The public will. generally, under
stand all this only in hazy way. But
people may know that the board is
doing it deliberately in order to lower
prices.
New Mexico is unaffected as yet by
this stringency. However, We should
avoid asking our bankers for long
time loans for speculative purposes,
They must keep their assets in liquid
shape. They are good bankers and de-
serve our confidence only when they
do SO.
Poise, confidence and reasonable
economy are all that Is needed for
everything to run on as usual in New
Mexico during this period of declin-
ing prices which seem just ahead,
Merchants must rely upon the
quick turnover of a large amounts
of goods at small percentages of pro-,
fits until We reach a new and sound
er basis.-Albuquerque Journal.