The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1920-08-26
EVERYBODY FEELING
WAY in BUSINESS,
IS DISTRICT REPORT


CHICAGO, Aug 26.-"Caution rules
in business In the seventh district"
says the report OF the seventh federal
reserve district board. THE producer
Is cautious for the very good reason
that mistakes cannot be made in high
priced labor and raw materials with.
out loss both OF prestige and profits.
Middlemen are cautious because the
retailers compel them to be SO. And
retailers are taking frequent sound
ings because they have "sensed' shoals
in the popular purchasing power.
The buying public--at least in
everything from pay to pay days
checking the extravagances which
have made bonanzas hitherto for the
long line of industries and trades en-
gagged in supplying popular desires and
needs, regardless Of prices.
Therefore, shrewd men Of business
in all positions are slowing up q little,
taking their bearings and trying to
find out when,' where and how far the
heralded drop in prices is going to go.
Net result: Caution, waiting attitude
and q certain grim resignation to the
inevitable.
= 1.-THE key to the whole situation is a
dearth OF liquid capital and restric-
ton Of bank credit. With the bust
ness world In a most adventuresome
and daring frame of mind-everyone
determined to get his share Of the
profits, scented in the ruling high
prices-it was necessary for the banks
to take stern action to avert the other
wise certain repetition of what has
happened in China and Japan. The
only way open to accomplish nquida-
ton painlessly and safely was that
chosen by the banks-namely, to COM
pei progressive liuuidations of boarded
or "cornered' products, as condition
precedent to the granting of further
loans.< That is.to say. the banks have
put down the heel of their imperative
No upon speculation and prof1teering
everywhere.
Shifting Of Responsibility.
"As result there is much shifting
of burdens and responsibility. The
jobber. finding 1t impossible to obtain
as much money or credit as he de-
sires to carry out his plan for holding
this or that commodity, is refraining
from his usual purchases and compel
ling first hands to carry the product.
But 1t is no easier for the manufac-
turer to borrow unlimited funds at the
banks than for the jobber.
Thus 1t happens-by one of the
curious economic paradoxes of the day
- that the manufacturer of many
things is spared from the danger of
disastrous losses later on by the pres
ent inefficency and low productivity
of the average worker. The goods
that are piling up in warehouses, be-
ing carried on some ones borrowings
at banks, must be marketed some time.
What they bring depends wholly on
supply and demand factors. That
there will be losses on much merchan-
disc Is conceded by conservative
judges; but the losses will be much
less severe and serious than would be
the case if the banks had been more
prodigal in financing excessive inven-
tories and extravagant manufacturing
law of economic procedure was pru-
dence and not speculation.
That there must be wholesale IL,
quotation of the stocks resting in first
hands is generally admitted; and the
business world is resigned to the nee
essity. believing that there can be
otherwise no speedy readjustment of
wage and price factors whereby nor
NAL economic conditions may be re-
stored to the country
In consequence of this and other
influences. general business appears
to be marking time pending a definite
turn in affairs one way or the other,
while uncertainty dominates the bust
ness mind, with some outcropping of
pessimism here and there. Failure of
the wheat crop to come up to expecta
tons is having its influence, but the
dominant factor is the credit situation.
Marketing Of Crops.
Crops, speaking generally. promise
we'll, with indications for a larger
production than a year ago in all eX-
cepting wheat. The greatest obstacle
to the farmer at the present time is
10 market his grain or live stock be-
cause of inadequate transportation IA
ciities. The question of holding crops
for higher prices no longer enters in.
10 the problem, for the farmer could
not sell if he wanted to under the
present conditions, because of inabil-
ity TO make deliveries owing to a lack
of cars.
UNLESS there is a strong revival
in buying of canned goods at present
prices (Which include only moderate
profit over cost, the Gamers will be
obliged to dump their stocks on
weak market. In such event. the rela.
lively small stocks in first hands may
turn out to be a lifesaver, as labor.
materials and tinplate rule high, while
transportation difficulties and the
scarcity of sugar further complicate
the trouble of the canning industry.