New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-09-01
Believes Fear of
Long Depression
May Be Mistake
National City Bank in Re-
view of Conditions Points
Out Necessity of Much
Cons truct ION Work

The National City Bank, in its Sep
tcmber letter on economic conditions.
says that it may be just ~ great
mistake now as in the early snentAs Of
1919 " TO think that a period O. general
and prolonged depression is at hand"
ln UNFOLDING this position. the bank
points out, There is still a great
amount of work in arrears and an i'm
perative need for construction work
and the production of goods to satisfy
the wants of our people as we'll as Of
the rest of the world. AS in the case
Of house building, this work may be
checked by the rising costs, but that
only means that costs must come down,
with the assurance that as they decline
activity will revive
1.-THE general business situation" &C
cording to the survey, "in our opinion,
has been developing in satisfactory
manner during the last month al
though this does not mean that
present conditions are all that could
be desired. 1t means that the gen.
eral trend is toward normal and per-
manent conditions, and that existing
disorders are no greater than might
be expected in accomplishing the ad-
Justments which are necessary. The
crops are fine. which is good founda-
ton for domestic business and for in
ternational relations. The railroad sit
uaton has improved decidedly during
the last month and, although far from
satisfactory, gives promise of gradual
betterment. There u.s. n better feeling
in banking circles as to the credit sit
uation, although money will remain
tight. The recession Of industrial &C.
tivity which is under way is not &C.
ha o. q fyop h,1f IN,
cidental to finding a lower level of
prices.
"A considerable degree of liquidation
has taken place in merchandise stocks
in the last three months, and the fact
that loans are practically unaffected
indicates not only that the volume of
BUSH mess in the aggregate is still heavy,
but that the banks are carrying an I'M
usual amount Of loans which represent
greater facilities in all lines Of bust
ness has resulted in the use Of earn
ings and credit to finance expansion,
and it will take some time to free the
| banks Of these commitments.
1.-THE feeling in banking circles is
more settled and confident because of
belief that the spiral movement of
wages and prices has been checked, and
that this being true the situation is
in the way Of working itself out. When
the people Of this country really set
themselves to the task of paying their
debts they. are certain to accomplish
something. and nothing will help them
to that resolution like falling prices.
Nevertheless, it is probable that the
present deadlock over prices will be adj
justed early enough to permit large
volume of business to be done, and un-
less the new price level is lower than
! now seems likely this trade will neces-
sarily require some expansion of bank
credit. The bankers expect to supply
the credit that is necessary to enable
business to be done, but If loans 20
up sound banking policy will require
/ that interest rates go up"
In defending high money rates, the
bank says: "In the general need for
greater production it should not be
overlooked that the fundamental need
is for more capital, and that this sup
plies an economic justification for both
higher profits and higher interest rates
These are the chief means by which
capital is obtained for increasing all
production. There is as great a need
at this time for more banking capital
as for more Of anything else, and no
reason for limiting banking profits in
favor of other profits or in favor of
credit expansion"