The Bemidji daily pioneer. [volume] (Bemidji, Minn.) 1904-1971, 1920-12-27
MONEY CONDITIONS IN
1921 MAY Be BETTER
Bank President Predicts Less
Degree of Credit Strain
on Banks Then

Better money conditions in 1921
should result from the progressive i'm
provements now operative in certain
adverse factors of the country's bank
credit situation, according to a state
ment made today by James S. Alexan-
Ter, president of the National Bank
Of Commerce in New York. He ex-
presses the opinion that banking may
expect to serve the needs of legiti-
mate business with a lesser degree of
credit strain than during the past
year. The chief cause Of betterment,
he says, was reduction in the vol
ume of war paper and frozen and
speculative commercial credits IN
banl, resources impairing their liquidi-
! ty.
Cuisines men are justified in
feeling confident that the money sit
uation in the United States will be a
very different mater from what it has
fbeen during 1920" Mr.. 'Alexander's
statement says. "Certain specific
factors are clearly recognizable as
the chief adverse forces affecting
bank credit during the past year, and
there is every reason for believing
they will not be so powerfully oper-
alive in the year to come"
TO illustrate Improvement of unfa-
vorablc factors in the situation, Mr.
Alexander cites figures of 800 bank.
, ing institutions, reporting weekly to
the Federal Reserve Board, with re-
sources estimated at about 40 per
cent Of the resources Of all banks.
From January to id-October, he
points out, these banks showed de-
crease Of $5OO,O00,O00 in the amount
If United States securities owned by
them and of $380,0O0,000 in loans
secured by government securities,
which for all banks would indicate a
reduction in war paper holdings of
about two billion dollars. There also
was a drop of $200,OO0,OO0 in loans
secured by stocks and bonds, this
ITEM representing in considerable
part speculative operations. At the
same time loans chiefly for manulac-
turing, commercial and agricultural
purposes showed an increase of ST.
51O,OOO,0OO.
"These figures indicate that, while
there has been marked contraction in
she non-liquid and speculative ele-
a continued expansion in the accom-
mediation extended to meet business
needs" the statement says. "This
explains why, although to midOcto-
Der contraction was not operative in
the total volume Of credit, better con-
ltlons were in sight in the banking
situation. 1t was because there had
oeen this marked improvement in the
quality of credit.
"A contraction in commercial
credits set in during October. Tn this
month the reduction of the non-liquid
elements also maintained rapid
pace. Thus two elements of better
ment were operative, improved liqui-
dity and contraction Of the total.
IF the foregoing facts and deduc-
lions are of value, it is not because
of the light they throw on past events,
but because of the promise they hold
| for the. future. They carry the con-
viction that credit conditions should
be more satisfactory during 1927
| han they have been during 1920.
.hese figures justify business men in
expecting our credit resources to
function more efficiently in the future
an they have in the immediate past
to facilitate their business operations,
because the four great causes of i'm
paired credit in 1920 should not exert
he same influence in the year that
lies ahead.
1--WE may assume that war paper,
in passing from the hands of the
banl';, will rest permanently in the
hands Of the ultimate investor, where
it belongs, and that it will~not again
seriously impair the liquidity Of COM
inerclal bank resources. We may
also hope that we shall not, in 1921,
see national transportation break
down which added large portion to
the impairment of credit. Again we
may expect that there will not be the
same violent price changes and that,
| therefore, commercial credit will not
be employed for purposes of COM
modify speculation to the same ex-
tent. Finally, we may expect that
prices and the production Of goods
will be co-ordinated more closely to
normal public demands and the emer-
gency should not arise to carry such
large unliquidated stocks over a. Pc
Rod of stagnation.
''With these factors absent or re-
duced in degree it should be possible
for business men to find ample means