The Washington herald., 1921-08-31
RESERVE BANK
SHOWS BUSINESS
STILLLQUIDATING
Philadelphia Branch's
Review Is Rather
Pessimistic.
PRICES STATIONARY
Interest Rates Lower, But In
dustry Not Yet Re-
spending.

PHILADELPHIA. Aug. 3O.-A re-
sumo Of the important events of the
month in the business and financial
world points to the &C Inclusion, says
the Philadelphia Reserve Bank, in
its regular monthly review of bust
ness conditions, that business in
general is still going through the
process of liquidation. Loans and
deposits of banks have decreased
and their reserves have increased.
The latest Wholesale commodity
price induces have either remained
stationary or shown a tendency to
rise; but the latest weekly food
price index (Bradstreet's) points to
a renewed tendency downdard.
Bank ClearIngs Decrease.
The volume of business as meas
ured by payments through banks
debts to individual Accountants
undergone further contraction
Business profits were again re-
6uced. Stocks suffered renewed
pressure. Interest rates have aver
dBCu q llINAC anu bOIN
moved somewhat higher. The Presi-
dent has presented a definite plar
for aiding the railroads, whose
earnings continued to show encour-
aging gains over these of a year
ago.s Foreign trade has further de-
clined.
That this should be so is not to be
wondered at. The process of liqui-
dalton is the reverse, broadly speak
ing. of the process of initiation
What happened during the war and
postwar period is now an old story
The difference between events then
and now is that at present they arr
moving in reverse order. The vol
ume. of business has declined from
the unprecedented peak II had
reached. prices have been following
suit. and likewise profits.
Liquidation Not Complete.
The process of liquidation ma.
been going on for some time, but
there are still important industrie:
and areas of the country in which
IL il not yet complete. The condi-
ton of e Federal Reserve banks
depends Upon the condition of their
member banks; the condition OF
their member banks depends upor
the status of the communities they
serve. Hence, the figures accurate
ly rejecting the condition of the
Federal Reserve banks. also reflect
Indirectly, but accurately, the con
dition of their respective districts
Attention is directed. therefore. &c
the Federal Reserve Bank ratio oil
reserves to liabilities.
10on whom III
lowest reserve ratio for the en-
tire system was recorded. the ratio
II the Federal Reserve Bank o.
Boston calculated as at present
ha< risen from AZ per cent to 76.t
that of the New York bank ha,
gone from $40 to 72.2. recovery %
RS points: the Philadelphia ratio
mas advanced 24.O points; thu
Cleveland ratio. 2J.5 points: thu
Chicago ratio. 2o.6 points: tn" st
Louis ratio. ISL points; the Kansas
city ratio. 1S3 points; and the Sar
francisco ratio. Els.
Variations In Reserve Ratios.
- These figures show that in tn,
sreas indicated the liquidation ha,
ocen considerable. But In uthcl
districts. business readjusment. as
measured by these ratios, has no
progressed as far. The ratio of tn,
Richmond district has risen 3:
points, and that of the Dallas dis
trict. .OS of a point. while those OIL
me Atlanta and Minneapolis dis.
sricts have declined respectively o.
points and ~ points They seen
20 bear out the common observation
hat liquidation is proceeding very
1nevenly in the different section.
Of the country. The first to fee
Is efforts were the industrial dis.
tricts. and these are showing the
greatest progress toward it's com.
pletiOn and toward recovery
The farming districts, as these
ratios show. are laboring under q
severe handicap. the existence OF
which nearly everybody recognizes
and which apparently could moi
nave been avoided. The situation
one that cannot be forced OF
handled impatiently. There is
abundant credit to take care of it
cut past experience has always
shown that time is necessary ele-
nent as we'll as money.
Review OF Events.
Certain events OF the past month
deserve special attention because OF
he influence they may exercise one
way or the other upon the adjust
nert OF important business factors
hat are closely inter-related, name
Y. costs. profits, prices Of various
materials and the buying power OF
great groups Of consumers On The
proposal to aid the railroads will,
carried out, restore to some eX-
ent the purchasing power of "a very
important group of consumers. and
his should result eventually in
over costs and improve service. (2D
me further reduction of wages in
he iron and steel industry is a
most important step toward the
railing down Of costs Of production
ID Borrowers were benefited by
over interest rates on securities
md commercial paper The Federal
Reserve Bank Of CIeveand reduced
Is discount rate from per cent to
az percent. the effect of which
ihould be considerable in such an
important industrial district. 90
Judging by reports as to colIec-
ions. however. commercial credits
made no more than a nominal re-
overy during the month. This
redit situation is so enmeshed with
he general business situation that
cannot show material improve
nent while business remains as dull
- II has been. Dun's and Brad
reefs failure figures show that the
'ast month has been a period Of