The New York herald., 1921-08-31
RESERVE BANK SEES
STERILIZATION NEAR
Drop in Prices Far in Excess of
Decline i'm Volume Of Credit
Loans Are Fewer.

Although there Is no evidence yet of
stances point to fairly advanced stage
in the process OF price readjustment from
the high levels of 1920. according to the
monthly review OF business conditions by
In prices. however. remains far in excess
OF the decline in the volume Of credit.
In so far as loans are made against
goods, ordinarily in amounts propor-
tionate to their selling value. the review
goes on. It might be expected that the
aggregate of loans would rise and fall
rroportionately with the rise and fall of
the general price level. But Just as
prices rose faster and higher than bank
loans, so they have fallen faster and
farther. The maximum demand for
credit was when the fall in prices was
most acute.
I'm succeeding months the review
continues, "the need for credit with
which to protect commerce and industry
has become less in many directions, and
the lower prices of commodities have
takings through the processes. of manu-
facture and sale. But In agriculture,
where price declines have been very Sc
we're. and where the readjustment is
necessarily slower because the farmers
period of turnover Is regulated by the
seasons and other conditions beyond his
control, the demand for credit continues
to a considerable degree.
I'm consequence, the demand for loans
has decreased most in those Federal Re-
serve districts which are largely indus
trial. and the demand for loans remains
heaviest in those districts which are
largely agricultural. The four Reserve
banks now borrowing from other Re-
servo banks are In districts where agri-
culture predominates.
Taken the country over, however, the
loans of the Reserve banks declined
more rapidly in July than in any pre-
vious month since the maximum of loans
was reached.
Available figures indicate that pro-
duction of basic commodities In the
United States during July was slightly
less than during June. The production
of pig iron in tons was the smallest for
one month since December 1903, and in
terms OF per cent. of normal was the
smallest recorded rate of output In the
history Of the industry. The lowest rate
previous to this summer was about so
per cent. of normal reached In 1908.
aside from the metals the lowest
production figure Is that for bituminous
coal, which reflects limited operations In
the steel industry and in other manufac-
turing Anthracite coal mined Is about
on par with last month, and wheat
flour nilled, cement production and
sugar MEETINGS show an increase. While
q slightly decreased rate OF operations
Is reported by the textile industries there
continues to be an excellent demand for
textiles.
Tonnage owned by the United States
rose from 4.3 per cent of the total to
22.7 per cent. Germany Is the only
country to show a loss. In the case of
the United Kingdom new construction
and ALLEGATIONS OF enemy tonnage have
now entirely offset heavy war losses,
and 1921 figures show gain of All, 900
tons. The total amount of tonnage is
now about what it would have been If
the pre-war rate Of Increase had been
maintained continuously during the war
period. The striking change is In the
ownership.
I'm March of this year the total
monthly tonnage of vessels entered and
cleared at ports of ten principal coun-
tries was 10 per cent. less than average
monthly figures for 1913. 1t might be
stated roughly that world seagoing ship
ping Is one-fourth larger than before the
war but that the movement OF cargoes
is one-flfth smaller"