Evening star., 1921-01-18
FUTURE IS BRIGHT,
FEDERAL RESERVE
BOARD HEAD SAYS
Gov. Harding Tells New York
Bankers Panic Posi-
biIities Are Gone.
PESSIMISM HAS GIVEN
AWAY TO OPTIMISM
Declares Europe Cannot Work Back
to Normal Without America
Trade.
BY DAVID LAWRENCE.

xIduC.
By DAVID LAWRENCE.
w. P G. Harding, governor of the
Federal Reserve Board. doesn't talk
about business conditions very often.
But when he does he tells some sig
nificant things about the entire man.
cial and business situation. That's
why the address which he prepared
for the New York state bankers meet
ing. complete copies of which were
made available today, is worthy of
study.
Il have always been impressed says
Mr.. Harding, "by the philosophy OF an
old saying which, I believe, is one o.
the many bits of wisdom attributed 70
Confucius, Things are never as gooo
philosophy is too often overlooked IN
boom times, it should always be taken
to heart in the periods OF reactloh
which follow. I am sure that we nave
all heard more pessimistc talk curing
the last six months than we usually
hear in ten years, and, if l may be per-
mitted to use an overWorked term,
the psychological effect OF pubic
sentiment has much to do with mold
ing actual conditions.
Changes Inevitable.
"It Is evident now that the read
justments which have taken place
we're inevitable and unavoidable. and
in view of worldwide conditions
could not have been long deferred in
this country, no matter what ex-
pedients might have been resorted
to. Great wars have invariably
caused great expansion. and the recent
war was no exception. Periods OF
great expansion have always been
followed by periods of reaction. and
the reaction is usually most severe
where expansion has been greatest.
The readjustments which have taken
place in this country since last spring
been wiped out and in many cases
those who have produced goods and
commodities at high cost hnd them-
selves unable to obtain cost Of produc-
ton for them. and are thus faced with
loss Of accumulated a;,inns ba0n Pson'S hesn wide
spread. They have affected every
section of the country, and it is not
unnatural that during recent months
the spirit Of pessimism should have
run amuck Just as in months preced-
ing the spirit of optimism exceeded
ali reasonable bounds.
ssBut present conditions Justify
some conclusions which ought to en-
courage and hearten US all.
Ranking Conditions strong.
"Our banking position is sound and
stronger than it has been for many
months, and the business community
which has been first overexhilarated.
and then unfluly depressed, has re-
covered its normal state Of mind.
"Public sentiment today undoubted-
ly approves Of working back to nor
NAL.
may have been. has passed.
..The gloomy forebodings which
many felt year ago because Of the
knowledge that readjustments were
pending have given way, in the as
surance that the most trying and
period is safely over. to feeling of
conservative optimism. renewed cour-
age and restored confidence.
1--WE should keep clearly in mind the
thought that our problems in working
lens merely. but they are problems
connected with the working back to
normal of a war-torn world. Europe
cannot work back to normal without
the help of America, and America can
not become normal unless and until
ure is restored, and until the restora-
ton has proceeded far enough to JUS
tify the conclusion that 1t will be
eventually completed.
Must Sell Abroad.
There are produced in this coun-
try every year goods and commodities
in volume in excess of domestic re-
ouirements, and in many cases guam
tity production is essential to eco
nomical production. In order to dis
pose Of our surplus products we must
sell them to foreign countries. and In
the present posture of world affairs
it is out of the question for foreign
countries to pay for goods purchased
here in the usual manner. We must
buy their goods If we expect them
to nay for ours, and pending restora-
ton Of the normal productive ac-
tivities of the world and Of Europe
particularly, where those activities
have been most curtailed, it is neces-
sary that we should devise some new
means of financing foreign trade
Mr. Harding seems to believe that
the export corporations authorized by
the Edge law will be very useful,
dicate much faith in the revival of
the War Finance Corporation over
which Congress and the chief exec
utiye clashed recently.
What seems to be feared Is that a
tariff may operate as an embargo and
trade relationships lost while coun-
tries which have been in the hab-
II Of selling to Europe, but which
now, on account of Europe's inability
to nav and their own inability to ex-
tend credit" will be shipping raw ma
terials to the United States in order to
sell for cash. Indeed, the accumuIa-
tion of goods in the United States
through the anxiety of countries 9TH
ar than European to sell their goods
for cash is as much a factor in the
present tariff controversy as the age
Gid cry Of cheaper European labor.