Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1921-12-07

turn to prosperity as quickly as pos
sible, largely through discriminating
| foreign investments and long term
credits on ali adequate scale.
[ How prolonged will be the per-
iod required for the complete re-
sumption Of the country's business
activity on a normal scale must de-
pend in considerable degree upon
the progress of industrial and finaE
cial recuperaton in other countries
which consume American products
"The Improvement in the financial
situation in this country since the
beginning of the reaction against IN,
flation has been pronounced and wen |
sustained. Since November 3. 1870,
when total discounts of the Federal
| Reserve System were at their max
imum, and since December %. when
Federal Reserve note circulation was
highest almost continuous progress
has taken place in the technical po-
siton of the banks: The extensive
liquidation reflected by the Reserve
System has been closely followed by
distinctly easier money conditions
and stronger investment market.
Regardless o. whether or not the
security markets accurately fore
cast the future of general business,
the recent remarkable improvement
in the money and investment mar
kets assuredly must have a benefic-
al effect on the fundamental eie-
ments in the situation. A long time
decline in money rates almost without
exception has been sequel OF great
wars; and the price of money, real
factor in the cost of commodities, us
ually follows the downward trend OF
price levels. The present situation
is no exception.
."The chief cause Of the rise in the
bond market is, of course, the de-
cline in money rates. A special mar
ket factor at the present time IS, the
small supply of new issues, otnef
than municipals as compared with
the amount of capital seeking invest
ment opportunities. "A frequent com
plant expressed by bond dealers is
that their Shelves are empty The
acuteness of the situation is accen..
tuated BY the prevailing state OF
business, the use Of new capital for
construction and expansion being but
fraction of what it formerly was.
The supply of funds for investment
purposes consequently IS unduly
large, temporarily at least. There
are other technical reasons serving
to maintain the high levels. Distress
selling, so prominent a year ago,
has been practically eliminated and
sales in large. volume for income,
tax purposes arc unlikely, not only
because the period of greatest strin-
gency is past, but also because m
come tax payments this year Will be
comparatively tsnlall, especially on /
the part sof corporation. Further
more, selling at present levels would
not establish, in general. losses on
>, issues purchased within
the last twelve months: l.. i,
1.-THE specific PROPOSALS of Secre.::,,
,tary Hughes for the slinitation ofiij
NAVAL armahlents by the three ctiefsi]]
naval powers have been accepted ln31
principle by the Slsbfe tatiyss pfai|
Great Britain and JAPAN And ab-!F|
parently there is general confidence
that a definite agreement Will be
reached for the execution Of the plans
in detail. 1 4s:tI
"The reduction Of governmental
expenditures in consequence of any
such drastic Imitation of ornaments
as is proposed. ;rcluding suspension
of naval construction for, a, decade,
would represent a direct economic
saving of immense significance. The
gains would not beEcorflned to the 4
mere alienation of the burden Of /
ornaments upon the taxpayers. On
the one hand, the nations concerned
would be. enabled to direct larger
part Of their public moneys to the
support ssof programs Of industrial
and social betterment; and on the
other, any lessening of taxation
would permit the use of "a larger
share of private earnings for ordi-
nary business undertakings.
an addition to the more immedl-
ate results would be the psychologist
cal background, increasingly power
full, developed by the continuing utu-
izaton of economic resources less as
means for the destruction Of life ana
property, and more as agencies Tor
the conservation Of life and the crea-
ton of wealth. ;.
"Any measure OF success Whlcn
may attend the discussion of the del
icate and intricate problems OF the
Far East would supplement in meal
culable degree the economic gains
resulting from the limitation OF arm,
aments, for the removal of potential
causes of international friction is an
aid in the principle of concert o.
nations in dealing with Far Eastern
questions would facilitate the appll-
cation of the same principle,
through machinery for continuing
conference, to other problems WHICH
constitute a peril to the worlds
peace Never before has there been
SO nearly universal acceptance OF
the prmclpis e wner orG to ABBY
With genuine hopefulness. therefore.
we may avail. its outcome"