davidaulloa/AmericanStories huggingface dataset:
New-York tribune., 1921-01-02

b
the downward price movement in Sc
cur'tles was reflection of industrial
prospects and a measure of the extent
and duration of the severe process of
rcadjus-Ment Which in davs Vi palmer
speaking and fewer economic theorist,
would have been called panic. But il
its December collapse the market went
much further and gave indication
chiefly OF compulsory sacrificing Of Sc
curlt'es by reason of financial necessi-
ties that could be met in no other wav.
obviously those necessities were the
ultimate and inevitable results OF the
credit curtailment program, the suspen-
SION OF comm modity buying and repudia-
ton Of commercial contracts both at
home and abrvad, the bludgeon-en-
forced collection Of absurd taxes and
the numerous other influences and fac
tors that now are in plain view. And
finally, of itself, the necessitous selling
Of securities, by rapidly forcing market
prices to unwarranted figures, wrought
such damage to the quoted values Of
pledged collateral that more and more
urgent liquidation was forced from
those whose commitments were not in
materials or merchandise or real prop
erty. but in these same securities
which alone could be marketed
This latter phase, of course, is an
old story. 1t occurs in each stock
market cycle, and ones memory need
60 back no further than 1907 to find a
full parallel. That the panic of that
year had to do with the boarding and
scarcity Of currency, whereas the pres
ent situation represents a break down
Of credit and price imitation, is imma-
terial. The Wall Street results are
the same-collapse, fright, destruction
Of buying power, and market quotations
far below intrinsic values. And that Is
the status of the stock market at the
beginning of 1921. 1t is no longer
reflection of industrial prospects. 1t
10 an evidence Of dire need and wide
spread fear which have wrought de-
gree OF havoc unjustided by conditions
With the situation what it Is and
New-York tribune., 1921-01-02
No Great Trade Expansion

1t may be added that IN the minds
a. many this great expansion was in
some way associated with great boom
in our foreign trade. To this it may
be answered: First, that there was no
unusual expansion OF our foreign trade
IL there had been, it could scarcely
have been of sufficient magnitude TO
produce, under existing conditions, any
notable effect upon the price level Of
this country. The Importance Of our
foreign trade is popularity much exag-
ccrated. Of the total of ell the ma
tons product, something more than
81 per cent is consumed at home;
not TO exceed s or 8 per cent goes
abroad, even in suc1 high year as
1919. OF this, the great bulk consists
of few comm odities, like meat and
wheat and cotton anI copper, the de-
moVsly one year from another.
Now, all this has very intimate rela-
tion with the probable course Of prices
in the next few years. 1t is obvious
that without greatly added supply Of
currency and bank credit the great
rise in prices since the arnlistice would
have been impossible. There is out
standing now in this country something
like S28 700 100000 Of so-called com
mercial loans. This amount bears a
fairly close relation to the total VOL
ume of goods in transit from the pro-
ducer5 to the ultimate consumers. and
likewise to the prices at which these
goods are carried.
Obviously, it takes 81 0o0, 900, 900 more
to finance and dispose of the cotton
crop, if the price of cotton is around 40
cents, than it would at 90 cents. 1t
takes nearly $1,000, 100000 more TO
finance and dispose of the wheat crop
al $3.50 a bushel than at $3.50 a bushel.
And SO on throughout the list. There
must always be u balance or equilibrium
between the outstanding amount of
currency and credit and the total value
of goods which the country is produc-
ing OR consuming. Now. il. the price
level next year should average, say,
one-qunrter lower than the level Of
general prices last year, 1t would re-
quire, roughly, one-quarter less Of bank
credit and currency to finance our pro-
duction and exchange of goods. Either
this contraction will take place or
prices will rise again to high level.
We cannot have an overfowng abun-
dance Of purcha sing power distributed
among the people and expect that this
purchasing power will NOT b used
New-York tribune., 1921-01-02
Repeal Excess Profits

While many changes should be made
in our existing tax law in the interest
Of business progress the first and most
important step in tax revision should
be the repeal of the excess profits tax.
This tax may have been justified as a
war measure, but it clearly has no
place in peace time legislation, and
few, if any, tenable arguments can be
advanced in favor of its retention. On
the other hand, the arguments offered
against it have become so familiar that
it is useless to discuss them. Let it
suffice to say rhat the inequalities re-
sulting from its application are so
great as to condemn it absolutely and
fully justify it repeal at the earliest
possible moment.
Although the adoption Of budget
system and the introduction of more
economical system of administering
the governent will materially reduce
the aggregate amount of revenue re-
quired for the support Of the govern
ment, it seems likely that the rapid
fall Of prices which we are now ex-
pericncing and the existing depression
In business will adversely affect the
amount Of revenue to be derived from
income taxes. 1t will therefore be in
cumbent upon Congress to adopt new
method Of taxation which will serve TO
make up the deficit resulting from the
repeal OF the excess crops tax.
New-York tribune., 1921-01-02
Cold Situation improves

There is still another important ele-
ment. Our credit structure is based
on an ample gold foundation. Follow
ing the removal of our embargo on
gold exports in June, 1919, there has
been some shrinkage in the monetary
gold stocks of the United States, but
this has rot been at the rate or in the
volume that some people had feared.
For a time there was a marked excess
Of geld exports over imports incident
to our settlement of adverse balances
OF lndebtedness in many parts of the
world outside OF Europe. while we did
not receive settlement from our main
sdebtor-Europe-but. on the contrary.
continued to sell there on credit.
While this movement. reducing our
gold base, was for time a factor in
adding 70 our credit stringency during
the period Of continued expansion. it
never was an important factor. and
there need be no apprehension that
other parts OF the world will be able
u attract our gold so rapidly or in
sNch amounts a. to embarrass US, par
tcularly IN view of the tendency tow
ard credit contraction now apparent.
as the rest Of the world earns an eco
nonlc right to our gold it should have
t. but that can come only gradualle.
As result o. increased productivitv
on the part of other nations, particu-
larry Europe. As they produce more
or themselves ana are dependent less
on ~ there VIII result the restoration
OF international trade to STATE Of ap-
proNlmate equilibrium in which gold
Wall aga serve in It's true function
as sliding weight in balancing the in
ternaticua accounts.
These, then. are the factors assuring
the soundness Of our credit situation in
the uture-that il, Z reduction in the
non-liGridity Of credit; the maintenance
OF suf'lcient stability and volume in
our monetary gold stocks 70 meet our
economic needs. and tic restriction Of
tie total amount o. credit in keeping
with sound business requirements.
New-York tribune., 1921-01-02

There Is some risk at a time like
tho present Of being wrongly construed
IN openly asserting an optimistic view.
When we say conditions are better
many people are inclined to jump at
the conclusion that we are prophesving
boom. No such thing as boom is
IN sight and no such thing is meant.
But in numerous directions we see de-
velopments that indicate that the worst
point In many lines of business has
been passed. Improvement toward
more stable conditions is apparent. and
Is indicative Of a better situation.
There are many other lines, it i, true.
that do not yet show the same signs
OK improvement. but the same sequence
OF events may be expected to follow
IN them as have followed in others. re-
sulting In better conditions there also.
Particularly marked has been the i'm
provement lately in the bank credit
situation, especially in respect to re-
storing it to a moro liquid condition.
Ourlng the last year number of
causes impairing this liquidity have
oeen active. One was the volume of
government paper still burdeninr our
oanklng resources as an aftermath of
war financing. Again, the great trans
portation breakdown in the earlv part
Of the year impeded the liquidation of
the com nercial credits involved in the
merchar tise concerned. Also. credit
was employed to withhold goods from
markets for speculative purposes. and
nnally le great retrenchment in buy
ing on the part OF the public which
we have witnessed during the latter
part OF 1920 made necessary the ex-
tension Of great volume of credits.
These various events produced a great
mass OF non-liqu.d credit which added
materially to the difficulty of the banks
IN IN meeting the demands made upon
New-York tribune., 1921-01-02
Necessity Of Peace

Entirely aside from the question of
whether or not We should enter q
league Of nations, no doubt exists as
to the necessity for the establshme ent
a. the earliest possible moment Of a
state of peace with these countries and
the strengthening of international eco
nomic relations with the whole world.
While it seems probable that the pres
ent period of industrial depression is
but temporary one and that it is
only a question of time before our
industries will be functioning as usual.
1t is quite evident that our future pros
perity is largely dependent upon our
international trade.
Valuable service can be rendered
through the enlarging Of the govern
ments facilities for obtaining prompt
and accurate information in regard to
conditions existing in foreign countries
which will affect our foreign trade and
the prompt distribution of this infor-
nation to business concerns who can
use it to advantage,
OF equal Importance with the enact
ment Of legislation necessary to plac-
ing the government on q sound bus
mess basis is efficient administration
Of existing laws.
Basically, as I have stated, economic
conditions in the United States are abb
solutely sound, and what Is chiefly
needed to preserve our prosperity is
just common sense, constructive CO.
operation between Congress and the
progressive business interests Of the
country.
New-York tribune., 1921-01-02

quite extraordinary parallel. It will
be remembered that when the armi-
stice came it was the almost universal
expectation that there would be a
very heavy fall in prices. The war was
over, and in the minds of the people
it was "the war" which had caused
these high prices, 50 with the removal
of the cause the prices would, natu-
rally, disappear. The war had produced
an unusual demand, and therefore, as
in the popular view prices are con-
trolled by supply and demand,- the
slackening of this demand was all that
Vas necessary to produce the desired
effect. 1t was universal wish, though
it was not realized that all the de-
Nand in the world is of no effect un-
.ess it is backed by effective purchAs-
rg power, that is to say, either bank
,redits or the coin of the realm. Nor
vas it realized. even by many econo-
niSts, how closely the rise in prices
lad paralleled the expansion of bank
oans. II average annual prices be
ken and compared with the loans as
T. July in each year, TIE CORES spond
ence alike in this country ard in Eng
and and in other countries was re-
markable.
From the arn.stice to about Febru-
ary or March there was sharp fall
in prices, amounting to about 5 per
cent on the Bureau OF Labor Index
and nearly 10 per cert on Bradstreet's.
There vas, likewise, a distinct fall ir
the volume Of loans. Then when j.
WAS seen that the recession in bust
ness was not heavy and the fall in
prices slight, business took heart again
and the immense quantity of purchas
ing power in the hands OF the people,
uMrestrainod now by any demands for
war thrift and economy, was let loose
to work its deadly effect. In twelve
months, from the spring OF 1919 to the
spring Of 1920. bank loans had expand
Cd by 25 per cent. The annual aver
ag9 for the thirty years preceding, in
Guiding the war years, was about per
&C 1t.
AT The same time the level oH prices.
as shown by the Bureau OF Labor IN
dex, rose 26 per cent. Such q rise
had never before been known in this
country in peace times, so long as we
have any records.
This great rise in prices was closely
paralleled in Great Britain and almost
all chc other great comm ercial nations.
Such al exceptional rise in prices
and expansion Of credits could scarcely
fa,l to produce a very violent reaction.
And this is exactly what has taken
7 lace. not merely in this country, but,
IN lesser degree, in all countries.
New-York tribune., 1921-01-02

~ Sexafob too nfet QOlnt, the 0au-
ger IL that more rather than less rev.
enue will be nseded. This brings up
at. once tho question Of funding the
temporary debt, which during the year
will mouth to more than $4,000 900 900.
II this temporary debt is not funded
into reasonably longtime bonds, the
debt will have to be met out Of current
tan revenue. For this there seems to
hs no warrant at all. Tho debt was
incurred for war purposes and there
is just as little reason for defraying
this temporary debt out Of taxes as
there would have been for defrayine
the rest Of the governments expendi-
lures by taxes rather than by loans.
We stretched our tax revenue to the
utmost point during the war and now,
VIXEN less prosperous times arc upon
US, 10 certainly not the period to seek
to dsfYsy moro Of the governments
expenses BY taxes and less by loans.
From every confederation Of prudence
and Of statesmnship the burden Of
ta1tion ought not to be increased, and
this means that the temporary debt
ought to be funded.
There Is another point connected
with the debt which seriously affects
the tax situation. We have in exist
ence sinking fund which was created
year or two ago. The law virtually
set aside some 100000 or $780,
100000 q year out Of the tax revenue
as per cent fund to amortize the
debt. 1t goes without saying that, on
general principles, it is wise to begin
paying of war debt as soon as the
war is over and while the level Of
prices is still comparatively high. But
It is questionable whether such a rigid
IMPLICATION Of the principle is desirable
in bad years. as we'll as good years.
We had a similar sinking fund during
the Civil War. But the secretaries OF
the Treasury very wisely proceeded as
II such fund had not existed at all.
That is. when the revenues were abund-
ant they paid of considerably more Of
the debt than was called for by the
fund; and, on the other hand, during
.he lean years they made no attempt
% keep up the fund. The net re-
sui. was that the debt ultimately was
paid more quickly than would other
vi-e havr neen the case
New-York tribune., 1921-01-02

and therefore there will not be the
same incentive for speculative with
holding of goods from market as there
has been during the recent era of vio-
lent price fluctuations. These goods
were carried by credits which have
been released for more productive pur-
poses.
Again, there is reason to believe that
IN 1921 we will not see another gress
recession in buying, so that .here
should not arise the same necessity 70
carry retarded stocks beyond the nor
NAL average Of commercial credit pc
riods.
Resumption Of moro active scale
of buying OH the part OF the public.
which may be expected during 1921,
should result in more normal rate
of turnover for merchandise stocks.
With these improvements In tha
iquidity Of credit in progress there
set in toward the end Of the year a
reduction IN the total volume Of credit.
This is the natural result Of tho less
ened demands of business, resulting
from the lower levels of prices that
have been established. the decrease in
speculation, and also from the re-
duced activity of business These fac
tors indicate that bank credit condi-
tons for 1921 will be better than have
character the wear 1000
New-York tribune., 1921-01-02

G are richly endowed with all the
assets for our full participation in that
tasi. and the wonderful future that
lies ahead of us when the task shall
havo been compieted-b we seem to
lack faith. As we stand on the thresh
old Of the New Year and Of the door
TO the greatest opportunities ever
opened to any nation in all history, we
hesitate and doubt. Like those who
cannot see the forest for the trees, we
are too prone to eXaggerate our LA
bilities and not only belittle but even
ignore our vast resources.
Leadership that will direct our ma
tional thought into logical channels
and more in accord with our manifest
destiny is imperatively demanded as
we enter 1921. And it is the responsi-
bility and duty of the government. and
especially Of Congress, to assume that
leadership.
Congress has never faced more i'm
portant problems than those which
confront it to-day. 1t g faced with
the necessity of not only enacting con-
structive legislation, but also of re-
pealing obstructive laws now in force
New-York tribune., 1921-01-02
oharPest Price Decline in Z. S. History Bringing 80 p c.
Drop Follows Great Initiation After Arms;ce Recession

weight existed Prices in the paper
currencies Of Europe and elsewh ere
went Up in the same degree or more
than those in the United States. and
their rates of exchange went down in
all intents and purposes, therefore, in
this country the lid was off on prices.
The higher our level rose the higher
the world level rose and the lower the
exchange rates went. So there was 10
curtailment of exports to any marked
degree, no flood of imports and no very
heavy outflow of GOLD
New-York tribune., 1921-01-02

The Bureau Of Labor Statistics in
dices, which are averages for the four
separate weeks of the month, showed
decline to November of "a per cent,
and on the indications noted above this
decline in December or January may
run to between 80 and 35 per cent
These are the averages for 326 diff
ferent commodities at wholesale, and
the best index of the general level
OF prices which We have.
The Bureau Of Labor's monthly in
dices run back only to 1900. The
heaviest decline in any twelve months
Which this index had previously
shown was 6 per cent.
Bradstreets monthly indices run
back to 1899, and the largest decline
for the same period which this index
had ever shown was under Is per cent
In none Of the great crises Of the
past has the fall in prices apparently
amounted to much moro than Is per
cent. in single year. This was in
1857. The nearest parallel to the re
cent decline was that which took place
in the last year of the Civil War. For
these periods We have only quarterly
records, but ON this index the fall
from January TO July OF 1865 was
abOut "a Ocr cent
New-York tribune., 1921-01-02

lions, rise Of, say, 10 per cent in the
general level of prices in the United
States, above those of the other COM
mercial nations, would medately
produce very serious stoppage of our
exports. food Of imports, an "un-
favorable" balance and an outflow of
gold
But in 1919 and 1920 no such counter
New-York tribune., 1921-01-02

to encourage extravaganza and penal
ize business efficiency. as is The case
with the excess profits tax. and on the
other hand, from the standpoint oil the
government. will not be subject TO great
tluctuation in periods of business de-
preston and may be easily adminis-
tered. Sales taxes can no longer be
regarded "a experiments, II we can
rely upon the reports Of the success
of these taxes in Canada. the philip-
pires and France, end TO a limited
degree in several other countries
The great burden OF war taxation
has brought to business men with
added force the need of adopting as
a permanent part of our machinery of
government well-organized budget
system, which will result in the plac-
ing of the financial operations of the
government on a scientific basis, there
by helping to eliminate waste and ex-
travagance. Legislation TO this end
should be among the first considered
by Congress.
Of equal Importance, as compared
with the problem of taxation, is the
state Of our international relations and
their effect on our present and future
foreign trade. In spite of the fact that
more than two years have elapsed since
the signing of the armistice, we are
still, theoretically at least, in state
of war with Germany and her allies.
New-York tribune., 1921-01-02
Great Demand for Credit

The higher prices rose the grea .c,
was the demand for currency and banl
credit. And so, since the low ooint jus
after the armistice, we have expandee
our bank loans by perhaps s7,000,u00,
900. Cores spondingly. the value o
printed Federal Reserve notes rose tx
a total of over $4,000 900, 900.
Between this expansion of banl
credit and prices there was, indeed. Z
New-York tribune., 1921-01-02
Faith Plus Brain Power
Needed Now, Asserts Sisson
Establishment Earliest Possible Moment of State
of Peace and strengthening of international Eco
nomc Relations Urged as Most Important Step
BY Francis II. Siisson

Icc-Ptesideut Guaranty Ttus CompaNy of 1EslU York
fundamentally
W. great of
prospects is constructive thinking.
II mountains, surely faith plus brain
world a and stable basis
New-York tribune., 1921-01-02
Believes Recovery Is Certain to
Follow Drastic Readjustrnent
"insmore Points Out End May Not Be Reached but
Insists Decline Has Been Sharp Enough
to Assure tpturn
By Robert S. Winsrnore
Cf BI{;nqs. Olc0tt 4. Il';ne,,.,,s

IH So1ted readustment' Of prices
tne year 1871 always VIII be we'll remembered throughout
States Wall Street played all
eessvey predicted reflected
an casc encouragement Of the nations trade
hl t also furnished the
afAee-n winch assets could be realized
urgently needed cash The state Of collapse which
Drougnt IN the closing that
New-York tribune., 1921-01-02
End Of Speculative Need !
Should Improve Credit
Rovensky Sees Additional Signs of Bet
terment Dali in Elimination of Weak
Spots in Nations Business
By John E. Rovensky
VicsPrssident Natono! Bank Of Commerce IN Ns.o York

ME- fundamental feature of the
to additional
signs Of beement sound like an
excess optimistic hadhood midst
sctors which must be admitted the
They meet the but they
analysis OF the situation reveals that the basic
structure sound and shaping themselves
satisfactory business
New-York tribune., 1921-01-02
Defects of Income TAT

20 FAR as the income tax is con-
esrnei the situation IL a little more
sia'eult. In principle the income tax
y anexceptionabie, and there are many
features connected with 1t that COM
mend it 70 the public. In addition TO
: multiplicity Of minor defects, how
sg1, there ara two weaknesses tha.
s-snc out prominently. The first and
.esemoEt Is the system Of tax ex-
s.ptions. In tho presence Of billions
tAx-exempt securities it would be
uprising il ths wealthisr CLASSES In
- country did not avail them selves
shis privilege. Tho second point
= ns sxagxsrsted system Of surtaxes,
.aleh La the higher brackets are de-
snsnsd TO take away almost three-quar-
Nrs o. = mans inconA-
- sdls 70 suppose that people will