New-York tribune., 1921-02-28

ments or issuing banks, connected with
the growth of the public debt and with
an increase in the volume of the de-
preciated paper which lead to growing
doubt on the part of the people as to
| the prospect of ultimate redemption in
gold, the generalization ceases to hold.
The generalization that rising prices
check consumption, moreover ceases to
hold in such a/situation. Importers and
other buyers of goods begin to reason
that the depreciation will go still fur-
ther; that if prices are high to-day
they will be higher still tomorrow.
Under such conditions, they seek to
get rid Of their money, anticipating a
still further fall in its value. Thrift
gives away to extravaganza. Specu-
lative buying and speculative import
ing are encouraged, rather than dis
couraged. Production, on the other
hand, is checked because business men
have difficulty in making calculations
for future prices and of future costs,
in terms of fuctuating standard of
value, and hesitate to make long time
commitments. If they make contracts
to deliver goods at future time at
fixed prices, and meanwhile the money
depreciates still further, they may find
that their costs will rise so greatly as
to turn profits into losses. The eco
nomic life of the modern world is so
much dependent upon pecuniary things
that fuctuating paper money is one
of the most pernicious things that
business can face. Europe's greatest
single need to-day is such restoration
Of stability in public finance as to make
possible the restoration of stability in
the value of it's money"
The money market, so full of peaks
last year when the call loan rates
were wont at times to soar in spec
tacular fashion, Is now likened to
plateau on which rates are moving
along without much day to- day change,
but with the trend for the long range
apparently toward gradually lowering
levels. Although bank loans indicate
that liquidation Of loans is proceeding
rather slowly in the aggregate, the
figures indicate progressive improve
ment. The problem Of clearing up
what the bankers call distressed cred
its, which are loans that are frozen
solid because Of market conditions, is
being solved in manner that is salts
factory to financial leaders. A Wall
Street estimate last week placed the
total OF such loans at between $50,OO0,-
600 and $75,0oo,oo0 here in New York,
q small amount compared with the ag-
gregate Of bank loans. The surprising
thing is that with all the drastic un-
settlement the totak has not reached
much larger figures.
think about the general tendency of
money rates assert that the trend Is
downward, but think the decline will
be gradual. eve people who are in
the business of selling credit" OBJ
served banker last week, "are scarce
ly able ourselves to see any perceptible
easing In the situation from day to
day. 1t is only when a man whom we
have been charging per cent for loans
comes and informs us that he can get
the money at tx per cent at another
bank that we are able to sense that
conditions are gradually changing for
the better from the viewpoint of the
borrower" Business demands for
credit are still heavy. The banks con-
tinue to curtail the borrowings Of many
corporations and individuals.