The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1921-05-30
Business Atmosphere Shows
Very Important Constructive
Developments Impending
Tendency Throughout the United States Is Look Ahead
ConstructiveIy, Though Few Still Think Bust
VIII Be Liquidated for Long
Time to Come

! seriousness OF this fact explains the
subsequent slump. A better feeling
regarding the export outlook, contin-
gent on prospects of settlement of the
British industrial disputes, is otserv
| able in the cotton market.
To agriculture, however as we'll as
export trade and business in general
the most important factor in current
developments is the continued easing
| of credit. The federal reserve ratio
of reserves to deposit and note liza
! bilities at the close of business May
20 showed another increase, standing
/ at 57.6 per cent against 56.8 the pre-
vious week. Gold reserves gained
about S14,000,000 but their effect was
partially offset by increases in dis
counts. These increases however, re-
| fleet larger use of commercial funds
and it is to be hoped that the gain
will continue. The reserve ratio is far
above the safety mark. There is no
reason why borrowing should not be
made seasier. It is, of course, iinpos-
sible to force money upon borrowers,
! but the argument that more freedom
! in loans would engender a revival of
speculation has lost most of its force
under present conditions, when profit
! able sale of a commodity held for
speculation is not easy. Recognition
of the stronger position of the reserve
| system has in no way abated the feel
| ing against its policies, especially In
agricultural districts, on which I have
previously commented. and 1 think it
safe to predict that the reserve board
will find it advisable to make another
| reduction in rediscount rates before
| the summer is far gone.
Az to Lower Freight
The possibilities of lower freight
rates are not helped as much az ex-
pected by the wage reduction an
nounced, which 1t Is said will amount
| to 10 to Is per cent, meaning pay roll
relief of $350,000,000 to $500, 900, 900.
! April statements of railroad earnings,
| however, were moro favorable. Gross
| earnings were in many cases greater
than in March and net earnings
showed even more Improvement as a
| result of drastic economies shown in
expense reductions. Car loadings also
continue to increase, the latest report
showing a gain of $4,000 in the week.
| REIMBURSEMENT of rates is proceeding in
many centers. Cuts have been granted
| in transcontinental rates several
products, following the increase In
| shipments by water through the
Panama canal. A number of insect
laneous reductions are reported from
| the middle west.
The problem of cutting the wages or
labor without too greatly impairing
it's purchasing power is still before
many industries. At the present ad-
! justment of prices and wages there is
still room for reductions in the pay
roll. The purchasing power of the
dollar in the ordinary home budget, al
lowing for the fact that rents, house
| furnishings and other miscellaneous
manufactured articles have Jagged be-
! hind the decline, is neverthe less ut
least 20 per cent above it's level when
prices were at their peak. None of
the reports on employment published
| by the states and various other au-
| thorties shows a decline in payrolls
which nearly equals this figure. The
real wages of labor are therefore,
| obviously higher than at any time
during the war. and though the sta
| tistics which this conclusion Is
| based cannot be called absolutely
complete and accurate, it is substan-
tiated by the striking maintenance of
retail trade as shown in reports from
nearly every section OF the country.
| The debts to individual account OF
the member banks of the federal re-
serve system, as good a barometer OF
the volume of business transacted as
lis available have shown a steady if
slight increase in the past few weeks.
Bank clearings this week are 26.7 per
cent below last year.
Foreign Exchange
rOI6ISu eASndASe, 81 StlOiiS IcC0Ally
as to excite general remark, developed
a weakness quite as remarkable as the
week progressed. OF the many fac-
tors contributing to this weakness,
probably the buying of American ex-
change by Germany in London to pre-
| vide for part of her reparation pay
ments was the most important. From
81 the previous week sterling fell to
! S3.S6h, and the fall In francs and
| other European CurrenCieS was
scarcely less spectacular.
The improved tone of many indus
tries and some of the commodity mar
lzets is strongly in evidence, though
| textiles, being between seasons, are
quieter, steel is tagging and looks for
ward to a quiet summer, and automo
biles and tires are Stacking a little
from their recent rush upward. Such
conditions make up the backwash of
any recovery especially one which is
so deliberately delayed as this is by
the failure of many manufacturers and
| distributors to make the price and
wage cuts which alone can restore tho
balance between the prices of raw
materials and foods and the goods
which are exchanged for them. When
this is done, as it must be eventually,
complete recovery will arrive. Mean
while, it is on it's way rapidly, and 1t
will be accelerated as the construc-
tive developments which are noted
from week to week exert their full!
effect.