Grand Forks herald., 1921-12-12
RECONSTRUCTION AND CREDIT.

Money is scarce, which is another way of say
ing that credit is restricted 1t is difficult to Dor
money with which to finance the most neccs-
sarv work, and hnanciers of all kinds, from those
on the street and in the pool halls those
i'll the ctadels OF trade trying to devise means
which vii; make borrowing easier
1t is unfortunate that the situation is as it is.
There IS an immense amount OF work that needs to
be done, and there plenty of people eager to do
it. The freezing up OF the stream of credit has
brought things to standstill X ct it must not be
forgotten that whereas our great trouble now is
lack OF credit one very important reason for the
present state OF affairs is that only short time ago
there was too much credit, and too many people
avaied themselves OF it too freely.
There was sudden imitation OF prices which
affected property of all kinds. Under the stimulus
OF speculation land values quadrupled in some sec
tons, and increased materially in all. City prop
erty doubled in price Raw materials destined for
manufacture increased in price so rapidly that their
owners were made rich over ght Stocks Of
goods on the shelves of the retailer followed like
course.
With prices advancing rapidly borrowing
was easy. The difference between the book values
OF yesterday and those of today was so great that
men formerly in very moderate circumstances sud
denly found themselves with comfortable fortunes
to- their credit. The profits had come so quickly,
so easily. so unexpectedly that their possession in
evltaby prompted to immediate enjoyment of the
good things that could be realized from them Very
often that impulse was allowed to govern The
individual borrowed the amount OF his paper profits
spent the proceeds and enjoyed himself.
OF course that practice was not universal but
1t was common enough to involve immense sums of
money in the aggregate, and to affect the Industrial
activities, the commerce and the finance of the en-
tire nation. When men had borrowed up to the
value OF their equity they had cease borrowing.
Credit began to tighten up.l To add to the discom-
fort, prices began to rapidly toward the nor
NAL, and it was found that much of the borrowing
had gone beyond the owners real equity in the
property Loans which had looked good on the
basis Of inflated prices looked less attractive when
the process of dehation had got under way, and
there was demand for liquidation, demand
which, in many cases. could not be met
These are some of the experiences through
which the country has passed One unfortunate
result is to restrict the supply of funds needed for
constructive work. There is urgent need that this
condition be remedied as soon as possible But if
the recommendations which are made in some quar-
tiers are heeded-which they are not likely to be-
instead of laying the foundations for an enduring
prosperity, we should merely be repeating with de-
liberation the blunders which were formerly made
inadvertently, and reviving and continuing for a
time the speculative and extravagant practices
which responsible for no small share of our
present troubles.
The man who got into trouble bv borrowing
too much yesterday will not be got out of his trou-
bles by borrowing still more lavishy tomorrow.