The Brattleboro daily reformer. (Brattleboro, Vt.) 1913-1955, 1921-01-18

Notes Have Been Withdrawn from
Circulation Within Past Three Weeks
Credit Outlook Now Encouraging.
BY DAVID LAWRENCE.
Especial despatch to The Reformer.)
Copyright 1921.
WASUINGTON. Jan. 1N.-Morc paper
money has been retired from circulation
in the last Is days than at any other pre-
yiouS period in American history. ~
consequence the wrinkles have passed
from the brows of our government officials.
The process of detlation has followed
formal lines. Nature has taken its
course Liquidation has been extensive.
And the entire financial situation is
healthier than it has been in some time.
Various statements issued by the federal
reserve beard indicate, when analysed.
that about S24J. GOO. 900 in federal reserve
notes have been retired in the last three
weeks, which is about $15O,0O000O more
than was the case for the same period last
year. Similarly since tire middle OF I4e-
cember loans have decreased about $780,
600, 900 corresponding to the reduction IN
the amount of currency.
Officials are drawing optimistic infer
enceS from these figures and are c1nhdent
that it means a quick change for the bet
ter in business As a whole. For a soon
a. the taking of stock in January is com
pleted. the buying Of spring goods and the
general demands of spring business viii
begin to be financed. The iInaClal cOndI-
ton of the business world as reflected in
the data gathered by the federal reserve
sboard is satisfactory and the natural eX-
pansiOn of currency and increase of credits
which occur in the early spring are conf
IDENTIFY expected.
The retirement of 100000 i'm fed
eral reserve notes has another meaning.
The decline signifies a reduction by more
than So of the per capita circulation OF
money Fortunately. the cost of living is
tumbling so that as the amount of money
in circulation dimiuishes, the purchasing
power Of the dollar is rising So far as Is
known, this reduction of more than 81 es-
tablishes a new record Certainly, no such
change has been recorded in an equal
space Of time. And as n further evidence
of the success of the dcilatiUn currents in
American finance the earning assets of the
federal reserve board have dropped below
the three billion mark for the first time
since Jan. 3. 1920.
In a nutshell, the policy of contraction
of credit which the federal reserve board
Instituted last spring has had the desired
effect, only it begins to appear that the
I results were accomplished in less time
than most people thought would be the
case. And it begins to look as if the con
tracing machinery had operated so far
that relaxation may be expected hence
forth. The prospect is that bankers will
not find justification hereafter for insist
ing on such substantial curtailments on
the notes They hold. The federal reserve
board itself will probably remain silent,
taking no official action, but there are
more ways than one for the board to indi-
cate informally to the bankerSsof the coun-
try that the pinching process has gone far
enough and that it would do no harm to
give the business world easier breathing
on pending loans.
OF course, the federal reserve board has
a delicate problem to face in saying any
thing on the subject. For the farmer OF
producer who has been obviously turning
his goods into the market at practically
any price so as to get money ito pay
loans might view a relaxation of credit
policy as a sign that he could get new
loans and thus hold his goods for higher
prices. The federal reserve board win
probably do nothing that will interfere
with the steady though painful decline in
the cost Of living, no matter who is affect
cd by the prices of commodities The
hoard has insisted from the start that its
policy of contraction was the only way to
force the cost of living down, SO while