Amarillo daily news. [volume] (Amarillo, Tex.) 19??-current, 1921-03-16

commodity price rcccsHlons. The appll.
cation ~ these means has helped Ia
bring about n more normal business ac.
tivily without an intervening period
~ widespread disaster.
Yot, despite the tremendous Increases
In commodity prices and wages, II IN
noteworthy that the cost ~ money has
increased, an the average, only twenty
five per cent, In the face of greatly
Increased operating expenses aud lusHcs
Inevitable IN business reaction, the
banks have been ultm conservative im
fixing rates. Money has hrn the
cheapest element IN business enter.
prise And the charge that the hanks
have contracted credit a. the dctrim"n,
~ legitimate and essential business
activities IN not sustained by facts.
According 10 the figures NJ the Comp
tollor " Currency, I'm Jun" 10. last III"
total loans and discounts ~ all hanks
amounted a. nearly thirtyOno billion
dollars an Increase NJ approximately
six billion dollars over the leans ana
discounts on June 30, 1919.
Neither the hanks nor the Govern.
ment can create credit. Credit IN the
product ~ enterprise and operation IN
commerce. and In limited and defined
by the nature IT such operations II
ls tho means by which real wealth IN
transferred. II " medium of exchange
and not wealth. itself Wealth consists
IT goods and service. And II should he
remembered that the vast destruction
~ wealth accustomed boy the war, such
as have pointed out can bc replaced
only by creating now wcalth-not by
creating more credit Va can make mp
thodcficit only by producing more goods
and service,
II N the function ~ the banks TO
vitnlizc credit by productive processes
aud by commerce and make u IT Use
a. the community The first aud
highest duty of bankers IN Ia put avail.
.O credit In uscahlc form and ~ dis
tribute and apporiion II for the good
Of the whole community. In dischnrg
mr. this duty. bankers must exercise
their hast judgement aud always give
heed ,u the condition If their reserves.
The process IT liquidation has ap.
mrcntly not been completed and pru.
dent regard Tor the safety and strength
II our banking system makes ncccs.
Nry the continuation II those policies
which have proved effective.
II must w. recognized. 1T course. TINT
general reduction In commoiity
prices cannot lr effected without hard.
ship Ia mnny elements 81 the business
community II IN not alone Spectators
/ In commodities who are adversely az.
fcctcd by price rcccssions Any busl.
ness which entails the carrying On hand
II stocks of raw materials or finished
goods generally inrurs the risk ~ DE-.
I prrciating values IN these stocks while
IN their possession. When prices are
rising. pvofiis are, In part. the result II
appreciation In the values ~ such hold
ing, aud conversely. In "a period at
declining values the risk uf monetary
luss T. Incurred. In a period ~ RISING
prices the credit demands are progrrs
slvc aud tend. II met. To- stimulate
further price advances Experience
shows tina, fluctuations In general
prices move IN cycles. During pro
ractcd upward movement banks must
BE- prepared fur the anticipated reversal
/ Accordingly. the banks must ncccs
nrily exercise restraint upon the cx
punding volume ~ credit when II
threatens to exceed the limits ~ safety
/ IN the very nature ef the ease, more
over. II ~ not the function ~ the tnnk
ing system a. ondcaVOr a. prevent u
recession uf prices which the ~ iic 0i
production aud consumption requires
The fact that the inevitable read
juslments have thus far been effected
without really serious difficulties give,
promise that there viii H. Nurthor
gradual r,-idiustmcntH with n NOR,
nrnmpi resumption of normal prosperity
than would have been possible had IA,
process Of crcdi, expansion been unhln
dercd The number ~ enterprises IN
which liquidation has already been NJ
fcrtcd " increasing and the bcncficln
I results ~ these rUidJuHtmcnts mr.
cumulative. while Tho greatest danger
from large ana sudden price recession
has probably passed. II h well. how
ever. to recognize that grave difficult
ties may BE- expected " We should *
ipernnce pronounced general "conomi'
depression attended by q large and In
'cruaslng volume II commercial failures
\ The speed with which approximate
stahiliat.on IN business h 10 be- h'ough
about will depend largely upon develop
mcnlt abruad, particularly IN Fdrop'
Industrial ro,uporation IN eastern an'
central Europe hns hocn slow IN th'
two years since the Armisiico, ana II
many other countries. includinL SOM