The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1921-11-29
SEES MANY SIGNS
THAT BUSINESS
TIDE HAS TURNED
Guaranty Trust Co.'s Re-
view Points to
Revival.
BUYERS CONFIDENT
Check in Downward Course
OF Prices Encourages
Purchasing.
BUYERS CONFIDENT

Evidences are multiplying that
domestic business has turned the
corner" and is emerging from the
dehation period. according to tbs
Guaranty Trust Co. of New York's
monthly review of business and
financial conditions. Two outstand-
ing indications Of Improvement are
cheaper money or easier credit, and
the more or less widespread in
dustrial revival. The Survey says
in part:
Banks of the country have beer
able. since the establishment of
the Federal Reserve System. to aid
in e6ecting a more orderly read
justment Of industry following in
fiation than was possible so long
as our banking system remained
decentralized. Such service in the
last year and a quarter has beer
Of inealculable beneft to the ma.
tlon's business. But avoidance oil
a collapse of credit, such as was
repeatedly experienced before the
organization OF the Federal Reserve
System. has tended to prolong read
justment.
Buying More Pronounced.
liquidation and utilization OF &C
curnulated stocks of commodities
the way has been prepared in d
number of Industries for increased
production for current consumption
The check to the downward course
or prices in this country and aboard
has lessened the incentive to defer
purchases. and this condition sup
plements the depletion OF holdover
stocks in charging demand for cur
rent production.
But much must be done to ex-
pedite better conditions. Malad-
justment between the prices OF
farm products and other eommo-
dities must be eliminated before
we can consider liquidation COM
pleted, or enjoy full prosperity
Taxes must be more equitably dis
tributed, and the high surtax rates
reduced. The railroad funding bill
should be passed as early as practi-
cable. to put the carriers on their
feet financially, and re-establish
railroad credit and operating eff
cheney. In view of our changed
economic position, permanent
high protective tariff should not BIZ
enacted to hamper our foreign
trade, and prevent, or indefinitely
postpone, the liquidation OF oul
~sereign debts. Every effort shoulC
be made to assure the success Of
the disarmament conference, anC
thereby reduce burdens and elimi'
nate colossal waste. We must as
sist other countries to prosper a.
quickly as possible. largely through
long-term credits.
How long IL will take to reach
normal business activity must de-
pend partly on Industrial and fnan-
cial recuperation in other countries
which consume our products.
Money Situation Easier.
Improvement in the financial
situation in this country since the
beginning of the reaction against
imitation has been pronounced anc
well sustained. Since November 5
1920. whep total discounts of the
Federal reserve System were al
their maximum, and since December
%, when Federal Reserve note cir
cuiation was highest, almost con-
tinuous progress has taken place in
the technical position of the banks
The extensive liquidation reflected
by the Reserve System has been
closely followed by distinctly easier
money conditions and a stronger in
vestment market.
Regardless of whether or not the
security markets accurately fore
cast the future OF general business
the recent remarkable Improvement
in the money and investment mar
kets assuredly must have a bene-
fetal effect on the fundamental eIe-
ments in the situation. A long de-
cline in money rates has almost al
ways followed great wars; and the
price of money is usually no ex.
ception to the downward trend OF
other prices.
Bonds rise, of course, as money
declines. A special factor now is the
/ small supply of new issues, other
than municipals, compared with the
capital seeking investment. A fire.
quent complaint of bond dealers 1.
that their shelves are empty The
state OF business also restricts the
use of new capital for construction
and expansion. Funds for invest
ment are unduly abundant, temper
arily at least. Other technical rea-
sons serve to maintain the rhign
levels. Distress selling, so promi-
nent a year ago, has been practical
ly eliminated. and sales in large
volume for income tax purposes are
unlikely, not only because the
period Of greatest stringency is
past, but also because income tax
payments this year will be COM
paratively small, esnecially on the
part of corporations. Furthermore,
selling at present levels would not
establish, in general, losses on in
vestment Issues purchased in the
past twelve months"