The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1921-01-18
Orderly DefIation Is
Being Received With
Feeling of Optimism
BY DAVID LAWRENCE
{Copyrlght by The .nteli!EenCeD

Washington. Jan. tc.-More paper
money has been retired from c'rcuIa-
ton in the last eighteen days than AZ
any other previous period in American
history. and as consequences the
wrinkles have passed from the orows
OF our government officials. The pro-
cess OF detiatton has followed normal
ines. Nature hIS taken It's course
Liquidation has been intensive and the
entire financial situation IS hea!th!eV
than Il has been IN some time.
Various statements issued BY the
federal reserve beard. indicate when
arlaiyzed that about $2+5.0OQ.OoO N fed
erai reserve notes. have been retired IN
the last three weeks which Is ABOUT
fifty million dollars more than was the
case for the same period last year.
Similarly since the middle uf december
loans have decreased about lbV,0OO,e0O
corresponding 10 the reduction in the
amount OF currency.
Otflc.als are drawing optimistic in
ferences from these figures and are
confindent that ;, means quick chanse
for the better IL business as who,e'
For as soon as th,. taking OF stock IN
j
spr,ng goods aud the general demands
of soring business will begin u he
financed. Til. financial condition Of the
business world. as reflected !? the da 4
gathered ~ the federal reserve board.
is satisfactory and the natural eNpan-
sion Of currency and increase OF credtS
which occur IN the early spring are
confidently expected.
HIS Another Meaning.
The retirement of $2i5.o0o,qo0 in
federal reserve notes has another
meaning. The decline signifies re-
duct:on by more ;han TWO dollars oil
the per capita circulation OF money
Fortunately the cost OF living - tnno-
ling SO that as the amount OF III. ney IN
circulation dIm!niShrs. the purchasing
power Of the dollar is rising.
So far as Is known. this reduction cf
more than TWO dollars establishes
new record Certainly no such Grange
has been recorded IN an equal space OF
time. And as further evidence or the
success Of the dst.atton currents III
American finance. the earning assets OF
the federal reserve board nave droppeo
below the three billion mark for the
first time since january y, l92o.
In a nutshell. the policy OF contrac-
ZION of credit which the federal reserve
board instituted last spring has had the
desired effect only &; begins to appear
that the results were accomplished IN
loss time than most people thought
would be the case And IL begins to look
aS il the contracting machinery hao
operated so far that relaxation may De
expected henceforth. The prospect IS
thar bankers viii not find justification
berea fter for insisting on such suostan-
tial cu-taInments on the notes they
hold.
Loans WIN BE Easier.
The federal reserve board itself will
o-ohahly remain silent. taking no or
ficial action. but there are more ways
.han one for the board 70 Indicate In
formally 70 the bankers OF he country
that the pinchinS process has gone tar
enough and that II would do no harm
20 give the business world easier
breathing on pending loans.
OF course. tho federal reserve board
has a delicate problem to face in say
ing anything on the subject. For the
GARNER producer who has been obvious
" turning his goods into market al
practically any p"ic"s so as to get
money to pay loans might view q relax
alton OF credit policy as sign that
hc could get new loans and thus hold
his goods for higher prices. The fed
eral reserve board will probably do
nothing that will interfere with the
steady though painful decline in the
cost OF living no matter who is affected
by the prices OF commodities. The boa d
has Insisted from the start that Its
policy cf contraction was the only wav
10 force the cost 0t living down. So
while there are some who think the
process OF liquidation has gone far
enough there are others who want the
federal reserve board TO hold steady
and compel prices 70 go down ever
further. Its Ike n delicate surgical op'
tration. the surgeon must cut deep
enough and yst not too deep. II re-
Cu!rcs skilled hand. But there is abun'
dant evidence that tAe cutting pr"c" SIS
has gone far enough and that n change
for the better in the credit situation
is immeEeNt.