The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1921-10-31
TRADE RECOVERY
TOMOVERAPIDLY
SOON, IS BELIEF
Demands on Building
Trade Is Encouraging
Development.
STEPS OUTLIN ED
Absence Of Foreign Demand,
Taxation and Tariff Lend
Uncertainty.
STEPS OUTLIN ED
Continued from Page One.

CoHtin1ed from Page One.
sources; unemployment has been re-
duced a bit more than the seasonal
trend will account for; wholesale
prices have stifened in many lines,
and the most sensitive index numbers
are rising slowly; Sentiment" is less
pessimistic. All this conforms to the
general rule of reviyals. But what
are the peculiar circumstances Of the
time that will give this movement its
special features. making II rapid or
slow, vigorous or feeble. prolonged or
brief? That question is hard to an
swer because many of the data on
which an intelligent judgment might
be based are not yet available. Still
we are not altogether In the dark.
First. the banking situation Is pc
culiar. The depression has been -ex-
ceedingly severe, but the crisis imme-
diately preceding Il was very mild IN
comparison with American precedents
There were no spectacular failures in
1920. no runs on great banks, no re-
strictions on the Withdrawals of de-
posits, no moratoria. no closings Of
stock exchanges. Embarrassed con-
Germs were not forced to go into bank
ruptcy IL they could be saved.
While the number Of failures in
creased, It did not reach half the
average number of 1885. On the
face of the statistical record there are
few conspicuous signs of the enormous
stress to which the financial machinery
was subjected.
OF course. this ability of the new
banking organization to Withstand
the stress is most reassuring. But
the reinsurance counts more when
we are thinking or the next crisis
than when we are thinking Of the
present revival. For our old bank
ing system served very well in
periods like the present. If the
liqu dalton of financial obligations
was destructively violent IL was at
least thorough. Weak concerns Gle
promptly; they were not nursed
through a lingering illness in the
hope that they might eventually
recover.
The present period of liquidation
has certainly been long, but We do
not know whether Ii has been
thorough. Only time can tell
whether the method of pan c
inanciering" which we have prac-
ticed for the first time has put US
in as good a position to recuperate
as the more drastic methods into
which we used to be forced by the
lack of a centralized reserve. Bank
loans have shrunk, reserve ratios
have risen. and discount rates have
dl:ned; but the present discount
rates are high in comparison with
those which prevailed. say, in the
summer of 1918. and there may be
still a large number of weak con-
Germs on the verge of a final COL
lapse. Probably there is no one man
in the country VINO really knows
Just how thorough the liquidation
has been.
Price Decline Uneven.
A second popularity is the I'M
evenness of the violent fall in
prices which has characterized the
depression. The prospects of a re-
vival depend in large part upon
such an adjustment among the
prices of transportation, labor, raw
materials and finished commodities
as promises at least moderate profit
margins in all the main branches
Of business.
The price readjustments made
during the period of depression, it
Is true, never restore quite the
same relations among different
classes of goods as prevailed in the
preceding period of prosperity. 1t
IL true also that the comparisons
we are nowadays making with the
pre-war prices span a long period
usually the eight years since 1913.
1t would be folish to expect any
close approach to the prewar align
ment. Yet the discrepancies re-
vealed by every exhibit of the hg-
ures raise doubts as to whether the
present price situation is even mod
erately stable. 1t seems probable
that further readjustments must be
made.
Once more American REVEALS have
often, been prompted by a keen for
eign demand for our goods. Such
was notably the case in 1879, 1891
and 1897. We can expect little such
outside help at present . Severe as
our depression has been, the United
States is in a far more fortunate
condition than any of the great for
eign countries, financially and in
dustrially. Recuperation in this
country may help business to re-
vive in Europe; but-a livel- export
demand seems unlikely to come to
our aid. And foreign trade has be-
come a more important factor in
American business than IL was be-
fore the war.
The most encouraging of the pc
culiarities of the present situation
is the latest demand for construc-
ton of which we have been talking
since the armistice was staged, but
which. has not yet materialized to
any large degree. We have not had