The Idaho Republican. [volume] (Blackfoot, Idaho) 1904-1932, 1921-01-05
CAUSES OF MONEY
STRAIN VANISHING
New York Bank Sees
Easier. Money for
1921


Commerce Monthly, organ of the
National Bank Of Commerce Of New
York Gtty~ appears the following
comment Un the prospects for better
money conditions in 1921 than were
enjoyed in the year just ended:
Business men are justified in
feeling confident that the money
situation in the United States in
1921 will be very different matter
from what it has been during 1920.
Certain specific factors are clearly
recognizable as the chief adverse
factors affecting bank credit during
the past year, and there is every rea-
SON for believing they will not be so
powerfully operative in the year to
come.
"These facts sprang irresistibly
from abnormal circumstances in our
national life which are passing away.
But at times their influence in i'm
pairing the efficiency of our credit
machinery was so great as to cause
serious anxiety. With the force of
these influences modified, banking
may be expected to serve the needs
of legitimate business with a less
degree of credit strain than pre-
vailed in 1920.
Expansion Follows War
Business entered the opening
weeks Of 1920 with tremendous mo-
mentum acquired in the rapid ex-
pansion that it had experienced in
1919. The initial causes of that era
which might truly be called one of
violent business activity, were the
great shortages in goods Of virtually
all classes and the impairments of
productive forces growing out of the
war. This condition was aggravated
by unbridled public buying resulting
from profitable business, high wages
and an excess of work over available
labor bringing about an attitude of
improvidence toward the future and
q tendency to spend rather than to
save.
High prices, the volume of busi-
ness and speculation resulted in an
expansion of bank credit which in
turn stimulated the upward ten
dencies in prices, business and
speculation"
The article goes on to name the
four reasons for the impairment in
the quality of credit-first, the war
paper; the transportation breakdown
early last year; the speculative with
holding of large stocks of goods; and
lastly the public retrenchment in
buying and the falling prices. The
article continues:
Four Reasons Given
1.-THE situation is yet far from nor
NAL. The continued lack of public
buying has made it impossible for
many commodities and for many
lines of merchandise to become rea-
sonably liquidated, and the process
cannot be completed until buying
once more becomes active and pro-
duction is demanded. But the banks
have stood by business and business
may feel confident that it is within
the power and the inclination of the
banks to continue to cooperate. To-
day the close partnership between
banking and business stands re-
vealed, because the banks, thru the
federal reserve system, have func-
toned as an integral part of busi-
ness. The present exigent condi-
lions will be worked out by business
and banking together, and only that
which will be the sound course.
IF the foregoing facts and deduc-
ions are of value, it is not because i
If the light they throw on past 6
events, but because of the promise
hey hold for the future. They carry 9
he conviction that credit conditions
'hould be more satisfactory during j.,
1921 than they have been during
1920. These figures justify busi- /
less men in expecting our credit re-
ources to function more efficiently d
n the future than they have in the d
immediate past to facilitate their
BUSINESS operations, because the
our great causes Of impaired credit
a 1920 should not exert the same in p
luence in the year that lies ahead" e
-.f- n
Plant of Pocatello tt