Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1921-12-31
Money and Markets

QdY Indicate LIletI Lilc } Se1i Ao-
whole will be more satisfactory TO
business than the year just ended.
Our forecast is that profits will de-
pend more on economy Of operation
than on expansion of volume. With
the many favorable factors now ope-
rating, business men should not fear
to make plans for the new year. but
they should plan with care and con-
servatism, and with constant effort
toward reduction of costs.
Financial Improvement continues.
Progress has been made in reduction
reduction of excess stocks of manu-
featured goods. Accommodations OF
raw materials have been reduced.
The rate of production in the major
industries has shown, little change
during the closing weeks OF the year.
Losses in some line have been offset
by gains in others, the net result
being that the gains over the level
of the earlier months of 1921 have
been held.
The last twelve months have wit
messed great progress toward stable
financial conditions in business. Com
bined gold reserves have increased
by more than 40 per cent while dis
counts for member banks have drop
ped so per cent, and Federal re-
serve notes in actual circulation have
declined rs per cent. The Federal
reserve system once more proves to
be system designed to care for in
creases and decreases in the volume
Of credit, with the requisite elastic
ity to do this easily. The betterment
in the position of member banks,
while not so striking is nevertheless
satisfactory.
Notwithstanding the consistent i'm
provement in financial conditions, re-
covery in manufacture and trade has
been slow. Unemployment in the
chief countries shows little decline
from the high point reached early
in the year, and it may we'll reach
new high figures during January and
February, when normally there is an
increase in the number Of those out
of work in North America and Eu-
rope. Manufactured goods continue
10 move slowly and uncertainty into
the channels of consumption.
In last analysis, the business Of
the world rests on a physical, not a
financial foundation. Failure of bal
ance between world wide supply of
and effective demand for physical
goods forced the violnt readiustmcnt
goods forced the violent readiustment
ment which will not be complete until
this physical balance has again been
established.
The wool situation illustrates par
ticularly well the various factors
which have prevented a return to
normal conditions. 1t has continued
to accumulate, partly because central
Europe has not been able to purchase
in the expected amounts partly be-
cause an important part of the wool
supply is a by-product, and partly
because the building up of flocks is
so slow a process that flock masters
reduce them only when they have
given up hope of profits. ;,
With cutailment of production and
increased demand, copper stocks are
showing reduction. The short Amer
lean and Egyptian cotton crops have
served to bring the worlds cotton
supply approximately to a prewar
normal. Stocks of hides and skins are
large in many countries but arc
moving more freely into consumption.
The prices of rubber and sugar arc
still below tn cost of production. Slsal
stocks carried over from last year
now constitute nearly two-thirds of a
normal years supply. The worlds
wheat production is in satisfactory
state Of balance in that there is an
adequate supply and sustained de-
mand The American farmer, in the
face of new corn crop of 3,l52,OO0,-
900 bushels is carrying over 281,-
100000 bushels from the record crop
of 1920. There is also an accummu-
lation in other less we'll known COM
modities.
This accumulation of physical
goods is not a misfortune. 1t as
sures to the world supply Of cheap
food and clothing, and real prosperity |
has never rested on any other basis.
But producers Of raw materials con-
stitute much more than half Of the
buying power of the world, and the
conclusion is inevitable that the en-
tire economic structure will gradu-
ally adjust itself to the raw material
market.
The essential step toward recovery
is removal of the burden of expndi-
lures for war. The countries which !
are wasting their money and effort |
on ornaments are those whose mar
kets must absorb the worlds excess
of raw materials and pay for it with |
manufactures.
The terrific burden of war debts
and preparation for war is clearly |
shown by data recently prepared by
the Federal Reserve Board. The
Board states that in 1920, of total
net public expenditure by Great Bri-
tain of 1.145.92S 600, sos per cent.
were for public debt charges and 25.5
per cent, were for national defense;
by France, of a total of 52,1s3,217,-
600 francs. 22.7 per cent, were for
public debt charges, and 50.7 per
cent, were for national defense. In
1919, Italy's total public expenditures