New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-01-17


leased. Is industry adjusts itself to
lower price level, member banks
will reek to reduce their indebtedness.
and, according to Governor w. P. G..
Harding, the Reserve authorities will en-
courage this process by keeping the dis
count rate Of the Reserve banks slightly
higher than prevailing open market
rates.
II no new imitation halts developments
which seem under way, the trend will
be in the direction Of a substantial
shrinkage Of the rediscounts, and hence
the profits Of the Federal Reserve
banks. Unless new offsets appear, the
regional banks will be faced with the
problem Of keeping their profits sufIi-
GENTLY large to meet their expenses, and
will do this in large measure by pur-
chasing acceptances in the open market.
II real dedation comes-in the sense of
substantial reduction of the aggregate
credit in existence In this country-then
lower earnings for the Reserve banks
will inevitably result. This contingency
is not viewed with alarm by Reserve
officials, as it never was intended that
the Reserve banks should earn larg.
sums Of money. They were created for
other purposes, and during the period
of imitation hugo profits were inescap-
able.
The fact that credit released from
industry will be to some extent abolished
by liquidating member bank indebted
ness at the Reserve bank will delay the
attainment of period Of easy money.
but credit conditions are likely to change
rapidly after business begins to release
funds on large scale. Last week Dor
rowings at the Federal Reserve Bank
OF New York were substantially reduced,
as rates on money for commercial and
speculative needs declined.
In spite Of the dropping Of the re-
newal rate on call loans to per cent
for the first time since November 80 and
the decline Of rates in the outside mar
ket to per cent, industrial stocks re-
vealed slight losses last week. The ex-
fremely rapid recovery from the low
prices caused by the hysteria and neces
sitous selling of December was followed
By series of irregular markets. Since
the fountain and springs Of strength of
the market during the rebound were to
large extent repurchases by those who
sold stocks and bonds last month to
establish losses for taxation purposes
and also short covering, 1t was to be
expected that, when this character of
buying tended to exhaust itself, dullness
in speculation would follow.
The rally from the low marks Of
December was not confined to security
prices Commodity quotations at the
organized exchanges turned higher, and
moderate improvement took place in
the various wholesale markets, particu
larly in cottons, silks, women's wooden
goods and shoes. A food of buyers has
poured into the city, and many of the
purchases that should have been made
IN the closing months of last year are
now being made. The squirt there
fore represents in part the effects of
deferred buying and also seasonal con-
ditions. Factors, emerging from a Pc
Rod OF excessive slackness, reported
bristling activity last week The ex-
preston Of real buying impulses led to
price increases, indicating that the low
quotations prevailing were under the
level at which sellers would be willing
to dispose Of any large quantities Of
goods. In the terms Of the depression
OF previous months, the present situa-
ton seems like an impressive boom.
However, it-can be more accurately de-
scribed as . moderate recovery.
Money Is easier. Current develop
ments in the money market indicate a
piling up Of surplus funds in banks In
a1mo0< oil no w+c 30 h. u~,,zA~