The Eureka sentinel. [volume] (Eureka, Nev.) 1902-current, 1922-10-14
CURRENT BUSINESS CONDITIONS
From the Monthly Bulletin for octo-
Der Issued by the National City
Bank Of New York

There is considerable discussion
and difference of opinion as to yheth-
er another period OF credit imitation
and rising prices Is in sight. The
prices Of many commodities are tend
ing upward, wage advances signify
higher Industrial costs and the vol
ume Of bank loans is now increasing.
| What is the difference between legiti-
mate and wholesome expansion and
the unhealthful state which is called
imitation?
II comparison is made with the
situation before the war. conditions
are now inflated, but this is not
chargeable to the slight expansion
which has taken place in the last few
weeks. Prices have had a very con-
siderable fall from the top. and q
slight recovery from that fall, but
this gain cannot be called secondary
imitation. 1t looks like the recovery
that always comes when the old
stocks are exhausted and industry
gets fairly under way again. The
fall Of prices was Uneven and in some
cases too precipiate, and the curtail-
ment of industry was too great to
permit of supplying the necessary de-
mands.
Although the wartime was any
thing but a period of depression,
some of the effects we're similar to
those resulting from a period Of de-
preston. Industry In some lines fell
behind the normal growth of the
country, creating a deficit of supply,
or accumulation of demand. This is
true In housebuilding, In the con-
struction Of railway equipment. and
in some other lines, and a revival has
occurred In those lines. 1t is due to
imperative needs, rather than to a
belief that the bottom has been final
ly reached in construction costs, al
though the feeling doubtless pre-
walls that prices are not likely to go
lower until the existing shortage Is in
large part made up. The advance of
wages is due in part to the revival Of
industry, but in large part to the i'm
migration act.
There is nothing about the atti-
tude of buyers of general merchan-
disc that indicates a desire to antici-
pate future wants. They are buying
cautiously, for immediate needs only.
and fighting advances, which Is just
the opposite Of the common attitude
when imitation is under way.
Conditions Favorable to Imitation
1t is true that conditions are very
favorable to an imitation Of credit
We have a great number of indepen-
dent banking institutions. actively
competing with each other for Gus
toners, and the most effective way
that has ever been found for winning
customers is by liberality in granting
credit. These banks have ~liQuidated
a great amount of credit in the last
two years, and while they have shift
ed a large part of 1t into securities,
they will be glad to sell the securi-
ties as fast as the market will take
them, II they can employ the funds
in the service Of their banking Gus
toners and to bring new customers.
Furthermore, the Federal Reserve
banks are now liquidated down to
very small holdings, with their gold
reserves at the highest point in their
history, and have the capacity to
grant more credit than ever before.
And. finally. gold is steadily flowing
to this country from the new produc-
ton of the world, and will continue
to do so as long as exchange rates
are in our favor as now.
These are the conditions that make
for easy money, and we have eve
yet had easy money in this country
that imitation did not come out OF 1t.
There is no such central control over
bank credit in this country as In
countries where the banking business
is handled by a comparatively few
corporations operating numerous
branches. The Federal Reserve banks
have no control over the member
banks until the latter begin to re-
discount, and then only by 9 OF
the discount rate, and popular pres
sure Is always strong Tor a low rate
There seems to be nothing in sight
to save US from imitation but an in
disposition of the public to borrow.
The mere presence of ample gold re-
serves in the vaults Of the Federal
Reserve banks will not cause infa-
ton. 1t only serves as the possible
basis. Somebody must borrow the
available credit. and use 1t in buying
things to such an extent as will pro-
duce the conditions that characterize
imitation.
Reasons for Caution
One reason for doubling that the
country will swing readily into an
other infiationary jamboree is that
so little time has elapsed since the
last one.
There would seem to be reason to