Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-02-21
RESERVE BOARD SEES
. ERA Of PROSPERITY
FOR UNITED STATES
Annual Report of System
Says Business Pendulum
Is Ready to Swing Back
Recommendations for Year

WASHINGTON, Feb. 20.-Busi-
ness throughout the country, pro
crossing through well-defned cycles,
Is nearing the point of the upward
swing of the economic pendulum,
according to the annual report of the
federal reserve board transmitted
today to congress.
There are those" the report said,
"who believe that the beginning of
revival is not far distant When
it does definitely set in it will be
followed in due course by a new
era of prosperity
Business, in one of its "long
swings" from prosperity, the report
said, has followed it's usual rota-
ton, which it described as business
activity and increasing production;
excessive expansion and speculation,
followed hiterto by panic and forced
liquidation; a long period of slow
liquidation, business depression and
stagnation, and then, revival. In
the light of recent experience" the
report warned 1--WE should remem-
Der, when we again enter into pc
Rod of full prosperity, that reac-
ton will follow sooner or later; and
if the flow of the incoming tide can
be controlled so that the crest may
not be reached too rapidly nor rise
too high, the subsequent reaction
will be less severe and the next
period of industrial and commercial
activity and general prosperity will
be marked by saner methods, greater
achievement along constructive lines
and by a longer duration than any
which we have had before"
The board confined it's report to an
account of the operations of the
organization for the year 1921, with
out offering any suggestions for leg
islation affecting the board of the
federal reserve system. The earn
ing assets Of all federal reserve
banks, the report said, amounted on
December %, 1921, to $1,535, 851 900,
compared with $3,263 ,027,000 on De-
cember 80, 1920, a reduction of ST.
727,176,00O, of 40 per cent, and a re-
duction of $1,SS6 125, 900, or So per
cent from the high point reached
on October Is, 1920.
The reduction in loans, the report
explained, was accompanied by
steady increase in gold reserves and
an almost continuous reduction in
federal reserve not circulation, the
loan reduction continuing despite
substantial decline in discount rates.
Gross earnings of the federal re-
serve banks for 1921, the report con-
tlnued, amounted to $122,S65, 200,
compared with $1S1, 297, 900 in 1920,
the falling off in earnings being due
to decline in the volume of rediS-
counts and reductions in rediscOunt
rates. Member bank borrowings, ac-
cording to the report, showed a con-
tinuous decline from $2,6S7, 100000
at the end of 1920 to about 81, 144,-
900 900 at the end of 1921, due to a
reduction of over 100000, 900 in the
volume of federal reserve notes in
circulation, caused by lower price
levels and by net imports of gold
amounting to $667 100000, practical
\ ly all of which found its way into
federal reserve banks.
AS a franchise tax, the federal re-
serve banks paid into the treasury
$59,974,000 for the year 1921.
On December %, the report contin-
ued, the federal reserve banks held
gold reserve of S2,870 100000 and
combined reserve. against member
banks deposits and note issues of
slightly more than Il per cent. If
the legal minimum reserve of 35 per
cent could be set up against de-
posits, the report added, there would
remain a gold reserve of more than
81 per cent against federal reserve
notes in circulation
For some months past" the re-
port said, there has been a marked
easing in domestic rates of interest.
Notwithstanding some unfavorable
features in the revenue laws, the
investment market is now absorbing
securities at reasonable rates which
could not have been considered
few months ago. Market quotations
of Liberty bonds have steadily adj
vanced until they are now approach
ing par. Good railroad and indus
trial bonds have also appreciated and
there have been some noticeable adj
: vances in standard stocks. High
commodity prices and lower money
rates bring higher market prices
for bonds"