The Lakeland evening telegram. (Lakeland, Fla.) 1911-1922, 1922-02-20
UPWARD SWING
OF BUSINESS IS
DUE VERY SOON
Annual Report of the
Federal Reserve Beard
Submitted To Congress
Today Is Decidedly OPP
tinistic In Tore-Sorne
Interesting Statistics
Are Submitted

Washington. Feb. 20.-Business
Throughout the country. progressing
through welldefned 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 re-
yival is not far distant When it does
definitely set in it will be followed in
due course by new era of prosper
ity."
Business, in one of its long swings"
from prosperity. the report said has
followed its usual rotation. which it
described as business activity and in
"reasing production; excessive expan-
sion and speculation, followed hither
by bank and forced liquidation; a long
period Of slow liquidation, business de-
preston stagnation: and then revival.
In the light of recent experience"
the report warned. we should remem-
Der. when we again enter into Il per-
iod Of full prosperity. that a reaction
Will follow sooner or later: and if the
flow of the incoming tide can be con-
trOlled 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 indus
trial and commercial activity and gen.
eral prosperity will ne marked by san
er methods, greater achievement
along constructive lines. and by a
longer duration than any which we
have had before"
The board confined its report to an
account of the operations of the or
ganization for the year 1921. without
Offering any suggestions for leglsla-
tion affecting the board or the federal
reserve system. The earning assets
of al federal reserve banks, the re-
port said, amounted on December 2S,
1921. to Sl.535. .S51,000. compared with
$3,263, ,027000 on December 30. 1920.
reduction of $1.727176.000 or SO
per cent. and a reduction of 1885,
125,00O, or 50 per cent from the high
point reached on October Is. 1920.
This reduction in loans. the report
explained. was accompanied by
steady increase in gold reserves and
an almost continuous reduction in fed
eral reserve note circulation. the loan
reduction continuing despite substan-
tial decline in discount rates.
Gross earnings of the Federal Re-
serve banks for 1921. the report con-
tinued, amounted to 1922, ,S65. 900, COM
pared with $1S1.297.0 900 in 1920. the
falling off in earnings being due to
decline in the volume of re.discOunts
and reductions in re-discount rates.
Member bank borrowings. according
to the report. showed continuous
decline from $2.6S7. 100000 at the end
Of 1920 to about $1.14400000O at the
end of 1921. due to a reduction Of over
S9OO,O0O,OO0 in the volume of Federal
Reserve notes in circulation. caused
by lower price levels and by net i'm
ports of gold amounting to s6G7 900,
600 compared with $751; .297 900 in
1920, the falling off in earnings being
due to decline in the volume OF re-
discounts and reductions in re-dis-
count rates. Member bank borrowings,
according to the report. showed a con-
tinuous decline from $2.6S7. .00O. 900 at
the end of 1920 to about Sl.144. .000. 900
at the end of 1921 due to a reduction
of over 5000. 100000 in the volume of
Federal Reserve notes in circulation.
caused by lower price levels and by
net imports of gold amounting to
S667,000000 practically all of which
found its way into Federal Re"erve
banks.
AS a franchise tax the federal banks
paid into the treasury $59.974.00O for
the year 1921.
On Dec, 2S. the report continued
the Federal Reserve banks held a gold
reserve of S2.S70000.000 and n COM
hined reserve against member banks
deposits and note issues of slightly
more than II per cent If the legal
minimum reserve of 20 per cent could
be set IN against deposits. the reDort
added there would remain gold re-
serve of more than 81 per cent AGAINST
federal reserve notes in circulation.
For some months past. the report
said there has been a marked in
crease in domestic rates of interest.
Notwithstanding some unfavnrahle
features in the revenue laws, the in
ves'ment market is now absorbing Sc
curities at reasonable rates which
could not have been considered a few
months ago. Market quotations of
Liberty bonds have steadily advanced
rntil thew are now approaching par.
Good railroads and industrial bonds
have also appreciated and there have
been some noticeable advances in
standard stocks. High commodity
prices and great business activity usu-
ally mean lower prices for bonds and
other securities yielding a fixed In
come, while reduced commodity prices
and lower money rates bring higher
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