The New York herald., 1922-01-05

4
ward lower levels: prices stabilized Al
lower figures; many dividend cuts and
omissions in the background: unemploy'
ment problem reduced; money trend to-
ward the ease experienced in prewa1
periods when business was at low ebb
industries here and there showing i'm.
provement: banking position the country
over the soundest ever; bonds at the
highest prices and lowest yields In hall
a decade; stocks preparing to discount
general business revival; balance sheet
losses in the background; inventories
thoroughly liquidatod.
So much for the material contrasts
! Fsychologically there has been trs-
nehdous Improvement Events In the
closing month Of 1921 disclosed that
governments can get together In con-
ference. can remove misunderstanding
and prejudice and can cooperate In such
a way as will benefit permanently bust.
ness and finance.
Problems Look Less DiMcult.
! In England the conferees apparently
settled centuries old question through
the determination to form the Irish Free
State. The Limitation Of armamsn,
conference in Washington resulted In
unprecedented steps and agreements
which will do much to relieve the ex-
pense Of government and insure oppor.
tunity for negotiation and adjustment
Of any grievous questions that may arise
in the Pacific.
Looked at from another psychological
angle, the financial and business outlook
has been bettered by the reasonable at
| titude of labor with reference to wage
reductions. Wise prophets a year ago
declared that labor would fight lower
wages In any direction with tho full
power of its weapons. Considering the
magnitude of the decrease In aggregate
amount Of wages paid. strikes have been
few and far between and successful
strikes have been negligible. Thus were
the prophets belied. No small part OF
the credit for averting a nationwide rail-
road strike should go to the attitude OF
the Harding Administration, but labor
itself bowed to. the working OF economic
law because In many and repeated In
stances to fight wage reduction meant
the shutdown Of industry an labor
thought better half loaf than no loaf
at all. But whatever the motive the
wage reductions played an Important
part In permitting the United States 70
go through the readjustnent period with
no greater hardship than has been mani
tested to date.
Years Constructive Operations.
An interesting feature OF last year is
the fact that, despite the depression IN
business. which prevailed nearly through
out 1921, the opportunities in finance
were by no means limited TO bearA To
be sure the major constructive oppor-
tunitics were in the bond department,
but carly fall saw q complete turning
point In the general range OF stocks,
with the extreme lows in the back
ground and profitable constructive op-
erations were conducted in portions or
the foreign exchange list and In ac-
ceptances. As far back as last January
the development which the bond mar
kets. were to see during the next twelve
months was indicated by the success
full fiotation Of new large loans and
tho great interest aroused even then in
State and municipal bonds. In that
month the position of the reserve system
as q. whole showed consistent improve
ment, due 10 the Importation OF gold.
which was to assume gigantic proper
tions In 1891. The call money rate pre-
vailed at per cent. and commercial
money ranged from III to s per cent
Consequently the bond market started
an upward swing, but II was held In
check by the outpouring OF new loans.
In February tho rates for accomno-
dation at the banks continued high, but
All bank movements were In tho right
direction. Reserve bank ratios moving
toward higher levels. In that month
there was much activity in bond fiota-
tions. with irregular price changes. The
most impetuous part of the readJustment
process occurred In March with tho de-
vclopments such as would attend In
evitably a period Of trade reaction and
OF meeting consequences Of imitation. ex-
travagance and proflteerlng. As was to
be expected, labor controversies assumed
growing dimensions. but a favorable
factor even then was the wise attitude
of the new Administration toward labor
problems, counseling wage earners TO
yield 70 the inevitable I'm wage roduc-
roads then were In a difficult situation,
with traffic dwindling. carnings shrink
ing and surplus freight cars rising in
number rapidly. Dividend reductions and
climinations at top speed and acute gen.
eral business depression wcre conspicu-
ous elements of the spring picture. New
crthclcss the change for tho better in
the credit and banking situation became
more pronounced, the twelve reserve
banks reporting Improvement I'm all
items. The rrst income and excess
profits IN. payment to be handled with
ease occurred on March 15 and the
effects of augmentation OF gold imports
and curtaiiment OF borrowing by mem
ber banks were obvious.
Rapid Liquidation starts.
The second quarter OF 1921 saw the
surface indications Of whiriwind prog
ress of liquidation and OF preparation
for the completion Of the liquidation
period. Several situations which re-
quired concerted banking effort to save
disaster arose but cooperation vas ~
hand and nearly an the difficulties were
solved without publicity. Tho period
was featured by price reccssions almost