Evening star., 1922-02-20
BUSINESS Revival
BELIEVED NEARING
Reserve Board Reports Up
ward Swing of Pendulum
Is impending.

progressing through well-defined
cycles. is nearing the point of the
upward swing Of the economic pen
dulum, according to the annual report
of the Federal Reserve Board trans
mitted today to Congress.
There are those" the report said.
who believe that the beginning Of
revival Is not far distant. When it
does dehnitely--set-.tnit In Ii win be fol-
lowed in due course by a new era of
prosperity"
Busfnees, in one Of it's ''long swings''
from prosperity. Ahe report said. has
followed it's usual rotation. which it
described as business activity and in
creasing production: excessive ex-
pansion and speculation. followed
hitherto by panic and forced liquida-
ton: a long period of slow'liauidatien.
and then, revival. In the light of
recent experience" the report warned.
I'VE should remember. when we again
enter into a period of full prosperity.
that a reaction 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 achieve
ment along constructive lines, and by
q longer duration than any which we
have had before"
Earnings Cut Half.
the board confined its report to an
account of the operations Of the or
ganization for the year 1921, without
offering any suggestions for legislation
affecting the board or the Federal Re-
serve System. The earning assets of
said, amounted on December 28. 1921,
to $1,535, 900, compared with s3,-
263,O27, 900 on December 30, 1920, a re-
duction of .727.176,0 900, or So per cent.
and a reduction Of $1.886,125,000. or SIS
per cent, from the high point reached
on October Is, 1920.
This reduction in loans, the report
explained, was accompanied by a
steady increase in gold reserves and an
almost continuous reduction in federal
reserve note circulation, the loan reduc-
tion continuing despite substantial de-
cline in discount rates.
Gross earnings Of the federal reserve
banks for 1921, the report continued,
amounted to $122.S65,O0O, compared
with $1S1,297.0Qo in 1890. the falling
of in earnings being due to decline in
the volume of rediscounts and reduc-
tions in rediscount rates. Member
bank borrowings. according to the re.
port, showed continuous decline from
81, ,687, 100000 at the end of 1920 to
due to a reduction Of over $500, 600, ,00O
in the volume of federal reserve notes
in circulation. caused by lower. price
levels and by net imports of gold
amounting to $667 100000, practically
all Of which found Its way into federal
reserve banks.
Pay sss,s74.ooe in Taxe..
AS q franchise tax the federal re.
serve banks paid into the Treasury
$ss,s74,o00 for the year 1921.
On December %, the report rcontin-
usd, the federal reserve banks held
q gold reserve Of $3.50, ,000, 900 and q
combined reserve against member
banks deposits and note issues lof
sli lightly more than Il per cent. If the
legal minimum reserve Of 3S per cent
report added, there would remain q
gold reserve Of more than 81 per cent
against federal, reserve notes In cir.
culation. ~ = = .ae--
"For some months past" the. report
said, "there has been a marked easing
in domestic rates Of interest. Not.
wfthstanding some unfavorable fea.
lures in the revenue laws, the invest
ment market is now absorbing securi-
ties at reasonable rates which could
NOT have been considered a few
months ago. Market quotations Of
liberty bonds have steadily advanced
until they are now approaching par
Good railroad and Industrial bonds
hayd also appreciated. and there have
been some noticeable advances in
standard stocks. High commodity
nrices and great business activity
usually mean lower prices for bonds
and other securities, yielding fixe6
income. while reduced commodity
nrices and lower money rates bring
hi0her market prices for bonds"