Idaho County free press., 1922-06-15
BABSON SAYS
Cheaper Money Ahead

Wellesley Hills, Mass, June Is
Roger w. Babson issued the following
statement today regarding the money
situation:
'' For the last few years banks.
mortgage companies, and others en-
gagged iii the lending of money have
been educating people to paw higb rates
OF interest. Manufacturers, business
men, nome builders and others are
today paying high rates of interest
winch few years ago they believed
never would be paid. Naturally this
has handicapped employment, especial
ly building operations. These people
now wonder whether this is to be
permanent condition or whether these
high rates are only temporary. Sta
lstlcs lead me to believe that the
high money rate period of the last
Few years has passed for many years
to come. Already money rates have
declined greatly in the wholesale mar
ket. Where a year ago the banks
were lending money on call to the
brokerage houses at from 6 to per-
cent, they are now lending at about
four percent Even three to six
months paper can be sold at from Az
to Az percent discount. There are
tremendous changes within short per-
iod of time. In fact the change is 50
great Ga decline of about so percent)
that it would not be surprising if
money rates now strengthened for a
short while preparatory to another
downward movement.
MONEY SIMPLE COMMODITY
"Money is commodity the same as
cotton, wool, lumber, or copper. 1t
has a wholesale market and a re-
tail market A wholesale price and a
retail price. Moreover, as with COM
the retail price in the money
market lags about six months to a |
year behind the wholesale price of /
the money market. This means that |
The rates in the wholesale money mar
ket go up and down from six months
TO year before the average business
man and home builder is affected. 1t |
takes nearly year for cotton to
get from the plantation to the shelves
Of the department. sore. Hence, it
nav be several months before the re-
tail cotton goods trade gets the ad-
yantage of a decline in the price of
'aw cotton. Tt is the same with money
Is with cotton. Tt is some months af-
er the decline in the wholesale price
# money before the business man and
he home builder get the advantage in
he decline Of rates. The bankers are
lot to blame for this Tt is economic
aw. As it takes some time for the
bankers to raise the retail interest
ate for money after the wholesale
ate advances, so it takes consid-
,rable time for the retail rate to de-
line after the wholesale rate de-
lines'
WILL BORROW CHEAPER =
Being asked how this is to affect
he average man during the next year
Ir. Babson reIlied as follows:
ssThis means that the average man
viii be able to borrow money much
.heaper during the next few years
han he has been able to borrow dur
ng the last five years. 1t means that
borrowers should now avoid borrow
NO for long terms at high rates. IL
means that there will be decline IN
he retail price of money the same
s there has been a decline in the
vholesale price of money. 1T means
hat money will be more available
or the building of homes, school.
ouses. roads and construction work OF
very form. Most of all it means; AS
he banks during the past few years
ave educated the public to high rates,
he public must during the next few
cars educate itself back again to the
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