Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-02-21
FEDERAL RESERVE
BOARD OPTIMISTIC

Washington, Feb. 90 - Business
throughout tho country, progressing
through we'll defined circles. is near
ing the point of the upward swing
of the economic pendulum. according
to the annual report of The Federal
Reserve Board transmitted today to
Congress.
"Thore are those" tho report said.
who believe that the beginning of
revival is not far distant. When it
does definitely set in. it will be fol-
lowed in due course by a new era of
prosperity"
Business in one Of its "long swings"
from prosperity. the report said. has
followed its usual rotation. which it
described as business activity and
increasing production: excessive eX-
Iansion and speculation. followed
hitherto by panic and forced luuida-
ton; long period of slow liQuida-
ton, business depression and stagna-
ton and then revival. in the light
Of recent experience" the report
warned. I'VE should remember. when
we again enter into period OF fun
prosperity, that a reaction will fol-
low sooner or later; and if the flood
Of N" incoming tide can be controlled
so that the crest may not be reached
,vp ,uniuily nor rise too high the sub.
scqr 1T reaction will be less severe
w. ''"vt NJ Rod of indr stral and
commercial activity and general pi oS-
T., AZ! VIII bc marked by Sanor meth
DDS. greater achievement along con-
structive lines. and by a longer dur
alton than any. which we have had
before"
The board confined its report to an
account of the operations of the or
saniZation for the year 1921. without
offering any suggestions for lcgisla-
ton affecting the board or the fed
eral reserve system. The earning
assets of all federal reserve banks.
the report said. amounted on Dec.
IS. 1921, to s1.535, ISL 900. compared
with s3.2G3, o21. 900 on Dec. 80. 1920. n
reduction of sl.727.17G,O Oo. or SO per
cent, and a reduction of $l.SS6,125.-
600, or So per cent. from the high
point reached on oct. Is. 1920.
This reduction in loans. the report
explained. was accompanied by
steady increase in gold reserves and
an almost continuous reduction in
federal reserve note circulation. the
loan reduction continuing despite
considerable decline in discounts.
Gross earnings of the federal reserve
banks for 1921 tho report continued.
amounted to s122.S6i.000, compared
with s1S1.297, 900 in 1926. the falling
off in earnings being due to decline
in the volume of redscOunts and re-
auctions in rediscount rates Mem
her bank borrowings. according to
the report, showed a continuous de-
cline from s2.S87, 100000 at the end of
1929 to about S1.144 10000 at tho end
Of 1921. due to reduction of over
5000. 900, 900 in the volume Of federal
reserve notes in circulation caused by
lower price levels and not imports of
gold amounting to $667,000.O00, prac-
tically all of which found its way in
federal reserve banks.
AS franchise tax the federal re-
serve banks paid into the treasury
So9.91t. 900 for the year 1921.
On Dec. %, the report continued.
the federal reserve Ia nks held a gold
reserve OF S-.S iH.HUU.bDD ana 4 COM
bind reserve against member banks
deposits and note issues of slightly
more than Il per cent. IF the legal
minimum reserve of 81 per cent.
could he set up against deposits. the
report added. there would remain a
gold reserve Of more than 81 per cont
against federal reserve notes in cir
Walton.
For some months past" the report
said. there has been n marked cas-
ing of interest. notwithstanding
some unfavorable features in the rev.
enue laws, the investment market is
row absorbing securities at reason
able 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. Coed railroad
and industrial bonds have also ap-
preciated. and there have been some
noticeable advances in standard
stocks. High commodity prices and
great business activity usually mean
lower prices for bonds and other Sc
curities yielding fixed income while
reduced commodity prices and lower
money rates bring higher market
prices for bonds"
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