Indiana daily times. [volume] (Indianapolis [Ind.]) 1914-1922, 1922-02-03
DECLARES 1922
TO BE YEAR OF
CONSTRUCTION.
New York Investment Au-
thority Speaks Before
Bond Men.
DEFLATION NEAR END

The year 1922 unquestionably will be a
constructive year in the business world,
John Moody, president Of Moody's In
st ors Service, New York, said last
light in addressing the indianapolis
Bond mems Club at its banquet in the
Travertine room of the Hotel Lincoln.
Mr.. Moody said the period Of defation
which set in with the summer Of 1920 is
not yet entirely completed but is prob
ably 80 per cent completed.
This does not mean that we are al
ready entering q real business revival,
but before the year 1922 Is over revival
will be under way" he said.
The action of The high grade invest
ment markets during recent months is
simply concrete reflection of the slow
~ mrroving economic situation which
has been progressing throughout 1921.
The fall in commodity prices, the liqui-
dation of loans, the commercial failures
and the slowing down Of business activ-
tiles, working together, have made avail
able for Investment purposes very large
amounts Of unemployed capital. 1t is
this releasing of the strain of credit more
than anything else which has 80 sharply
relaxed the money market and brought
a great revival of demand for high class
investment issues
This special factor, however, will not
continue to be important as the defla-
ton process reaches completion. The
vital question therefore is, what will be
the course of interest rates and Of Sc
curity prices when defation is Complete
and q new demand springs up for capt.
tai, and credit in regular business and
industrial channels? VIII interest rates
return to higher levels and bond prices
react, or will the reverse occur?
PREDICTS NO RENEWED
STRAIN ON CREDIT.
''It is my opinion that with a revival
of general business activities during the
coming year or two there will be no re-
newed strain on credit and that the
eArend of interest rates, as a whole, will
z&be downward rather than upward.
"Consequently the upward movement
in general bond prices, barring tempo
rary setbacks and unexpected develop
n ants will continue upward. A year or
two hence high grade investment bonds
should be ranging considerably higher
than they are today.
"A business revival. when it comes, will
not be a speculative revival such 5 was
the case in 1919. There should be no
new period Of initiation for many years
TO come. A nOnspeculattve revival i'm
plies, not a shortage of capital, but the
steady production of new wealth and
"The investors Of the country are the
business men Of the country, the holders
Of the bonds and stocks Of the great
business organizations; and anything
which adds to their real prosperity auto
maticalIy adds to the investment funds of
the nation
"There are, Of course, many uncertain
and unsettIing factors in the outlook for
the immediate future. Our own domestic
problems, political and economic, are Sc
lfOus and necessarily invite caution. We
also have the unsettled foreign situation
confronting US The latter is probably
not so menacing as it appears on the sur
Face and is really better than 1t appears
Economic conditions in Europe are stead
lily improving and this year is likely to
witness q definite settlement Of many of
the political and financial problems
abroad.
weighing all. the unfavorable against
the favorable factors in the situation l