The Barre daily times. (Barre, Vt.) 1897-1959, 1922-02-20
UPWARD SWING
OF BUSINESS
| Is About to Be Realized
According to Federal
Reserve Board
ENCOURAGING SIGNS
ARE REPORTED
New Era Of Prosperity
For the Entire
Country

Washington, D. G., Feb. 2o.--Busi-
ness throughout the country progress
ing through well defined circles Is near
ing the point of the upward swing OF
the economic pendulum, according TO
the annual report Of the federal re-
serve board transmitted to-day to Con-
gress.
"There are those" the report said,
"who believe that the beginning OF re-
yiyal is not far distant. When It does
definitely set in it will be followed in
due course by new era Of prosperity.
Business, in one of its "long swings
from prosperity, the report said, mas
followed its usual rotation, which y
described as business activity and I'M
.creasing production; excessive expan-
sion and speculation, followed hitherto
by panic and forced liquidation; a
long period OF slow liquidation, bust
ness depression and stagnation, and
then revival.
"In the light Of recent experience,
the report warned, I'VE should remem-
Der, when we again enter into period
of full prosperity, that reaction VIII
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 to high, the subse-
auent reaction will be less severe and
the next period of industrial and COM
mercial activity and general prosperity
win be marked by saner methods,
greater achievement along constructive
lines, and by longer duration than
any which. we have had before"
The board confined it's report to an
account of the operations Of the or
ranization for the year 1921, without
offering any suggestions for legislation
effecting the board or the federal re-
serve system. The. earning assets Of
all federal reserve banks, the report
said. amounted on Dec. 30, 1927, to
81. 535 ISL goo, compared with s3,203,-
or 900 on Dec. 80, 1920, reduction OF
81 1877 ,l76. 900 or SO per cent, and re-
duction OF 81 $50, ,25, 900 or 55 per cent
from the high point reached on Oct.
Is, 1920
This reduction in loans, the report
explained, was accompanied by "A
steady increase in gold reserves and
an almost continuous reduction in fed
eral reserve note circulation, the loan
reduction continuing despite substan-
tial declines In discount rates.
Gross earnings of the federal reserve
banks for 1927, the report continued,
amounted to $l22, 900, compared
with Slsl DOT 900 in 1920, the falling
off in earnings being due to decline in
the volume of rediscounts and redue-
tions in rediscount rates. Member bank
borrowings, according to the report,
showed continuous decline from ST.
6s7 900 900 at the end of 1870 to about
SI,l44 100000 at the end of 1927, due
to 4 reduction of over 5000 100000 in
the volume of federal reserve notes in
circulation, caused by lower price lev
els and by the net imports of gold
amounting to 1867 100000, practically
all of which found its way into federal
reserve banks.
As a franchise tax the federal re-
serve banks paid into the treasury
$59, 974 900 for the year 1921.
On Dec. 2S, the report continued. the
federal reserve banks held a gold re-
serve Of S2,s70.000,O00 and a combined
reserve against member banks depos-
its and note issues of slightly more
than II per cent. II the legal minimum
reserve Of IS per cent could be set up
against deposits, the report added,
there would remain gold reserve of
more than 81 per cent against federal
reserve notes in circulation.
For some months past the report
said, there has been marked easing
of interest. Notwithstanding some I'M
favorable features in the revenue laws,
the investment market is now absorb
ing securities at reasonable rates which
could not have been considered few
months ago. Market quotations of Lib
erty bonds have steadily advanced un-
til they are now approaching par. Good
railroad and industrial bonds have also
appreciated, and there have been some
noticeable advances in standard stocks.
High commodity prices and great bust
ness activity usually mean lower prices
for bonds and other securities yielding
a fixed income, while reduced commod-
ity prices and lower money rates bring
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