The New York herald., 1922-02-21
UPWARD SWING OF
BUSINESS Is SEEN
Throughout Country Progress
Is Well Defined, Says
Reserve Board.

WAsHINGroN, Feb. 20. Business
throughout the country. progressing
through well defined circles, is nearing
the point of the upward swing of the
economic pendulum, according to the an
nual report of the Federal Reserve Board
transmitted to-day TO congress.
There are those" the report said
who believe that the beginning of re-
yival Is not far distant. When it does
definitely set in it will be followed in
due course by a new era of prosperity
Business, in one of its long swings
from prosperity the report said. has fol-
lowed its usual rotation. which is de-
scribed as business activity and increas-
ing production excessive expansion and
speculation, followed hitherto by panic
and forced liquidation a long period or
slow liquidation. business depression and
stagnation, and then revival. In the
light of recent experience" the report
warned I'VE should remember, when we
again enter into period of full pros
perity, 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 in
dustrial and commercial activity and
general prosperity will be marked by
saner methods. greater achievement
along constructive lines and by a longer
duration than any which we have had
before"
The board confined its report to an
account of the operations of the organ
fAr .x-st nfPo riv,or
suggestions for legislation affecting the
board or the reserve system. The earn
ing assets OF all reserve banks, the re-
port said, amounted on December 2S.
1921. to s1,535, ,S5l 900. in contrast to
SO, 100000 on December 80. 1920, a
reduction of s1.727.176, 900. or SO per
cent. and reduction. of S1,SS6, 5000.
or 55 per cent, from the high point
reached on October Is. 1920.
That reduction in loans, the report ex
planned, was accompanied by steady
increase in gold reserves and an almost
continuous reduction in reserve note cir
culation, the loan reduction continuing
despite a substantial decline in discount
rates.
Gross earnings Of the reserve banks
for 1921. the report continued, amounted
to s122,S65, 900. in contrast to s1S1,297,-
900 in 1920. the falling off in earnings
being due to decline in rediscounts
and reductions in rediscount rates.
Member bank borrowings. according to
the report, showed a continuous decline
from $685., 900. 900 at the end of 1920
TO about s1,144, 100000 at the end of
1921. due TO a reduction of more than
5000. 900, 900 in reserve notes in crcu-
lation, caused by lower price levels and
imports of gold of $667.000,0 900, practi-
cally all of which found its way into
reserve banks.
On December %, the report contin-
ued. the Federal reserve banks held a
gold reserve of 70,000,000 and a
combined reserve against member banks
deposits and note issues of slightly more
than II per cent. If the legal minimum
reserve of 80 per cent. could be set up
against deposits. the report added, there
would remain gold reserve of more
than 81 per cent. against reserve notes
In circulation.