Norwich bulletin. [volume] (Norwich, Conn.) 1895-2011, 1922-01-28


1t is probable that much Improvement f
in the general situation cannot be look
ed for untif\that time. I
Whether or not it is desirable that /
business conditions in this country
should be Independent of those in other
parts of the world. it cannot be denied I
that conditions here are indirectly at |
fected by those abroad. While this
country has been experiencing reduc- !
ton in its inflated credit structure and 8 I
fall of commodity prices and wages, with |
tie inevitable accompaniment of bust |
ness depression and unemployment, |
much the same trend has taken place in |
England and France. On the other hand, |
Germany, either through force Of neces- |
sity or desire, has followed different
method-that Of continued initiation.
Wages have been mounting rapidly,
commodity prices even faster, factories
have been operating at maximum ca
pacity, and there has been very little
unemployment. let it has been ficti-
tious prosperity, because that country
has been selling its products and its Ia
Dor to other nations at less than their
true value. This is a policy that cannot
be continued indefinitely, because it
means national bankruptcy. Possibly the
first crack in the structure occurred In
November and December, when the
value of the German mark in the United
States increased about 20 per cent. in
few days. This was accompanied in
Germany by q. drastic break in the stock
markets, so serious as to call forth the
designation of Black Thursday" for
December J. As one consequence, com
modify prices had only a moderate in
crease Of 8 per cent. during December,
while in the previous month they had
increased about % per cent, and In o.
tober 80 per cent. Confidence in the
future has been shaken. The prospective
conference at Genoa may be able to save
the situation, but in the interim cendi-
tons may become much worse in Ger
many. If they do, both the French and
| the English situations will be affected,
and this country cannot help but feel the
| effects in some degree 1t is highly de-
sirable to place the German financial
| the world over may be forced to mark
| time while the resdjustment is being.
| completed.
| These basic factors must be kept in
mind in forming Judgment upon what
| is In store for the future. The recital
OF them may sound pessimistie. but they
are not stated for the purpose Of put
/ ting danlper on whatever optimism
may at present exist. Rather should
| they. be considered IN the light of justi-
| tying the maxim that "to be forewarned
Is to be forearmed.'
| There are three other conditions OF
! more immediate concern which are con-
| stantly operating to improve the present
/ situation. The first has been spoken Of
| many times-namely, the continued
| large volume of distribution of good.
i through retail channels to the ultimate
consume large, consider
| ing the depression in agricultural and In
dustrial centers. The department store.
and apparel shops that report to this
bank, for example. sold a larger volume
of merchandise during 1921 than durins
1920. There was undoubtedly an over
production of merchandise compared
with the real needs of the people durin.
1919 and the first part Of 1920, but
would seem as if goods were consume,
faster than they were produced durin.
the past ya"r and a half. The Increase
activity If . textile and shoe industrie
| in this district during the latter part Q
1921 was probably due to the fact tina
production had to be increased In or
| der to meet the consumers needs.
The second important factor Of i'm
mediate concern in the business situation
is the status of the building industry
For several years the volume Of neE
) construction has been declining. Indi
vidual types of building have at time
T experienced activity, but since 1916, wit
: the exception Of part Of 1919 ard 1924
the general trend has been downward
T At present, particularly in New Eng
land, there seems to be a change occur
E ring in the situation. The value Of cor
S tracts awarded for new construction I
e this district during December was tn
S largest for any month in 1921. This
= particularly noteworthy, inasmueh as
o decline should normally be expected
8 this time Of the year, signifying that I'll
t improvement is doubly important TIL
S fact, taken in conjunction with the pre-.
e pect of moderation if not actual cess;
t ton in the decline of building costs II
s a time at least and the increase
d amount of credit available for buildin
# seems to warrant the estimate tn;
f building operations in New England du
ing the first part Of 1929 will be eonsit
e erably larger than during 1921.
r The Improvement in credit condition
= is probably equally as important as II
: continued large volume Of retail trat
W and the increasing scale of building o
II erations. 1t is certain that the stra
1t in the money markets was prime CO
l. trtbuting cause Of the last depressio
% 1t required an extraordinary amount
le capital to do business in the first pa
Of 1920, when commodity prices we
10 high, and now that there has been q
l. cline averaging about IS per cent.
it wholesale quotations, It is obvious tn
y commercial demands for credit are n
IN so large. Banks are charging their reg
II lar customers approximately 1-2 p
II. cent. for short time commercial loans
" present, as compared with to 8 IL 3
rs cent. about a year sgo. What is pre-
l. ably more important, credit Is easier
to obtain new, than it was at that tin
m The banking situation is not straint
or and frozen loans. while not entirely
thing Of the past, are no longer me
esl ace, and many large banks, members
y, the federal reserve system, have fou
to it possible to do their business witne
. borrowing from the reserve bank. 7
h banking system Of the country has
he enormous surplus gold reserve, suffieit
re to finance any reasonable expansion
vo business,
al Improved banking and credit cont
tons, the large volume of merchant
he being sold by the retail stores, and
ut improved outlook for the building ira,
SO give hope of at least moderate deg
r. of business activity in New Engls
he during the coming months. The du
g. ton and degree of the activity, howey
a. will depend largely on whatever cham
MS may occur among the more fundamen
a faeters-the foreign situation. the C
ais tailrnent of the farmers purchase
n power, the hurdensome taxes aeeo
tn. panying large governmental exper
an lures, and the influences of the tariff
on domestic and foreign trade.