Webster City freeman. [volume] (Webster City, Hamilton County, Iowa) 1884-1946, 1922-01-02

period OF depression, when confidence
begins slowly to return, when surplus
stocks of goods have been worked Off
and shelf stocks are generally reduc-
ed; when the lowered demand accom-
panying unemployment begins to over
take supply, when money is easy, inter
est rates are down, and prices, especi-
ally for raw materials, are low. At
this period business begins to revive :
more and more people are employed
ard more and more goods are c0nsum-
ed. Business expands at an increasing
tempo, unemployment disappears, and
wages increase. AS prices rise, a fever
Of speculation sets in, and there de-
velops veritable scramble for goods,
stocks, and properties. Paper profits
are large. People spend freely, extra
vagantly, and finally beyond their cur
rent income. Orders for present and
future deliveries pile up and an APP
parent shortage Of goods develops a
sellers market. Industrial plants are
extended to meet this supposed demand,
interest rates rise, and bank loans and
currency issues expand to meet the eX-
pansion of business All the economic
and psychological factors conspire to
produce an era of intense business
activity and prosperity.
"In these periods of great activity
and prosperity, heavy volume of debts
is made for plant extensions. for prod
uction, and consumption. These debts
accumulate faster than production
and savings. Greater and greater diff
Guilty is encountered in meeting debts
and interest currency due with cur
rent production and savings. AS inter-
est and debts currently due overtake
and pass current production and saw
ings, curious reversal of direction oc-
ours in the economic and psychological
forces and phenomena which combine
to produce prosperity. Bankers whose
expanding loans have depleted their
reserves, are forced TO stop further
lending and then to call loans; banks
Of issue raise discount rates; spccula-
ton rapidly diminishes, manufacturers
and merchants begin to place surplus
stocks in the markets; prices begin
to fall; consumers curtail purchases
and spending in anticipation OF sun
lower prices; orders for goods are
Cancelled, and it becomes apparent that
the orders representing demand were
more or less of fictitious proportions
more and more goods are put on the
market, while demand grows less ana
less; building slows down; debts are
liauidated as far as possible from cur
rent receipts; the buyers strike de-
yclops: production falls off in con-
sequence of lowered demand; and I'M
employment develops; prices continue
to fall, and the decline is usually more
rapid than the rise.
"This process is continued until some
portion of the debts made in the period
OF prosperity is liquidated and until
stocks are reduced to Il point where
such demand as exists, even in times Of
unemployment, finally Overtakes supply
Prices and interest rates are down.
wages are lower, money is easy, ana
the beginning of the new era OF pros
perity is at hand; all of which we
have seen in this country and i'll many
others in highly condensed ana
most spectacular form in the last Two
and half years. Rarely has cycie
swept through all its familiar features
more swiftly and dramatically than
that which followed the close OF the
great war. The most distant nations
were equally involved, and most OF
them followed through the successive
phases in almost identical times. Far
distant Java and Japan were affected
in much the same way, at much me
same times, as the United States. can
ada, and Great Britain"