Imperial Valley press. (El Centro, Calif.) 1907-current, 1923-03-12
The Situation in Money and Banking
as Viewed by a Big New York Bank

without recourse to the reserve
banks, and this being SO it is pos
sible that the demands on the latter
might increase suddenly and rapid
w. 1t is therefore well for these
intitutions to set their houses in
order The country does not want
rapid increase of demand on the re-
serve banks. The resources Of the
member and non member local
banks are ample to finance the bust
ness of the country on sound basis,
and if the business is kept within
this limit it will be likely to run a
steadier and more satisfactory
course than if more credit is used.
knowledge that the reserve banks
are behind the situation with great
resourcesat their command will i'm
part greater stability to it than
would the use of those resources. 1t
is to be borne in mind that when the
labor supply of the country is fully
employed the limits Of industrial
expansion have been practically
reached, and production cannot be
increased by the mere use Of credit.
That is where initiation begins, and
the banks should be on their guard
against it.
The country does not want any
more experience on the line of lock
ing the stable door after the horse
has been stolen. The way to keep
reserve benk resources in reserve is
to discourage their use when expan-
sion is under way. The country
should expect to confine itself nor
mally to the amount of credit which
the local banks are able to supply,
using the reserve banks to give the
greater degree of elasticity which
the seasonal fluctuations require.
! There is no reason to doubt that on
this basis the industries can have all
the banking accommodations neces-
sary to enable them to operate at
capacity.
Disadvantages of Price Advances
1t is natural to want boom, with
rising prices and paper profits, but
any one who will read the excerpts
from British bank speeches and note
the satisfaction expressed over the
growth of British exports and the
approach Of the pound sterling to
the dollar basis, must be impressed
that prices i'll this country are al
ready high enough for a healthy
state of export business. Every
economic authority in England,
tributes the rise of the pound ster.
and for that matter in Europe, at
ling in terms OF the dollar to the de-
probation Of the latter-in other
words, to high prices in the United
States as compared with British
prices, and the consequent gain Of
British trade.
If, for instance, Mr.. Mckenha is
right as to the influence of our gold
rserves, and we think he is, the eff
feet of sending us the South African
gold production to apply on the
British debt will be 20 raise our
price level above England 8 and
turn back to her the foreign trade
which we gained in recent years.
1t certainly will do so if we use our
increasing stock of gold as the basis
of credit expansion.
Money Bates
Time money in New York is ) to
81 per cent. Offerings Of CONNER.
eial paper are increasing, and the
prospect is for a g9~1 demand for
money as spring business develops
The lower ratio for call money in
FEBRUARY WSs per cent and since
The mid1h of the month the renewal
ate Ias been 5 or higher.
4cceptances have been unsettled
. little by the rise of the reserve
bank rate, but still are selling on a
per cent basis.