Indianapolis Times, Volume 34, Number 43, Indianapolis, Marion County, 1 July 1921 — Page 9

[CREDIT ALONE L>’OT TO BLAME ■ IN DEPRESSION Heckling Tactics of Congress Partially Responsible, Says Banker. NEW BILL INVITES PANIC “There ha* lately been manifest In many quarters the mistaken iflea that the credit situation alone Is the funda- " mental cause of the present retardation of business activities generally,” states the Guaranty Survey, a monthly review iof world-wide business and financial conditions Issued by the Guaranty Trust Company of New York. “The necessity for readjusting- underlying Industrial conditions, seemingly, is not thoroughly understood. Instead of a proper concentration of effort on this primary task, a number of legal measures are being proposed which would render this readjustment more difficult. Some of these proposals have as their purpose the arbitrary limitation of the discretionary powers of the Federal reserve board. '"There has been Introduced In the of Representatives, for instance, a KV which would prohibit Federal Beserve banks from charging member Banks in any transaction with them a Breater rate of interest than 5 per cent Bar annum. The passage of this bill Bonld automatically deprive the Federal banks of the power they now possess for controlling Inflation. The Inevitable result would be to recreate conditions under which money panics might be precipitated: and one of the , chief purpose* for which the Federal .rserve system was designed is the rprevention of such panics. TAKES POWER FROM FEDERAL BANKS. “Likewise, it has been proposed to amend the Federal reserve act with a view to restricting the authority of the Federal Reserve Board in curtailing credit. The suggested amendment reads as follows ‘The Federal Reserve Board shall have no power or authority to restrict the amount or class of eligible paper a member bank may rediscount so long as it complies with the law that applies to member banks, except by an order adopted by two-thirds of the members of the Federal Reserve Board, copy of which shall be mailed to all batiks affected thereby. Said resolutions shall not take efTect until thirty days after its receipt by member banks.' ” “Such an arbitrary legal regulation would be fraught with possibilities for mischief, and worse. The advance notice of a forthcoming restriction upon eligible raper, under conditions which this proposed amendment would create, would induce a rush of demands upon the member banks for credit accot, yjfions. Prospective borrowers would to obtain accommodations before the restriction should become effective Instead of aiding In a stabilization of credit conditions, therefore, the effect of such an amendment would be to weaken the Federal reserve system as a preventive of financial panics. f “Whatever its shortcomings, the Federal Reserve act has proved to be providential for the United States. It provided a banking system which was strong enough to withstand the greatest credit strain ever experienced In this country, and which not only successfully funoduring the dangerous inflation period, but also has subsequently met the ‘acid test’ of the even more dangerous deflation period with equal success. It can-

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not continue to operate so helpfully if in every detail the power of the Federal Reserve board to regulate credit is minutely prescribed by law. FARMERS NEED GOOD CREDIT. “The relationship of the prosperity of agricultural interests to the economic life of the country as a whole is receiving increasing recognition. This is evidenced by the numerous efforts which have been directed in recent weeks, in and out of Congress, toward the provision of additional farm credit. There is cause for gratification in the fact that definite progress has teen recorded in the organization of machinery of a private nature for this purpose, with corresponding lessening cf the probability of further reliance upon direct governmental activity. “Among the bills before oCngress designed to aid farmers and live stock producers generally or particular classes of these are: The bill authorizing the treasury to furnish $50,000,000 to the War Finance Corporation for advances on live stock; a proposed loan by the :reasury of $50,000,000 to the Federal Farm Loan Board in order to increase ths working capital of the Federal Land Banks, and the proposed formation of a Government corporation, to be supplied with $100,000,000 from the treasury for financing exports of agricultural products “The wisdom of the proposed direct participation by the Government in the provision of credit, either through an expansion of the activities of the war finance corporation or the creation of an additional corporation, is doubtful. Such credit as may be extended on a purely business basis may be had through existing credit agencies of a private nature or those which may be formed under laws now in force. The granting of credit through Government bodies can scarcely be more broadly effective than that by private agencies—save at the expense of the taxpayers, representing unwarranted distribution of favors and burdens. The favorable response which bankers have given to the suggestion that they organize the necessary machinery for providing additional credit accommodations to live stork growers is evidence that private sources of credit may be made adequate to meet the demonstrated needs. GOLD SrrPLY IS INCHPAMNG. The influx of gold Into the United States continues. The net balance of imports in May was $57,000,000, raising to about $320,000,000, the net gain through Importation in the first five months of this year. For eight consecutive months imports of the metal have exceeded exports. “Owing to adverse trade balances with the Orient and South America, the I'nited States lost gold In 1919 and the early months of 1020, with the result that our stock of gold was reduced to $2.&f?.000.000 on May 1. 1920. This represented a reduction of $475,000,000 from the stock of the metal held at Its previous maximum three years earlier. In the subsequent thirteen months, however, we have increased our stork of gold to a record total on June 1, 1921, of $3,175,000.000. “The recent accumulation of gold in this country through importation is to some extent a reflection of the inadequate provision of credits for financing our export trade. In the interest of this trade, every reasonable effort should be made to obviate the necessity for foreign countries to dispose largely of their gold holdings. "While this inflow es gold has helped to improve the reserve position of the Federal Reserve banks, It represents on the whole a withdrawal of the metal from countries which need to strengthen their currencies. The effect of this upon exchange rates is not precisely measure-

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* rea< * overs * ze f° r 33x4. While j 0

able, but it is certain that the movement can pot continue at the present rate without adversely affecting exchanges. So far as this country is concerned, there is probably more cause for apprehension on this score, in view’ of the possible impediments to our export trade, than for fear of an inflation of our currency and prices in consequence of the accumulating gold supply. “For the most part production nnd trade show continued hesitation. In some localities, however, the volume of retail transactions, allow’anee being made for the lower prices, eqnals or exceeds that of the corresponding period last year. Appreciable improvement is found also in some lines of manufacturing. Those industries which were among the first to undergo readjustment are giving evidence of increased activity. “ Nevertheless it has become more clearly evident that the spurt of activity in some lines of production In the spring, was. as pointed out In the April number of the Survey, merely of a seasonal character. The expectation of an early upturn In business based upon the belief that the increased production In these Industries would be sustained was not well founded. It is doubtless a good omen that the scope of the necessary Industrial readjustment Is now better understood. BASES OF CREDIT ARE STRENGTHENED. “Improvement In underlying conditions upon which a sustained revival of business must be based, however, continues. Wages are being further adjusted, price declines are less abrupt, and the bases of credit are being further strengthened through reductions In so-called frozen loans and the strengthening of hank reserves. Accumulated stocks of goods in many lines are being reduced, affording th“ bases for larger production In the future. “Unemployment In general continued to Increase in Mar, according to statistics compiled by the Department of Labor. The net decrease in the number of employes of representative firms last month, as compared with April, was approximately one-half o? 1 per cent. Preliminary reports for the manufacturing Industries of New York State Indicate a reduction of about 2 per cent in employment in May, as compared wlh April. Strikes are responsible In part for the Increase in unemployment. “The conditions noted in the foregoing are sufficiently representative to show that the Industrial outlook in this country is not without favorable aspects, and on the whole, slow progress is being made toward a revival of business “Since the recent announcement by the railroad labor board of a 12 per cent reduction in railroad wages effective July 1. there has been considerable agitation for a horizontal reduction in freight nnd passenger rates. Such a reduction would be advantageous to the economic welfare of the country, of course. If It could be effected without further jeopardizing the finances and credit of the carrier* and prec pitating receivership. Further weakening of the financial condition of the railroads would be decidedly detrimental to the business of the country. “The wage reduction when made general is expected to save the railroads $400.'00.000 annually, and an additional saving of $300,000,000 is expected through the elimination of waste heretofore occasioned by the national agreements, although how much may actually be Rived this way is very problematical. But even a reduction of S7OO,O'>O.OUO in annual operation costs would not alone enable the roads to earn a net return of 514 or 6 per cent upon the valuation placed on their properties by the Interstate commerce commission, as contemplated in the transportation act, with the present reduced traffic. “In the fiscal year ended June 30, 1910. operating expenditures amounted to (77 per cent of operating revenues, which

32x4 Ann Nonskid $LO.to Nonskid. $24.95 Nonskid. $25.50 $32.00

INDIANA DAIL Y TIMES, FRIDAY, JULY 1,1921.

permitted the payment of dividends amounting to 5.21 per cent o“ the revenues and the appropriation of 2.47 per ciut for sinking funds, reserves, and betterments. When the roads were returned to private operation, operating expenses had been Increased to such an extent that they absorbed 90 per cent of operating revenues, and taxes had increased so that practically nothing was left for it terest, dividends or surplus. "During the war, horizontal rate Increases were made—flat increases which added the percentage to all of the then existing rates without regard to the fact flat altnough some commodities could be marketed t-n an economic basis despite the increases, others could not. During the war and the period of speculation which followed, the effects of these horizontal rate Increases were not felt so severely. “The situation now, however, with many commodity prices dropping sharply. Is difficult. The problem is to bring about a readjustment by which lower rates will be provided for commodities that cannot bear the present levels, and not to effect a horizontal rate reduction which will take away from the railroads all that they hope to save through the forthcoming wage reduction and economies made possible by the abrogation of the national agreements. “Furthermore, it must not be overlooked that considerable progress has already been made In rate readjustments on the commodity basis, and that thousands of proposed changes, agreed to by railroads and shippers, have been submitted to the Interstate Commerce Coif mlslon for Its approval. “The essential thing Is to restore the credit of the railroads as rapidly as possible, and that can be done only by putting their finances on a sound basis—which is possible only by permitting the railroads to earn a living wage.” The review also discusses briefly some of the conditions abroad. FIND LOST Rl\ ER BED. CARIBOU, Cal., July I.—A lost river bed was encountered in drilling a power tunnel here recently. It was at a depth of 400 feet and the log of a tree wus found In a perfect state of preservation, the wood pruning freely.

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AMUSEMENTS.

KEITH’S ELECTRIC FAN VAUDEVILLE A Breeijr Show In n Cool Theater Iced Umonad** Nerved Free I STEED'S SYNCOPATED SEXTETTE Spicy Syncopations PAULINE SAXON, DON C. ALFONZO ZKI.AY A, FORD A PRICE, BARRY TSUDA. Cartoon, of Aesop's Fables Paths News—Digest Topics 3 Shows Every Day 2:30, 7:30, 9 p. m.

The Big Comedy Novelty, CRANDALL'S BRAZILIAN CIRCUS MORTON, DENNIS AND GIBSON, HARMONY SINGING FUNSTERS FOUR—HAMEL (.IRI.S—FOUR MUSICAL MISSES BENSON AND MOORE, WARNER AND COLE. SI .IKNKS, HALL AND GUILDA, HARD AND GEOROE: MACK SENNETT FARCE, "BUNGALOW TROUBLES.”

MURAT Tonight j Matinee Tomorrow THE STUART WALKER CO. —IN—MY LADY FRIENDS ■ A Summertime Comedy. i Next Week—"ARTISTS’ IIFE” I By Peggy Wood and Samuel Merwin. | First time on any stage.

English’s IMMI MATINEE SATURDAY LAST THREE TIMES Gregory Kelly Stock Cos.

MOTION PICTURES. Alhambra ALICE JOYCE IN “The Scarab Ring” Hall Boom Boys Farce Fox Kem Miami Six W ¥ O Second Big IS id Week PREMIER SHOWING IN INDIANA WALLACE REID IN “Too Much Speed” Bennett Comedy, "THE UNHAPPY FINISH"

EMBRYO CARUSO FOUNI) IN MINE Italian Coal Digger to Get Grand Opera Chance. COLORADO SPRINGS, Colo., July 1. —An embryo Caruso has been discovered, 33, an Italian coal miner of Papeton. neat here, according to the belief of Professor Brown, head of the School of Music at Colorado College, and through the generosity of wealthy local residents Gheno will b egiven an extensive education in music In an effort to fit him for grand opera. Gheno, who cams to this country five years ago, was discovered by Prof. A. P. R. Drucker of Colorado College, at an entertainment in I’apeton, when the Italian sang several songs of his native land. The singing was so remarkable and the tone and volume so tremendous that Drucker was astonished. He sought out the miner later and had his voice tested by Professor Brown. Gheno’s voice so surprised Professor Brown, who has trained many notable soloists, that he insisted upon Gheno at once taking up the study of music. Gheno at first demurred, because of lack of funds. “I have to make money to support my wife and two children," the miner told Professor Brown. “I work hard in the mines all day and am too tired at night to study.” But the two college professors raised a fund to care for Gheno and his family during a year of study. It Is predicted that it will take nearly that time [ to train the Italian for concert work, as he has no knowledge whatever of the technique of music. Despite the fact that he cannot read a note, it is said that his tenor voice offers tremendous possibilities, ns he has been singing the Italian folk songs for many years Gheno's training will start this week with Professor Brown.

A CycJonic Drama //yMMmfffi/j'W of Life at its Best jM and the Shadows Cast by Broadway’s Blazing ueut.

LOEW’S STATE THEATRE Always Has "THE BEST OF EVERYTHING'* THIS WEEK ELSIE FERGUSON —Iu—"SACRED AND PROFANE LOVE” NEXT WEEK The Great Venetian Spectacle "CARNIVAL” Continuous from 1 to 11 F. M.

Douglas Mac Lean in “One a Minute"

SENSATION OF THE SEASON SEE BERT SWAN Wrestle 10 Foot Crocodile Under Water Death Defying Feat MABEL SWAN And Her Diving Sea Lions PROF. THURMAN In Sensational Balloon Ascension Stupendous Display of Fireworks Afternoon JULY 4th Evening RIVERSIDE PARK

400 MILLIONS LAY IN HARBOR Value of Merchant Ships Lying Idle in U. S. NEWPORT NEWS, Va., June I. Swinging with the tide in a sheltered and landlocked harbor, $400,000,000 worth of merchant shins ride Idly at anchor In the James River. These ships are vessels built by the United States Shipping Board during the war, and for which there Is now no use. Twt hundred and fifty of the craft are built of wood and iBS are of iron and steel. Capt. F. J. Walcott is custodian of tins i.uutical graveyard, but insists that it is a storehouse and not a graveyard. The wooden ships are in first-class shape and ready for action, Captain Walcott declares. He further states that the $200,000,000 Uncle Sam spent on the wooden ships was not thrown away, but that a use will be found for the vessels. Machinery has been removed from most of the ships and sent to Norfolk where It has been properly oiled and stowed away In Government warehouses Decks have been protected with libera: coats of paint and canvas and rigging have been likewise cared for. The craft are anchored in units of seven each and dot the river for many miles. Some shipping experts claim that because of limited tonnage the vessels cannot be operated profitably. Swaying in the gentle swell of the river these vesseiß seem a wraith of the submarine warfare. Their future i undetermined. Congress may settle it. SEEKS HIDDEN RIVER BED. OROVILLE, Cal., July L—Believing that many hidden river-bed channels escaped the notice of the early gold prospectors, Bert Knapp has secured a diving suit and will explore the bottom of tbe swift-flowing Feather River.

MOTION PICTURES.

HEAT WAVE HITS THE NORTHWEST Crops Damaged in Temperature Above 100 Degrees. ST. PAUL, Minn., July 1. —Unprecedented heat that has kept the Northwest sweltering for more than a week, had reached a climax today, weather bureau reports indicate. Yesterday’s temperature of 99 In the Twin Cities, 104 at Fergus Falls, 106 at Bismarck, 108 at Mandan and 108 at Eauclaire, Huron and Hibblng, showed that the heat wave had covered practically every section of the Northwest. Duluth was the only city In this section of the country that was comfortable. The maximum there was 74. Crops have been fired and agricultural officials said extensive damage already has been done. Tnless the heat wave is broken today or tomorow and rain fails, serious losses will result, they said. Weather reports indicated some relief

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DROAD RIPPLE PARIf U and BATHING BEACH f 1 INDIANAPOLIS SUNDAY, JULY 3rd, 1921 PEERLESS ENTERTAINERS Vocal —Instrumental —Comedy—A Rip Rousing Comedy Program MONDAY, JULY 4th, 1921 HO OSIER QUARTETTE Reading and musical numbers and an able bunch of assistants in novel repertoire of vocal and instrumental specialties. GRAND CELEBRATION FIREWORKS AT NIGHT You should see and hear this program, it will be worth your while both days. Plenty of amusements and refreshments at this ideal pleasure park. Free moving pictures every night. UNION TRACTION COMPANY OF INDIANA

tonight and Saturday for Minnesota an the Dakotas, but still there was no of general rains. Local thunder shower! was the best promised. There were sixteen persons prostrated in the Twin Cities yesterday and one man drowned. Rail Head Dies SOUTH BEND, Ind., July I.—Wallace A. Ballard, 58, president of the New Jersey, Indiana & Illinois Railroad, died here late Thursday, after a month's illness. The widow and three children survlve. Burial (dll take place here Saturday. BAM BROWN COMING IN? WASHINGTON, July I. The Sam Brown belt, cause of much dispute during the war, may be accepted as regulation equipment to be worn in the United States soon after General Pershing assumes the post of chief of staff on July 1. General March, chief of staff, forbade the use of the belt by officers at home during the war. although General Perilling sanctioned it In Franca.

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