Current Situation

So many prophets of business have seen their predictions mocked and flouted by events so far this year, that in the literature of anticipation, generalities are replacing dogmatic assertion.

When the Reserve in Manhattan last raised its rates, most bankers saw higher money rates in the offing. Now, however, the bond and stock markets have proved unexpectedly strong, apparently in anticipation of easy money conditions.

It seems certain that money conditions are just now the basic consideration in regard to future business conditions; and that, in this respect, the U. S. as a creditor nation is in a very different situation than ever before. Our theories of business cycles have been largely postilated on our situation, so long continued, as a debtor country. It may be, therefore, that the past will to a smaller extent than ever before indicate probabilities for the future. Also, the abundance of funds in this, country may lead to a generally lower level of interest rates for the coming years ; and a consequent higher price level for fixed investments, as well as a more stabilized price situation generally.