Current Situation

The old adage, "in times of peace, prepare for war," has a very generally recognized application to business. Veterans in U. S. business have been taught that unclouded economic horizons are deceptive, and that it is well to suspect business prospects which are intensely and 'completely favorable. After the past year of good business, with such new factors as tax reduction about to stimulate prosperity still further, many business leaders are pinching themselves to see if they are not engaging in lovely dreams. The outlook in some ways seems too good to be true.

This situation has resulted essentially from the present position of the U. S. as a creditor nation and our apparently inexhaustible supplies of gold credit in our banking establishments. Always before, lack of banking accommodations has acted as a brake upon overdevelopment of business activity. While frequently painful in application, this brake nevertheless was fundamentally salutary. Now the brake has apparently been removed, except in so far as the Reserve System can enforce such a policy irrespective of the gold hoard in its vaults.