CHAPTER IX
HOW LONG WILL THE DEPRESSION ENDURE?
Divergent Views
The duration of the business depression which now holds the world in its thrall is conceded to be one of the most vital economic—and political—issues in the world today. It is a paramount economic issue because upon business recovery depends the material well-being, one may almost say the very existence, of many millions of people. It is a paramount political issue because without a return of prosperity many existing European governments will sooner or later succumb under the financial strain to which they are now being subjected. In view of the enormous significance of the problem, a thorough-going analysis of the factors involved in the present industrial and financial situation is required.
Men's views of the probable duration of the present depression in business are as far apart as the poles. Among those who count themselves shrewd judges of economic conditions there is the greatest diversity of opinion. Some are convinced that we are in for many years of depression; others hold that a year from this autumn will see a turn for the better; while still others insist that a substantial improvement is due within a few months. It will serve as a useful background to our analysis if we first present the arguments advanced by those who hold such divergent views as to the probable duration of the existing depression.
Those who look for an early revival of business base their conclusions on a variety of grounds. Some contend that prosperity will return the moment the buyers' strike is ended; let purchasing be resumed and all things else will follow. Others are less specific and merely feel that all will be well as soon as the world as a whole has settled down to "normalcy." Others insist that it is mainly a question of interest rates; when money again becomes cheap—not long hence—loans will be increased and business activity will revive. Still another view is that production has been reduced much more than consumption and that exhausted stocks of goods will shortly necessitate a resumption of productive activities. Finally, there is the "ordinary business cycle" view which holds that the history of past trade cycles indicates that the duration of depression is normally short, that the bottom is soon reached, and that the process of recovery then presently begins.
Buyers' Strike Theory
One finds, by reference to contemporary literature, that the buyers' strike argument is heard less frequently now than it was a year ago. It is beginning to be realized that the failure to buy—whatever may have been the case in the early stages of the depression—is now largely due to a lack of buying ability. The huge volume of unemployment and the reduction of wages and profits has destroyed purchasing power; and it is urged that it cannot be restored until after active business has been resumed. Credit has also been undermined, particularly in Europe. Thus many insist that the United States must resume credit extensions to Europe before the purchasing of American raw materials can be resumed. 1 11 The problems involved in resuming foreign credit extensions are discussed in Chapter XIX. Following this development, it is urged that the buying power thus generated among the producers of foodstuffs and raw materials in the United States will soon produce a general revival of domestic prosperity there. Those
who hold this view are, however, not hopeful of an early revival; they are looking a good many months ahead, for they realize the difficulties involved in resuming credit extension to Europe under present conditions.
Cheap Money Doctrine
Those who insist that as soon as "cheap money" is attained business men will again seek to borrow from the banks, loans will be increased, prices will rise, and prosperity will be resumed, argue, one must say, from premises which find little, if any, support in actual business life. This point of view requires more than a passing word, however, because, strangely enough, it is tenaciously held by many economists of the present day.
There is an old argument to the effect that when anything is cheap the demand for it automatically increases; and it would seem to follow that when money is cheap the demand for it will also increase, with the results suggested above. So certain are some economists that the whole problem of depression is but a simple question of interest rates, that they attack the managers of the central banks of England and the United States for not summarily reducing discount rates for the purpose of breaking the back of the depression. But one may learn from the experience of business men that there is no reason whatever why a business man should seek to borrow money at 4, or even at 1 per cent, if he cannot find an opportunity to employ it at a profit. Moreover, in a time of depression the security for loans is scrutinized by bankers with more than ordinary care and they will not grant a loan for commercial purposes at all unless they "see the money coming back"—as a result of profitable business operations.
If evidence on this point is wanted, it is to be found in abundance in the history of some of our past depressions, notably in the early nineties and in the late seventies. In the latter period there was a plethora of funds and "rock bottom" interest rates in the United States almost continuously from the autumn of 1873 to the summer of 1879. Bankers complained of their inability to loan money; and many threatened to leave the business because it had ceased to be profitable. Conditions were similar in other countries. In the seventies and nineties the discount rate at the Bank of England fell as low as 2 per cent without stimulating a revival of borrowing. Instead of wishing to borrow, many businesses sometimes find it impossible in a time of depression to make a profitable use of all of their own working capital; they also have money to lend.
In the face of these facts, which he who runs may read, it is nothing short of a psychological phenomenon that so many students of finance should hold to the myth that low interest rates alone are sufficient to produce a business revival. The truth is that cheap money is one factor conducive to a revival of business activity; but it is only one of many which must act together to restore the confidence that is necessary to business resumption.
Exhausted Stocks Theory
The contention that production has decreased more rapidly than consumption and that, in consequence, increased production will shortly be required, has more point to it. If stocks of goods are being rapidly depleted and if the volume of consumptive demand is above current production, it would seem to follow that sooner or later production will have to be increased.
It does not necessarily follow, however, that on the present occasion an early return of prosperity is, for this reason, assured. In a number of lines accumulated supplies appear already to have been exhausted; but the increased output that resulted from this depletion was not great, for the reason that so many other lines of business were still "on the way down." In many basic industries, moreover, it is notorious that the supplies of goods are still of huge proportion. With 16,000 hogsheads of tobacco (two years' supply for Great Britain) in Liverpool warehouses; with nearly three years' world supply of wool on hand; with hides almost unsalable at any price; and with large supplies of sugar, copper, cotton, and other commodities still on hand, one has to have even more than the natural American gift of optimism to look for a substantial revival of production in the near future in these basic lines.
It is not without significance, moreover, that there are vast stocks of war supplies which governments must still liquidate. It is understood that the United States government alone has several billion dollars' worth of supplies still unsold—supplies of almost every conceivable kind. It is understood, also, that the government is hesitating to sell them at this time through fear of the demoralizing effects upon the markets generally. Granted that the argument that production must ultimately be increased to catch up with consumption is sound, there is nevertheless little ground for believing that the time has yet arrived. More will be said in this connection presently.
The Question of Prices
Closely associated with the argument just considered a the contention that after prices hit bottom in any line, they must soon thereafter begin to rise again. Accordingly, even before all prices get to the bottom, there may be enough that are already coming back to make the net situation one of improvement. But is it true that when prices reach bottom in any line they necessarily start going up again, and that in consequence when the "price bottom" in general has been reached there will be an early recovery of business in general?
Whatever may have been the case in some periods of minor depression, it was certainly not true in the major depressions of the early nineties and the late seventies that prices rebounded immediately after reaching the cellar. In fact they remained down—with minor fluctuations—for several years; they even descended to the sub-cellar. The events of these depressions should also prove disquieting to those who insist that production will necessarily increase just as soon as stocks are depleted.
While on this argument, it may be well to ask precisely what is bottom in the present price situation? Will the bottom be reached when prices are only 50 per cent higher than before the war, or will the index number go down to 125, or, perchance, will it go all the way back to, or possibly even below, the level of 1913? The views of most students of price movements have already had to be revised several times during the present decline. May they not have to be revised again? It is significant that the number of students who believe that prices may conceivably fall to the pre-war level—at least in England and this country—is increasing.
But, it may be asked, how is such a decline possible in view of present costs of production? The answer is that costs fall as prices decline. There is, in fact, an interaction of forces; a decline in costs—for any reason—permits a cutting of prices; and a cutting of prices below cost, as often occurs, forces a driving down of costs. The vicious spiral that characterized the period of rising prices has been reversed; the corkscrew is now boring downward.
Further Decline Likely
Notwithstanding the cessation of price declines in England and the United States during the summer of 1921, there is little reason to believe that the decline has been permanently halted. The depression in some countries is just getting under way, and this will have its effects in the international markets generally. Germany is making a desperate effort to acquire funds for making reparations payments, by underselling her competitors in every market. Great Britain is making a tremendously powerful drive for a reduction of wages in all lines, to the end that she may regain her place in world markets—a place that a few years ago she had been able to maintain only because of the very low price of coal. Whatever may be the merits of the effort, success is at last attending British efforts to liquidate labor. The cumulative effects of the recent reductions in British wages upon the money costs of production in British industry generally will not be fully manifested for many months.
In the United States, also, there is little reason to believe that the end of the descending spiral has been reached. The process of wage-cutting, for example, still continues. Indictments of the "criminals" engaged in building trade combines are—according to reports—still in an incipient stage; and coal prices have not as yet been materially reduced. More significant still is the powerful drive that has recently been started for a reduction in transportation costs. It may take a long time to accomplish this reduction; but before we are through with the process of liquidation, railroad rates will be materially lower—following which, there is practically certain to be another wave of cost and price reductions more or less throughout the industrial system.
In this connection, it may be noted, that those who hold to the buyers' strike view of depression can find little reason for immediate optimism. For, so long as there is a hope that the forces at work will carry prices still lower, there is little incentive to resume purchasing just yet. The buyer is no more certain to regard 50 per cent above pre-war prices as bottom than 100 per cent above. He is more likely to see the bottom as actual pre-war prices. In so far, therefore, as psychology may affect the situation, its influence will be in the direction of still further price declines. Little stock is to be taken in the psychological argument, however; the history of past business cycles reveals that changes in psychology follow rather than precede changes in fundamental business conditions.
Price Maladjustment
Altogether too much emphasis has been placed upon the average of prices, as revealed in the various index numbers. The important matter in the present situation is not that the average price level is now only 50 per cent higher in the United States, for example, than it was in 1913; not the average of all prices, but the variation of prices as between different groups of commodities is the significant feature in the present price situation. The prices of agricultural commodities in the United States, taken as a group, as shown by the United States Bureau of Labor Statistics, now average about 13 per cent higher than the 1913 figures. It should be added that these are the prices in the primary markets, and not at the farms, where prices are now little, if any, above actual pre-war levels. On the other hand, the prices of household furnishings are still approximately 2j4 times the pre-war prices, and the prices of building materials are approximately double those of 1913. A number of other groups of commodities are still well in excess of 50 per cent above the pre-war level.
Now the farming communities in the United States still comprise over one-third of the total population. Accordingly, the purchasing power of the farmers is of fundamental importance to industrial prosperity. With the prices of the things which the farmer has to sell roughly at pre-war levels and the prices of the things which he has to buy still roughly twice the pre-war prices, it requires no great mathematical ability to demonstrate that farm purchasing power has been tremendously reduced because of the disproportionately heavy fall in the prices of agricultural produce. Before the war the gradual evolution of agriculture and industry had resulted in a normal price equilibrium, which passed away when widely different changes took place in prices.
The present unbalanced situation will remain true until one or the other of two things happens: Either farm prices must rise until they approach an equilibrium with the prices of other things, or else the prices of other things must fall until they approach an equilibrium with farm prices. There are those who argue that the easy way out is to raise farm prices half-way and reduce the prices of other things halfway, thereby effecting an equilibrium at a level of, say, 50 per cent above the pre-war average. Nothing, however, in the working of economic forces can be found to justify the belief that the prices of agricultural produce can automatically be raised with a view to reaching the desired equilibrium. The prices of agricultural commodities in the United States and elsewhere will be governed by world-wide conditions of demand and supply, and there is nothing in the present situation to warrant any confident belief that the prices of agricultural commodities will soon rise much above their present levels. If such proves to be the case—if agricultural prices remain at or near their present levels—the resulting low purchasing power among the farmers of the world will in the end drag the prices of the other groups of commodities down close to the same level. A lagging demand for the products of manufacturing industry throughout the vast agricultural areas of the country will exert a persistent pressure for a continuance of the process of industrial and labor liquidation.
Price Stabilization
There is a widespread agitation at the present time, both in the United States and Europe, in favor of the stabilization of prices at approximately their present level. It is urged that further deflation is highly undesirable because of the attending industrial consequences; deflation, it is contended, is just as bad as inflation. Neither high nor low prices matter; all that matters is that prices should cease to fluctuate.
The whole argument for price stabilization, however, rests on the assumption that it is the price level that is the significant factor in the present price situation. The argument wholly ignores the wide variations that now exist in the prices of different groups of commodities. No attempt can here he made to discuss fully the issues involved in the stabilization program. Two or three questions may, however, with pertinence, be raised.
If possible, would it be desirable to stabilize prices at a level of 150, when such action would involve holding the prices of farm products at approximately their present low levels and the prices of household furnishings, building materials, etc., at approximately their present high levels? Is it possible, if agricultural prices remain at their present levels, to maintain the prices of the things which the farmer has to buy at their existing levels? Is it possible to have the prosperity which "stabilizers" hope to promote, by keeping agricultural purchasing power permanently depressed? If not, how, concretely, is it proposed to eliminate automatically the wide price divergences that now exist?
The Quantity Theory of Money
There are numerous economists of standing who argue that prices cannot be expected to fall any lower than they now are because of the vast quantity of gold and paper money that is available for the requirements of business. The quantity theory of money implies that the level of prices is controlled by the quantity of gold and other forms of currency, including credit or deposit currency. If this theory is sound, the question naturally arises whether it is not true that the present quantity of currency is easily sufficient to support the present level of prices throughout the world.
In the long run, there is undoubtedly a fairly close correlation between price movements and changes in the quantity of gold and other forms of currency. In the short run, however—that is to say, in the downward swing of the business cycle—it cannot be said that the quantity of gold and credit currency is of any real importance. While a shortage of currency and of bank reserves may limit the extent to which prices may rise on the upward swing of the cycle, a plethora of funds does not limit the extent to which prices may fall during the period of depression.
It may be recalled in this connection that certain strong adherents of the quantity theory urged a year or so ago that prices could not fall at all, because the quantity of currency in circulation would not permit it. The post-war price level was necessarily to be permanent. After the index number of prices in the United States had fallen from the peak of 272 to 225, it was then argued by many that prices could not well go below 200, because the quantity of gold and other forms of currency was sufficient easily to support a price level double that of 1913. And now that prices have receded to an average of 150, these same persons are still sure that the supply of currency is the controlling factor, and that in consequence prices cannot well go much lower.
The fact is that the downward movement of prices is governed by a tangled web of economic forces, in which the quantity of money and currency plays a relatively unimportant role. The quantity of currency in circulation has decreased, it is true, but only after the fall in prices and the decrease in the volume of business activity. Prices actually fell for several months before the decline in currency began. Currency that last year and the year before was in the channels of circulation is now, in consequence of the prolonged liquidation that has occurred, accumulated in the vaults of banking institutions. There appears to be no reason why, so far as the currency supply is concerned, the price level may not as readily decline from 150 to 125 as it did from 200 to 150. The result would merely be a still further augmentation of bank reserves.
The only way in which the accumulation of bank reserves, resulting from the decline in prices and the business depression, may conceivably serve to check further price declines, is through the effects of a plethora of funds upon discount rates at the banks. As we have already seen, however, low interest rates alone cannot check the forces of liquidation nor bring about a resumption of business activity.
On the next upward swing of the business cycle the existence of very large bank reserves, and the great powers of credit expansion on the basis thereof, will undoubtedly permit prices to rise again for some time and to a very considerable extent. Thus in the long run—particularly if the nations of Europe do not attempt to reduce outstanding currency in the effort to return to a specie basis—we might have a price level very much higher than that of 1913. For the present, however, we are concerned with the possibilities of a still further decline in prices during the present downward swing. On this issue our conclusion is that the available supplies of gold and other forms of currency will not prevent still further price recessions. The extent of the fall will be governed by other factors.
The "Ordinary Business Cycle" Theory
This theory of the "ordinary business cycle," the advocates of which look for an early return of moderately good business, merits careful consideration. A study of business and financial data over a period of years reveals a very definite cycle movement. Business passes successively through stages of depression to prosperity, to financial crisis and back to depression, whence in due time it emerges again and enters upon a new round of prosperity, etc. This cyclical movement has, of course, been long observed, but until lately the stage of depression was generally regarded as of somewhat uncertain duration. But recent elaborate statistical correlation of financial and business data has led certain economists to conclude that depressions are normally of fairly uniform duration.
The study on which this conclusion was based covers the years from 1903 to 1914, during which there were four periods of depression. It was found that from the date on which interest rates ceased advancing on the upward swing of the business cycle, it was always from six to ten months, usually nearer the latter, before the bottom of the depression was reached and a turn for the better was definitely discernible. This correlation method, it should be understood, does not attempt to assign causes; it merely ascertains the facts. The significant fact is that, for some reason or other—it does not matter what—a business depression works its own cure in from six to ten months.
The theory is, nevertheless, pretty closely associated in the minds of economists with the low interest rate theory already discussed. Since interest rates ceased to advance in the summer of 1920, it was predicted that the bottom of the depression would be reached in the spring, say April, of 1921. Events have already shown that the date was set too early. Indeed, it has been conclusively demonstrated that the length of time required to reach bottom under present conditions bears no relation to the length of time required under conditions which prevailed in other depressions. It remains to be seen whether, when the bottom is reached, a new ascent will immediately be begun.
Untenable Doctrine
The fundamental difficulty with this theory as applied to the present situation is, in brief, that the data on which it is based were drawn from a period (1903–1914) when world economic conditions were the most stable in history—a period relatively free from destructive wars, one during which all important nations were on a well-established gold money basis, with the international exchanges almost everywhere at par, and the whole international financial and trade mechanism in adjusted equilibrium. It was a period in which public finance in all leading countries was on a sound basis, with revenues sufficient to care for expenditures. It was, moreover, a period in which the prices of different groups of commodities were in rough equilibrium; there was at no time any violent dispersion of prices as between the various groups of commodities.
Now the data drawn from such a period are in this theory used to predict the duration of a business depression in the present era when conditions are utterly different—when domestic prices in basic groups of commodities have been thrown completely out of adjustment, when the disruption of the world-wide international financial mechanism is without a parallel in history, when unbalanced national budgets imperil the very existence of present governments; in short, when the foundations of organized society have been shaken.
We must clearly abandon the doctrine that the normal duration of a business depression is always from six to ten months. We abandon it the more confidently in view of the known facts as to the duration of some of our earlier depressions. In the early nineties and the late seventies, as we have already seen, the "ordinary" duration was not from six to ten months; these depressions were of several years' duration. There were in each case minor—very minor—fluctuations in trade during the period of the depression; but there was nothing resembling a sustained revival for practically six years in the seventies and for four years in the nineties.
We do not refer to these earlier depressions for the purpose of proving that the present depression will necessarily last for either four or six years. Although conditions during the depression following the crisis of 1873 resemble those of the present more than they do those of any of the minor depressions between 1903 and 1914, one would not be warranted in insisting that the parallel is close or that much may be inferred from the duration of the depression of the seventies. A brief description of the conditions obtaining during the latter years of this depression and of the forces which appear ultimately to have conspired to restore prosperity will, however, prove suggestive.
Depression of 1873
For several years during the depression of 1873- 1879 interest rates, as we have already seen, were low; labor was thoroughly liquidated; and prices were down to "rock bottom" although not altogether in equilibrium. But the situation did not work its own cure. Purchasing was not resumed and prices did not start upward immediately after what everyone regarded as the bottom had been reached. Neither psychology nor the play of "natural" economic forces sufficed to bring a resumption of prosperity. Business remained in the doldrums.
What was it that ultimately broke the back of the depression in the summer of 1879? The early months of that year had not been promising. Very much depended upon the condition of agriculture. The outlook for the wheat crop was, however, mediocre, and the prospect for a favorable price distinctly poor. The year 1878 had produced one of the largest European wheat harvests on record. "When 1879 was well advanced, wheat from the English farms was still moving in quantity to storage points; at the close of March the stock of wheat at Liverpool was larger than at any time within five years." 2 2 Alexander D. Noyes, "Forty Years of American Finance," page 53. (At this period, it should be understood, Europe ordinarily still produced grain for export.) Accordingly, the American prospect was anything but encouraging. Given a reasonably good European crop, a further depression in American wheat prices seemed inevitable.
In the spring and early summer, however, there developed in England the most untoward weather "known to the memory of living man." Extreme cold, accompanied by continuous rain through the harvest season, made the wheat crop almost a complete failure. Conditions on the continent were not very much better. The result was an unprecedented demand from Europe for American wheat. At the same time there developed in the United States extraordinarily favorable crop conditions, with the result that the American wheat yield in 1879 broke all existing records and was not again equaled until 1891. The combination of a huge crop and a high price brought an increased purchasing power to every rural community in the grain growing sections of the country. The resulting demands for goods were soon manifest throughout the industrial systems.
Other events, largely fortuitous, combined to lay the foundation for a remarkable revival of purchasing power in the autumn of 1879. Noyes tells us that: 3 3 Alexander D. Noyes, "Forty Years of American Finance," pages 56, 57
"The crop of Indian corn was the largest on record; this, too, found a ready and profitable export market. Cattle raised on the interior farms were sent abroad in such numbers that the foreign trade complained that British graziers were being forced out of the British market. By a rather remarkable coincidence, the famous tide-water pipeline from the Pennsylvania oil-wells was completed in 1879, and the year's export of this product rose nearly 2 million barrels over the highest previous record. By another coincidence, equally independent of any events already noticed, the cotton crop of India in 1879 was a partial failure; Europe's supply on hand fell off 30 per cent from the autumn stock of 1878 and 50 per cent from 1877, and with the consequent heavy purchases by foreign spinners, the season's export of American cotton was the largest ever yet recorded."
The situation at this time was complicated by a monetary problem. The resumption of specie payments, i.e., the redemption of greenbacks in gold, occurred on January 1, 1879. The confidence resulting from a return to sound money was not sufficient, however, to restore prosperity, as is shown by the persistence of the depression throughout the first half of 1879. Indeed, if it had not been for the unexpected expansion of exports that occurred and the resulting inflow of gold from Europe, there is little doubt that the attempt to resume specie payments would have proved a failure.
It was thus a remarkable concatenation of events—largely fortuitous—that broke the back of the long depression of the seventies. No doubt the drastic liquidation that had occurred, with the resulting low interest rates, low wages, low prices of basic raw materials, together with a plentiful and willing supply of labor, were factors conducive to a business revival. But taken alone, they had proved insufficient to restore prosperity. Orders on the books were still lacking—consumptive demand was everywhere lagging. Hence industry continued to languish until the wheel of fortune gave the necessary fillip to demand.
Chance Developments and Recovery
To guard against misinterpretation it must be reiterated that these events of the depression of the late seventies are cited only for the light they throw upon the current theory that business depressions always work their own cure within a short period of time. We do not conclude from the analysis that the present depression will necessarily last several years. Indeed, we do not pretend to know how long the present depression will last. We incline to the view, however, that the process of liquidation is still far from completed, and that the economic retrogression of Europe is a very definitely bearish factor in the whole industrial outlook.
In general, we believe that whatever may be true of the lesser oscillations of business, a major depression is normally broken only by chance developments. It is possible, therefore, that some fortuitous chain of events, which no one can now foresee, will bring us out of the present depression at a relatively early date. But if we are to face facts and weigh the possibilities of an early recovery of economic prosperity in the United States and in Europe, it is important that we disillusion ourselves of the notion that business depression cannot last more than a few months or a year or so at the most. The lesson of the depression of 1873-1879 is that after the bottom has been reached it is possible for business to stay in the doldrums for a long period of time. The industrial machine may remain, as it were, at dead center.
Before closing this discussion of the probable duration of the business depression, it should be stated that few among those who believe that the bottom of the present depression has been reached—that liquidation has now run its course—contend that a period of great prosperity is at hand. What they urge is merely that the worst is over; that conditions may be expected to show a slight improvement in the near future, and that gradually they will materially improve. Most of them concede that there is still a rocky road to travel.
Most but not all. There are some—not economists—who still contend that the great need for goods resulting from five years of unprecedented destruction of wealth must shortly raise both Europe and the United States out of the existing depression. Housing is everywhere in arrears; railroads and public utilities have not been rehabilitated; the capital goods generally that were destroyed during the war have not been replaced. Never in the history of the world was there so great a need of intensive industrial activity as now.
Lack of Effective Demand
All this is only too true. But it does not follow that the mere need for wealth will result in its production. The construction of additional houses and factories, and the rehabilitation of railroads will, under a profit-making system, be undertaken only when it pays to do so. In the language of economists, there must be not merely a need; there must also be an effective demand—that is to say, demand backed by the ability to buy. Poland needs houses; but the Polish people cannot now pay cash for the food required, let alone houses. Austria needs raw materials; but the Austrians are starving, and they must mortgage their future because they have no means of paying for raw materials. And the sad part of it all is that many of these people will not be in a position to buy even food until some measure of industrial prosperity has returned. France and Belgium and Germany and Italy likewise need houses and railroads, factories and equipment—what not—after the terrible destruction of four years' war. But the rank and file of the people who alone can furnish the demand for these goods have not now the purchasing power with which to buy them. And they will not have until something again starts the wheels of industry and again furnishes them with remunerative employment.
Such building as has occurred since the Armistice in any of the European countries—even in England—has in the main been subsidized building. The effects of subsidies upon government finances have already been indicated. Nowhere in Europe has it been demonstrated that there is an effective demand for building. While the situation in the United States is very much better in this respect, there are few who seriously contend that our rent problems and construction problems have been definitely settled.
In conclusion, it must be understood that in all the foregoing analysis we have been speaking only of the situation as it may develop if allowed to run its natural course, free from governmental or other organized intervention. There is here suggested, of course, the possibility of credit extensions to Europe as a means of giving the initial impetus to a resumption of purchases. Since further credit extension, however, involves political as well as economic considerations, on the question of reparations and inter-Allied debts, as well as industrial phenomena, its discussion must for the present be postponed.