OCR Text |
Show TEAK IN HIGH COST OFLIVINGREflCHEO j Shortening of Lending Power I by Federal Reserve Believed Cure for Extravagance WASHINGTON. Feb. 1. Results of tho action of tlio federal reserve svb-tcm svb-tcm In raising discount rates to six j per cent, forcinp a reduction In outstanding out-standing lines of credit, have become evident in the last month, the federal reserve board announced tonight In a summary of the nations business con- jditions. Coupled with this "optimistic outlook" the board expressed the belief be-lief "that a peak In high prices and i inflation had been approached if not reached." , While heavier trade demands, and. in many cases, greater "prosperity" were reported, federal reserve- agents in reporting to the board have pointed to a "shprtened lending power." This was interpreted as indicative of less easy credit because of dangers of various vari-ous kinds growing out of "extravagance, "extrava-gance, excessive prices and overtrading." overtrad-ing." Would Discourage Extensive Borrwlng Another result of tho higher dls- Icuuni iHu."t van tutu uy ine ooara in tho action of commercial houses in I discouraging clients from extensive borrowings. The market for commercial commer-cial paper generally has beenndull, the statement showed. Tho general liquidation In the stock market also was continued during Jan- uary and, according to tho board's ! view, the higher discount rates had forced a slowing down in stock activities, activ-ities, January Month of Doubth "Financially, January has been a month of doubt and tension," the summary sum-mary said. "General business prospects pros-pects appear favorable, but will require re-quire careful disposal of pending financial fin-ancial and exchange problems. Foreign For-eign trade continues at an abnormally hlglr level although ar heavy reduction is predicted if the exchange continues at Us present unfavorable figure. "Tho action of the federal reserve system in raising Its discount rates has been favorable received by the financial fin-ancial community as a step toward the reduction of outstanding lines of cred- tit. Ordinary commercial rates are moving mov-ing up, while on some days there has !bcn a very high rate for call funds at j different centers." The output of coal continues to be low despite the return of miners to work after the strike, tho board reports. re-ports. The car shortage is charged directly di-rectly with blame for the low production. produc-tion. Iron and steel production, the report said, has reached a high record level but the demand for production is keeping keep-ing just ahead of the supply. Likewise, Like-wise, in the flour milling industry the output has gradually gone higher. Gratifying changes have come In the leather and shoe industry within the last few weeks, reports showed. The demand for higher cost of goods apparently ap-parently is slowing down rapiaiy with a corresponding increase In the call of lower grades. oo |