years and they wanted now to enjoy themselves." Moreover in finance the war was far from over "because we had still ahead of us a loan which at that time we felt would be about $6,000,000,000—the Victory Loan." Governor Strong went on ta describe how in the summer of 1920 when the public stopped buying it was just like closing the outlet of an elastic pipe, with the water being constantly forced in at the other end. "The pipe will certainly expand," and it did. Consumption stopped at the point of retail distribution but production at the point of origin still continued and "during this period goods piled up all along the line." Raw materials immediately fell and "that is the characteristic of periods of depression that the first to suffer collapse in prices is the producer of raw materials." During this period of decline and of "backing up of goods" the loans of the Federal Reserve Bank did not decline. "The curve of prices dropped quite markedly, but the volume of bank loans continued to rise for some time before it began to go down, indicating that the first result of this curtailment of consumption was a pressure upon the banking system for credit to carry these goods and a decline of the curve representing bank loans could only be expected when consumption began and debts
