The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1918-01-23
EXPANSION Of
CREDIT MUST
Be STOPPED
Upward Movemen. of Prices
Largely Ascribed to An
Expanded Currency.

WASHINGTON, Jan. ec.-Effect OF
credit expansion on the general rise OF
prices. and the part the American people
can play In counteracting initiation by
WAT time economies were emphasized to-
day by the federal reserve board in rs
annual report 10 congress.
Explaining that even though credit
expansion is not entirely responsible for
increase in. prices. the board says Ill
regards II as one OF its most Important
duties to prevent as far is practical eN-
panson Of banking credit from running
an uncontrolled course.
Goods and credit" says the report
must be saved TO the utmost OF our
ability in order to check the upward
movement of prices and in order to free
for use Of the government the goods
for The winning Of tho war.
The present condition Of Il greatly OK
banded currency will h. improved. rho
board believes "aS IN" public performs
lts duty Of absorbing ;hc government
loans out OF savings. Before the thSrd
Liberty loan. tho report adds. federal
reserve banks must reduce their invest
ments 20 strcnE then reserves and avoid
further expansion that has accompanied
;hc last two Liberty loans. Tho board
does not say specifically how Il proposes
u do this.
Among the many radical influences OF
;h, war on the money markets. the
board explained that one OF tho most
pronounced had beer the effort q: c"r-
b-it. b,N fe1rrnl reserve
systeyn absorb ninety day notes ar other
short term paper accepted with the priv
il.r.. ~ repeated renewals. The board
had perSistent!y opposed any such ~
:n-, 10 drS;ro? iiUuidity Of III" banks
assets. on which the system WAS based
the report said. but it admitted that ne
difficulties III privat" and H"fp"Fitt"
t;::anrins was So great as |" JUSTIFY ac-
lion h.: congress.
Tn, most serious prcblcm of corporate
Financing has been removed By govern
rucnt operation Of. railroads. says III"
boards report. but the situation Is Skill
serious.
TIN. board therefore, respectfully suE-
rcs,S early consideration oE congress OF
,br nrobl.n, oc corporate financing in
TN: belle: that no satisfactory SOLUTION
,rilI he found thar does not involve some
The hoard is OF tn" opinion that some
nlan FOR government Intervention or aid
can h., worked out which would msot III"
OF the situation saustac-
torily." =,
Earnings a. the l. reserve banks In
19l7 were reported AZ $l5,SOo.o0o gross
and s1l20n.0nn net with declared uiFl-
bends OF about s6.S0.0"o.
The boards expenses nave been llit!o
loss than s"5N.00n and the cost OF adj
rinis,eriug ;hc gold settlement luha
has been only $4,000.
the .ntravtct- of state banks ana trust
rounani.:s during the year strengthened
~. system create. says tho report:
Although ;hs gold reserves Increased
enormously in quality. the proportion OF
reserves to deposits fell in proportion
10 the expansion OF credit
Eo radical amendments OF the reserve
act ar. suggested although Few minor
.,b,nyes are recommended. They include:
Election Of directors Of reserve BANKS
ny = simpler method; provision lot
printing bigger denomination OF iedera4
,.es.rr. notes: provision FOR incorpora.
ZION OF foreign trade banks under federal
ras.rys charter and permission for Ma
-ional banks to establish branches IN
their cities.