The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1919-12-31
Will Call Halt
On Speculation
By DAVID LAWRENCE
Copyright by The Intelligencer


WASHINGTON. D. e. Dec. 60
Generally speaking. tho public-~w hl'h
Is largely reSponSihlr-haS not been
acutely conscious of the delicate Imam
rial situation In which tho nation hS
found itself in the holiday season.
While the federal reserve hoard bcltFES
the crisis has passed, II ~ nevertheless
determined to check speculative octiN-
ity and use it's powers and influence TO
cause the American people to ccono-
mizc.
Many persons have thought that be-
cause the federal fvservc system was
constructed IL bear the strains that
had previously been placed upon our
national banking system, any burden
Whatsoever could be- imposed and the
structure would not sag. But the fed
eral reserve board has been compelled
for the nations good 10 restrict the
amount OF money which member banks
could borrow Of the federal reserve
banks and OthorwlS" uS' it's powers 10
check ihc extensive issue "t credit
paper for speculative purposes. Before
the federal reserve act was passed
national bank could not borrow more
money than ITS capital stock. This in
ficNibility WAS in On" sense good
thing. hut in many other cases an oh
stacle TO business expansion. tn" fed
rral reserve system has permitted banks
TO borrow as long a. the FUNDS were
available in tho reserve hanks. In some
eases member banks have borrowed ten
and ffScCn times their capital Sto k.
Now tha federal reserve board mas
called halt. II ~ determined 10 prt"Ec
that tho federal reserve system NOT
only designed Ia expand upon em"r-
seacy. but to act rs n check and re-
straininS force. too.
Cause OF UnsaS.nssS.
There Ia no denying the fact that the
approach OF Christmas with It's trs-
Lpendous buying in the retail trade
mill hH FI-
RSmbCrrd TINT the arms Icr came 8"
LdenIx- that the public ssRsr.l lisArs<@ss'
prepared either "a purchasers or
lers 10 take care Of the Christmas
hde r year nEc. All the pcnt up de-
Tres OF the American people however
,esuitins from ehe war period or inyol-
untary economy were let loose this
year II was the frst great after the
war rest. And the Federal Reserve sys-
tom Stacd Shs strain. hTe western and
southern hanks are in excellent condi-
tion with piles Of reserves. Dallas. FOR
iustanc:, ha.i IS percent reserve. NS
RAPIDLY. however as tn" retailers or the
west ard south who sold tremendous
stocks Of gnols during the holidays be-
Ein to pay their eastern balances. the
Flow os money eastward will begin
Money Is fully expected By the Federal
Eeyervc a ard TO be easier in the
mean that the discount rate will be
lowered or that advances to member
banks will he resumed i'm unlimited
quantities. 1t does mean that the op-
portunity viii be at hand 20 take up
the slack. the outstanding Federal Re-
serve notes and other credits which
have been drag on the situation.
Much GOOD Expected.
Much good is expected by the Federal
Reserve Board TO come from the oper-
alton OF tEe Edge Law. which would
permit export organizations TO be form-
e,l to finance exports The public gen
orally may noti realize that the United
Ssates has a trade balance in its favor
OF nearly three billion dollars and yet
Is shipping out gold In unprecedented
bulk. This means simply that Ameri-
can exporters have been selling TO
Europe on credit and that America -
paying for her own imports in gold in
the hope Of stahalizinK the exchange
market. Rut while that big trade bal
ance continues. American concerns are
drawing heavily on our own banks for
money 10 pay overhead and other en-
penses. These loans are serious
drain.
How long can they continue? Not
much longer. And Europe must get on
her feet again In order TO begin paving
her bills to America. II would be- a
serious thing for America if the bottom
dropped out Of European affairs and II
BECAME apparent that Americans
couldn't hope TO get their money for
outstanding bills and that production