New-York tribune., 1920-05-19
Owen Charges
Reserve Board
Invites Panic
Oklahoman, in the Senate,
Warns Ii That Farmers
and Others Will Revolt
Against III g h Interest
Denial of Credit a Peril
Declares Vioent Depression
by Such Means Will Serve
Only Rich and Ruin Poor
From The Tri6tne's Washington Bureau

From The Tri6Hne's Washington Bureau
WASHINGTON, May 1S.-The policy
of the Federal Reserve Board in rails
ing interest rates has resulted in con-
dtions that might develop into panic,
Senator Owen, Democrat, Of Oklahoma,
author OF the Federal Reserve Bank
act. declared in the Senate to-day. He
said he wanted to warn the Federal
Reserve Board that fit continued its
policy the farmers and others in the
country who cannot obtain credit
under existing high rates would be
forced to follow the example of the
Nonpartisan League in North Dakota
and establish their own banks.
"Two ways are open for lowering
prices" said Senator Owen. THE best
way is to increase the supply Of COM
modities BY stimulating both produc
tion and saving The worst way is to
raise interest rates, to deny credits,
break I'D business, cause panic, and
have bankrupt sales and cheap goods
temporarily. This latter course may
result if the banks al combine to raise
rates and derv credits for productive
and distributivc purposes.
The Federal Reserve Board, in rails
ing the rates broadly, is striking manu-
facturers. wholesalers, merchants, re-
tailers, stockmen and farmers, who are
not speculating and DO not deserve
punishment.
"The Reserve Board is justified in
encouraging a denial of credit for
LOIS &c
Justified in urging the gradual iquida-
tion of bank resources engaged in
speculative enterprises or for mere in
vestment purposes.
II regard it as very hazardous to
deny credit to the so-called non-essen-
tials, among which Senator Mccormick
classes Photographs and silk stockings.
Both of these are essentials. Nothing
is more valuable than the photograph
or OF greater educational value. | am
told that automobiles are to be classed
as non-essentials where they are used
for pleasure purposes. In war the
pleasures of the people may be inter
fered with, but not in times of peace.
We fought for liberty, and the liberty
70 ride in an utoniobile, hear phono-
graph and even to wear silk stockings
ought not to be denied by the Federal
Reserve Board by driving such manu-
tacturers out of business.
Senator McCormick's resolution
offers q hook and an invltation from
The Senate to the reserve board to de-
clare policy Of deflatjon. The policy
OF deflation set by the Wall Street
Stock Exchange control, which broke
the stock market by high interest rates,
meets the approval Of the same class
OF financial experts doricied in Chi
cago, who might naturally advise the
Senator fro.p Illinois.
''If the reserve board leads the pro
cession Of banks in fixing high rates on
the people-that is, on their own de-
posltors-and y great industrial de-
preston follows, why should they won
der If the people of this country should
demand as a remedy that the reserve
banks be made banks of deposit and
discount? l warn the Federal Reserve
Board tnat this country is not going
TO submit to any depression created by
the banks Of the country by the policy
o. the board OF under the advice of
lnaaclers doiniciled either in New York
or Chicago.
a violent depression by such means
would serve the rich and ruin the
poor. The debtor class OF the country
relying on stability in business, will
be unable 20 llquIuate without great
sacrifice, and tho creditor class Will
quickly and virtpously absorb the
property Of the debtor class at panic
prices and cash in later when the usual
reaction takes place. This Is the his
tory Of all panics; The country under
stands it and the country will not
suhnait to an artificial panic, no matter
how respectable the advice that brings
il about.
when the Federal Reserve Boarl
summons q council to determine :
policy, that council should includ,
merchants and rot bankers alone. TIL,