Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1920-05-27
HARDING URGES
MORE ECONOMY
TO CUT H. c. L.

WASHINGTON, May 25.-Econ-
omy in individual expenditures, re-
duction of non-essential loans by
banks, increased production and i'm
proved transportation are needed to
reduce the cost of living and de-
flate credits, Governor Harding OF
the Federal Reserve board declared
today in responding to a senate reso-
luton of inquiry.
The board is not prepared to de-
fine what are essential and non
ESSENTIAL loans, Governor Harding
stated. This, he said, is a problem
of local bankers familiar with local
needs.
Governor Harding's letter, pre-
scented to the senate today by Vice
President Marshall, came in response
to the resolution of Senator Me
Cormick, Republican, Illinois, ADOPT
ed recently, requesting information
regarding what steps the board con
templated ito meet the existing in
flation of currency and credits ano
consequent high prices and wha1
measures were proposed to moblll5
credits for movement of the 1925
crop.
Reviewing the boards warnings te
federal reserve members against eX,
tending credits and its increase OF
discount rates, Governor Har al a
SAID the DOdru LOT nollHS I'D,
recognized that the expansion :. OF
bank credits -. was proceeding
at a rate not warranted by the pro.
duction and consumption of goods.
The discount rate advances, GOV:
ernor Harding said, have checked
credit transactions somewhat, pu1
have not been entirely effective II
bringing about the reduction in loans
desired and which might normalIJ
have been expected during the early
months of the year."
Loans Have Increased
"On the contrary" he said, com
mercial loans have steadily increas.
ed. Thus it appears that the pub
lie has anticipated demands Tor
banking credit which are usually
made later on in the year..
1.-The average reserves Of Fedora
Reserve Banks are now a little over
against Is per cent at the beginning
of the year and about 81 per cent
twelve months ago."
Governor Harding told of the re.
cent conference here Of the Federa
reserve advisory council and it's rec
concentrations for curtailment OF
credits together with. the opinion
that congestion of transportation
facilities is tying up great quaint
'aThe board is convinced" Gov
ernor Harding continued, that If the
unsold portions Of last years crops
can be brought to market before the
new crop natures, the liquidation OF
credits which are now tied UP II
ficient to offset to a considerably
degree the credit demands D.. in
moving the crop of 1870
In the efforts to reduce non-es,
sential loans, Governor Harding sa!3
banks were cautioned against drastic
&c and advised TO seek
gradual liquidation, and to gran,
loans stimulating essential produc-
ton.
"The problem Of the banking sys-
tenn Of the country" he continued: rs
to check further expansion and tc
liquidation without curtailing es-
sential production and without
shock to industry and legitimate
ut is the view of the board that
while the federal reserve banks may
properly undertake in, their trans
actions with member banks to dis
criminate between essential and non
essential loans, nevertheless thal
discrimination might much better. be
made at the source by the member
banks themselves"
on Traffic Congestion
Regarding congestion of merchan-
disc and traffic, Governor Harding
said: ri.
ut is true that under existing
conditions the volume, of credit re
quired in any transaction is much
greater than was the case in pre-,
war times; but it is also true that
the resources, of the member AMI
non-member banks would be ample
to take care of the essential bust.
ness Of the country and ITO large
extent Of non essentials as well i
there were a freer flow of goods .ano
snredit. If frozen loans were .SliqIi;
fled and If commodities which am
field back either for speculative pur-
poses Or because of lack of transpor-
tation facilities should go to the
markets, and if large stock of mer-
chandise should be reduced, the re-
sultant release of credit would have
almost beneficial effect upon the
general situation. In the meantin1e
everything must be done to expedite
the release of these credits and to
restrict non-essential credits in fur
ture.
"The board will not hesitate, sc
far as may be necessary, to br1ne
to bear all it's statutory powers in
regulating the volume of credit.
much will depend upon the res,
toration of the normal efficiency OF
railroad and steamship lines. II
adequate transportation facilities
can be provided the board sees NJ
occasion for apprehension in con-
nection with the movement of crops
now being grown"