The Washington times., 1920-08-26
CHECK BANK LOANS
FOR SPECULATION
Federal Reserve Board Calls
Halt on Credit for Nom
Essential Purposes.

Expansion Of bank credits has beeB
definitely checked. Gov w. p. O.
Harding, OF the Federal Reserve
Board. stated today, reviewing the
credit situation, and moves initiated
by the Government TO restrict credit
to more essential uses.
Turning OF the tide OF expansion.
and beginning OF more hopeful FL
nancial outlook, is attributed by Gov
ernor Harding to the vigorous prose-
cution OF the policy outlined by the
Federal Reserve Board to shift sp-
plications for accommodation from
non-essential to more essential
branches OF trade.
Governor Harding emphasized the
point that this policy is being pur-
sued energetically. but with a "maxi-
mum consideration for the mainten-
ance OF productive activity in all
parts of the country"
"The Federal Reserve Board" Gov
ernor Harding said. deemed IL it's
duty to exert it's power in the direc-
tion OF curbing the expansion OF
credit used for speculative or non
essential purposes, without interfer-
ring with maximum production along
essential lines.
"In the adjustment Of trade asA tn
dustry to the new basis OF essential
and some hardship from un smploy-
ment may result But in view OF the
serious shortage of goods in all 0Do0
and the pressing demands OF consun-
ers over the entire world, a read ust-
ment should be effected without un-
due delay and with a minimum q
friction and unrest"
A more favorable banking position
has been created in this country.
4. h. 49,. A. T. -
opinion of Governor Harding and nh
associates on tho board. 1t Isl also the
view of members Of the boards ad-
visory council. comprising the leading
fiTfanciers of the nation, that danger
Of an acute money stringency this fall
has passed.
On the basis OF most conservative
reports from leaders in finance the re-
serve board Is OF the opinion that
business men generally are exercising
a more wholesome judgment in COM
mercial matters. The board is in
formed that business generally, look
ing hopefully to the future but pro-
ceeding with caution, is at the present
time taking account of stock, curtail-
ing their commitments and exercising
more deliberation in settlement Of
business problems.
Governor Harding asserted that tho
Federal Reserve Board will continue
to refrain from any dictation to
banks. with specific reference to what
are and what are not essential cred.
its.
THE board has taken the position"
he said. that it Is not sufficiently
close to the actual day to day re-
Quiremsnts of business to undertake
to lay down rules as to what loans
are for essential purposes and what
loans are not. Ultimately the main
responsibility for such DECISIONS must
rest with the commercial banks them
selves. In their dealings with CUSTOM
ers the banks are in position to
ascertain the purpose of each loan
and decide whether this purpose is
essential or not"
The standard of essentially in
loans, it was said, is necessarily diff
ferent from those existing as re-
suit of war demands, and the measure
Of discrimination to be exercised in
the question of loans for essential
purposes is left for determination by
the banks in touch with the needs Of
various localities.