The Barre daily times. (Barre, Vt.) 1897-1959, 1920-05-25
STATEMENT WAS
PRESENTED TO SEN
ATE COMMITTEE
In Response to Resolution
Adopted Recently, Re-
'questing Information
About What the Federal
Reserve Board Planned
to Do in Order to Rene
dy the Situation.

Washington, d. c., May 25.-Econo-
my in individual expenditures, reduc-
tion of nonessential loans by banks,
increased production and improved
transportation are needed to reduce the
cost Of living and debate credits Gov
crnor Harding, Of the federal reserve
board, declared to-day in responding
to Senate resolution os inquiry.
The beard is not prepared to define
what are essential and non essential
loans. Governor Harding stated. This,
he said. il Il problem for local bankers
familiar with local Affairs,
Governor Hardings letter. presented
to the Senate to-day by Vice President
Marshall. came in response to the res
oution OF Senator Mccormick, Repub
hcan, Illinois, adopted recently, re-
questing information regarding what
steps the board contemplated ITO meet
the existing imitation of currency and
credits and consequent high prices, and
what measures were proposed To mo-
bilize credits for movement OF the 1920
crop
federal reserve members against eX
tending credits and its increase of dis
count rates. Governor Harding said the
board for months has recognized that
the expansion of bank credits
was proceeding at a rate not warranted
by the production and consumption of
goods The discount rate advances,
Governor Harding said, have checked
credit transactions somewhat. but
"have not been entirely effective in
bringing about the reduction in loans
desired and which might normally have
been expected during the early months
of the year"
"on the contrary" he said. CONNER
cial loans have steadily increased. Thus,
II appears that the public has sUtici-
pated demands for banking credit
which usually are made later on in the
year.
The average reserves of federal re-
serve banks are now little over 42ts
per cent" he added "as against 4j
per cent at the beginning of the year
and about 81 per cent II months ago
Governor Harding told of the recent
conference here of the federal reserve
advisory council and its recommends |
tions for curtailment of credits togcth |
or with the opinion that congestion Of
transportation facilities is tying up
great quantities OF foodstulfs.
"The board is convinced Governor |
Harding continued. that il 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 in carrying the /
old crops will be sufficient to offset 10
a considerable degree the credit de-
msnds ia moving the crop of |
1920
In tho efforts to reduce nOn-esseu-
tial loans. Governor Harding said. /
banks were cautioned against drastic /
curtailments and advised to seek grad /
ual liquidation and to grant loans stim-
ulating essential production.
"The problem Of the banking system
Of the country" he continued, SIS to
check further expansion and to bring
about a normal and healthy hquids
ton without curtailing essential pro-
duction and without shock 10 industry
and legitimate commerce.
1T j. the view Of the board that
while the federal reserve banks may
properly undertake in sheir trausac-
tions with member banks 10 discrimi-
nate between essential and non-essen-
tial loans. nevertheless. that discrimi-
nation might much better be made at
the source by the member bank shem-
selves"
Regarding congestion Of merchandise
and traffic. Governor Harding -aid: 1T
Is tr7s that under existing conditions
the volume of credit required in auy
trausseiion s. much greater than was
r,le ease IN pre-usr times. bu u j. 40
true that the resources 81 the member
and non member hank would b. ample
10 take care % the essentials as well IL
there wcre = frecr foN of goods ard
credit II frozen loans wcrr hqui-
fed and commodities which are held
hack either for speculative purposes ur
be-sause - lack 81 transpcrts ion "a
rilities should 20 30 the markets and
IL larEe stocks Of merchandise should
~ reduced the resultant release ~
credit muuld have q most henefcial rf-
feff upen thc gencral situation. Eu
she usasuf me everything must he Done
- sKuafite fhf rrlea-f af fhezr cred
its ard 80 rt-triet nan-ss=sHtial ore.iit-
So future-
-The hoard ui1 ust hfsifatr Sd far
o. msf - neerssary o. trug 90 BEAR
a. - ssatutrry rauers in rr-ulafiE-