The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1920-11-14
Advances Views as to the
Best Way to Reduce the
States Financial Con-
ditiOns to Normal
LOWER PRICES MEAN
CURTAILED CREDITS
LOANS MUST BE HELD DOWN
TO REQUIREMENTS SET
FORTH BY FEDERAL
RESERVE BOARD

Oklahoma City, Nov 13.--F'red G.
Dennis, bank commissioner of Okla
homa in statement made public
tonight answered two questions re-
garding the financial condition of the
state. The questions which he SAID
had been put directly to him, wero
First-What is the most reasonable
way to bring the financial condition
Of Oklahoma back to normal? and
SecOnd-What is the hes; way to
take advantage of our financial sys-
tenn so as to get the greatest benefit
for the state In the future?
Answering the first question" said
the statement prepared by Mr.. Dennis.
the credits OF the country are ex-
tended in the y. .r4tion that the
products and resources Of the coun-
try were advanced during the period
of war. The lowering Of the prices
Of commodities, which we have TO
sell. necessarily requires the reduc-
ton of credi.s as the resources Of
financial institutions will be curtailed
In preparation TO the decrease Of
the prices of commodities sold.
1T has been estimated that with
80 per cent decrease in the price
OF commodities. tha. the deposits Of
the banks will shrink % TO So per
cent and like per cent Of loans will
necessarily have TO be collected, and
in addIon to this. whatever money
was borrowed BY banks to make the
present loans. With the reduction
OF 25 per cent of the loans and enough
more 20 pay the borrowed indebted
ness, banks viii so into the new
year in good financial condition, with
their borrowing ability available for
use during the dull summer season.
wherein production is in the process
OF development.
Briefly this means that banks vii!
have to collect enough TO pay their
borrowed money and about 25 per cent
more, in order to take care of the
shrinkage in deposits"
In regard to the second question,
as TO how TO take advantage of the
states financial system, to get the
greatest benefit for the state in the
future, Mr.. Dennis said he believed
this can best he done by both state
and national banks making loans that
will meet the requirements Of the
Federal Reserve Banks, as to eligi-
bility."
In summing up his statements ans
werng this question, Mr.. Dennis said:
Briefly the way TO get the great
est benefit from our financial sys
TEN In the future for this state is;
FIRST: All banks should confinC
themselves to eligible paper and com.
plcle the paper by proper financia
statements or certified copies of chat
tel mortgages at the time the loan is
made, and for state banks to offer
only this character OF paper for r.
discount at their correspondent, banks
where It In turn can be used By
their correspondent banks with th,
federal reserve bank. Avoid 'fro2er
credits as eligible paper only car
be passed along without any lncon
vonienco to the central banks.
Second: All national banks ant
banks which are members OF the Fed
eral Reserve Bank system. should re-
discount their noes directly with tn
/ Federal Reserve Bank and not sen,
thom TO their correspondent banks
This process brings new money int
the state to help both the communit!
In which the bank Is located. and tn
community In which the correspondent
bank Is located"
Nearly all the notes OF these banks
Mr.. Dennis said, are eligible paper
"or can be made so with u htu
care and attention by the officer
OF the bank"
The statement then ltcml1cd vari
Gus kinds OF eligible paper. summ~r
lzlng the items us follows:
"Small notes, acceptanccs and bill
OF exchange offered by producers o
dealers In commodities OF the coun
try, are acceptable as eligible papc
1T the Federal Reserve Bank, pro
vidcd the statements justify It o
provided the security offered Is am
Pile"
Notes on real estate, stocks o
bonds. lou side OF government bonds,
or any loan that In made FOR as In
vested capital or speculation or 10
the purpose OF permanent Investment
are not acceptable by the Fedora
Reserve Bank. and should be avoid
ed. except to limited extent, tn
commissioners statement continued.
Az Dennis concluded his statcmen
as follows:
"A 25 per cent reduction OF th
banka In oklahoma and enough NOR
to make II possible Tor the bank
to pay their borrowed obligations
could not. In the face of facts nov
confronting us, work hardship o.
the borrowers Of the state. Any p,
place could not object 20 rcducln
son entitled % loan In the iir-
his borrowed obligation. 25 per CEN
when It Is apparent that II is neces
sary for the banks TO liuuldate thci
! a .. sass