Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1920-05-22
IMPROVEMENT IN
ECONOMIC SYSTEM
Of NATION IS SEEN
BY DAVID LAWRENCE

and the readiness of the bankin,
and business public TO consent t.
curtailment of unnecessary and un
productive credits.
But the view at the executive en-,
of the avenue is not altogether shared
by members of congress, some O.
whom like Senator Robert L. Owen
of Oklahoma, fear that curtailmen
of production will result and tina
the prices of all commodities viii
tend to rise because of the scarcit!
of stocks. Other members of con
gress feel that the federal reserve
board and Secretary Houston ar
pursuing a conservative policy ant
that their program will influenc,
the whole business world.
Incidentally. Secretary, Houston''
| letter to Chairman Fordney, of thu
house ways and means committee
is intended as a warning that con
gresS had better cease thinking abou
a soldier bonus and give serious con
sideration to the prospect OF increas
ing taxes to meet current govern
ment expenses. And altogether boil
| congress and the executive depart
ments are today more deeply alb
| sorbed in the economic situation thai
they have been since the close o.
| the war.
Congress Closely watched
This renaissance comes at a time
when congress is anxious to ge
away for the political summer, bu
kilograms already pouring in from
! constituents indicate that back home
business men, bankers, merchants
and manufacturers are watching
Washington for any moves that may
! affect what has been referred tt
so often as essential and "nonessen
| tial lines of business"
The effort to curtail the amount
! af inc NV in ci cfincr that
Der banks of the federal reserve sys
tenn actually discriminate in the
classes of loans that they make Is
expected to produce results. In fact
the treasury believes results are al.
ready in evidence. But on capito
instead of increasing the interest
rates. they should be lowered to
or per cent, has unqueStionably
encouraged various borrowers to be-
lieve that if they get behind the
movement they can bring about q
reduction instead of an increase In
interest rates.
Senator Owen argues, for instance
that there should be discrimination
on the part of the Federal Reserve
banks in applying their interest rates
and that loans for speculative and
unproductiye purposes should pay
the highest interest rates and pro-
duction should be encouraged in 9TH
er enterprises by CORRESPONDENCE
lower rates.
Houston Cites Example
He advocates uniformity of dis
elimination which means that cattle
men in Texas should be able to bor-
row their money for the same rates
as cattlemen in Montana.
Secretary Houston is inclined to
look upon Senator Owens economics
as faulty and contends that SO out
of a 100 economists would not agree
with the Oklahoma senator's con-
tention. The head of the treasury
department declares that the inter-
serve board must bear some relation
ship to the uses of money outside
of the government circle. He as
serts, for example. that il money
were loaned by the government at 3
or per cent, the resources OF the
federal reserve system would not
only be drained but would be used
to- make extensive profits in other
Is lines. ~ tg.... !. 5gs,gt
T. For instance, he points out that
there would be nothing to prevent
the borrowing of money from fed
seral reserve banks at and per
cent and loaning that same money
to railroads and other enterprises
paying as high as 6 and 7 per cent
a handsome profit. The whole ques-
ton really >revo1ves not merely
around the question of what is an
essential or nonessential line Of bust
ness but what is an essential or
nonessential loan in particular
business. ..tf
The Treasury View
The treasury believes the member
banks in their respective communi-
ties can exert the only influence that
can at all be applied in America
complex economic structure and that
will successfully carry the whole
economic load. Expressions that
may have gone out concerning an
arbitrary restriction of credit are
unwarranted. The treasury's view
. is merely that legitimate and es-
sential credits should be advanced
and that the high interest rates will
drive speculative investments from
the borrowing market and release
money for productive purposes.
Nobody, Of course, can say what
factors will be controlling in the
readjustment that has been begun
but check to expansion of credits
has been applied.
Senator owen and his school of
thinkers believe restrictions is psy-
chologically bad and produces de-
preston. Secretary Houston and the
FEDERAL reserve DOarQ are cOnVllceu
that it means the introduction of
conservation and caution. All parties
are convinced that at the core Amer
lea is sound but they differ as to
the best way to help surmount the
difficulties and embarrassments of
an expanded credit system.
Of one thing the business public
may rest assured. The federal re-
serve board and the treasury are go
ing ahead with the policy mapped
out by Governor Harding, of the
federal reserve board. because they
have the power under the law to
raise the interest rates and fix
through the member banks the re-
discount rates. Congress has very
little to do with the matter though
| Senator Owen, who is candidate
| for the presidency, may make sew
| eral speeches on the subject in the
near future and his supporters al
ready are organizing business mems
/ L. 81 - ~ fy~ir