Evening journal., 1920-09-09
PARTISAN CONTROL OF CREDIT.

n. ENOCRATlC campaign managers find themselves very
~ much embarrassed by the practical workings OF the
Federal Reserve Systemhe legislative act OF the
eight years Of Democratic administration 10 which they
have been pointing accomplishment. The party |
leaders Who decaned in 1912 against the extension OF
Federal powers are appalled, when they realize they
have in recent months, what tremendous power they
placed in the hands OF small group OF men-partsan
politicians.
It was under the operation OF the Federal Reserve sys
tenn that imitation took plaoe-the imitation continuing
even after the had ended by the signing OF the
arnstice In recent months the Federal Reserve Board
haa undertaken to force denaton-thus admitting and
desnonstratng that small group Of possess, under
he provisions Of e law the power To control the can-
nels trade By ordering banks in the far South
west 10 call their loans TO sheep and cattle men, the
board indirectly holders OF wool and cattle 10 s
all or part Of their holdings order get the money
with which 10 pay their obligations BY D0tfyDg banks
mat they must diminish loans 10 "unessental indus
iries~ the industries TINS cassed by the board
forced 10 cur+ail tiseir actvities
Under such a system any particular secton OF the
country happecs 10 be dependent argely upon in
dusr the condition Of business in that section be
controlled by the action OF the board based upon It's
Judgment as to what The industry should have in the
way Of credit Cotton growers hold their crops n
Me board thinks cotton loans should be exteDded-they
must sal If The board takes the notion that loans on cot
ION should be restricted That such effects be prd-
sfAgrcuure Of the stas OF Texas which said recently,
1e actions Of the Reserve Bank Board caused banks o
call loans on cotton wfich forced growers to se thus
adding TO the scheme 10 deprcss the price"
Mr. Cox and his campaign managers are further en-
barrassed by the report OF the Federal Reserve Board
showing net earnings paid in capital ranging from SO
to 20 per cent the average FOR the entne system being
Isl per cent, at the time that Mr.. John Sketon
Williams a member Of the board, complains that banks
in New York City have charged high IS per cent
for emergency short-time loans.
But the real feature OF the situation that embarrases
hem IS not the question whether the board exercises
its Judgment wisely decreeng that loans shall shall
not be made OF continued TO wool cattle cotton
men or whether has shown sound judgment in putting
the ban upon what it chooses 10 nonessental
Industries" the Of the matter is that the Demo-
crac party prOcaming against extension OF Fed
erai power, established government institution that
~ielos more power American industry and trade
man ue most radical advocate Of bureaucracy would
have dared 70 advocate he real nature OF the scheme
Mad been known
3 From political viewpoint the developmen,s are i'm
portant for men who have money or labor or wage.
Hepndept upon what are cassed as "non-esseotial t
dustres' have awakened 70 the fact that the neroo,,
party has established this autOcratic supervisor NJ n
lines OF business and made them subject to It's ever
whn.5 They not likely TO vote approval of its mar
agement especially since the management is condemn,
by one OF the authors OF the measure. senator owen
Democrat.