Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-06-12
CREDIT VOLUMES
BEING CUT down
Borrowings Are Still Heavy,
But Pressure Is Causing
Much Liquidation.
From Daily Financial America. }

| New York's banks are leading the
way in supporting the policy of re-
stricting credit They have been
active In reducing the immense
volume of transactions that have
marked Americas business of the
last year. That volume Is still high
above nine billions week In bank
iclearfngs Is required to finance 1t now.
But In November last. it approached
eleven billions. compared with less
than seven billions a week at the end
of 1918.
Since the federal reserve board be-
gan it's campaign against excessive
use of credit in November there has
been a reduction in clearances of one
and half billions a week. This Is
shown In the reserve boards weekly
statement of banking conditions re-
ported by more than $50 of the more
important clearing houses. Yet all
of this reduction of a billion and a
half has been effected in New York $
transactions. while other centers have
increased their activity.
| New York. for the week ended No
vember IL last, reported clearances of
| 675,9e0,e00. The retrenchment. there
fore. was $1.fS5 100000. or 26 per
cent In this period prices generally
! had risen about 3 per cent. requiring
slightly more money to handle the
same amount of commodities. While
New York was cutting operations,
however. others were adding to them.
| The total clearances outside of New
York were $4.s71 100000. an increase
| of $322.000.o00, or. per cent in clear
ances over November IL.
| Heed Reserve Board Warming.
| Apparently. the warnings of the fed
| eral board have been needed in New
! YORK. Manufacturers and merchants
here well know the difficulties they
have found in obtaining loans. But
In other sections borrowing and trad
ing continue at even a greater VOL
ume than in November last. All rec
| ords of clearances were exceeded for
| the country as whole in November
causing the application of the finan-
cial brakes at Washington.
| There Is some reason for additional
activities in the agricultural districts
where planting Is in progress. There
| is also, in the grain belt, a delayed
| movement of crops aided by cars that
have lately become available. This,
| however, Is offset by paralysis of the
movement of freight In other districts,
particularly of non-essential prod
ucts. All districts alike, excepting
New York, however, seem to have
| shared in the swelling of transac-
! t1ons. Apparently, where bank ac-
Souuls nave not Deen employed In
moving commodities by rail, they have
| been employed in some other way.
Borrowing Steady.
Borrowing from the federal reserve
banks on May Is was greater than on
November 10 by S369, 200, 600. or IA per
| cent OF the entire country. The total of
! rediscounted bills on hand in May was
still S2.964 100000. despite the increase
in the .rediscount rate. New York Dor
rowing in the same period rose only
81. 900. or per cent
There appears reason for more pres
sure against the speculative and non
essential borrower everywhere, rather
than in New York alone The actual
production and exchange Of necessaries
will be aided if credit can be diverted
from boarding and non-essential pro-
duction. Financing will be made easier
Tor the farmer. manufacturer. merchant
and transportation manager if public
credit is not wasted by those who OBJ
ain it. One OF the promising indications
lately Is the reported reduction OF pas
senger automobile production to 65 per
cent. and of pianos fur garments, came
eras and sport goods
Thrift in the use of bank credit is as
necessary as economy in the spending
Of increased wages. No man has the
right to assume that he can do as he
pleases with the public's money, Dor
rowed from the banks Such loans
should only be made for specific, essen
! tial purposes. 1t is the duty of the
| banker to see that these loans are not
applied to the nations undoing. It is
the reserve board function to see that
the bank performs its duty. There is
still much to be accomplished by both of
these trustees Of the American people.