New-York tribune., 1920-12-04
Farm Inquiiry
Develops Into
Verbal Battle
Harding, Federal Reserve
Governor, Defends Board
Policy in Lively Tits
With Congress Members
Says Banks Will Do Part
Denies Profiteering Charge;
Houston Against Revival
of Finance Corporation

WASHINGTON, Dec. 3.-The Con-
gressional Joint committee hearing on
the agricultural situation developed
to-day into a dispute, at times quite
heated, between Governor Harding of
the Federal Reserve Board and mem
bers Of Congress.
Mr.. Chairman, what is the purpose
Of this hearing" Governor Harding
finally demanded, while being ques-
toned by Representative Byrnes,
Democrat, Of South Carolina. as the
Federal Reserve Board on trial or am
| on trial here ?" he continued. declar-
ing he had been a target for "ail
kinds of abuse"
Representative Byrnes SAID he meant
no reflection on Governor Harding.
Circulars issued by the regional
Reserve bank of Richmond, Va. to
member banks, and which Mr.. Byrnes
was attempting to show had resulted
IN rigid restriction Of farmers credits,
were under discussion. Governor
Harding said such circulars were not
submitted to the board until printed
Then attention of the issuing regional
board deemed unwise. The board, he
added was not central bank.
Tells Byrnes to Read Act
At one point Governor Harding told
Representative Byrnes he fought to
read the Federal Reserve act and trv
to understand it," Mr.. Byrnes replied
that he did understand the act, as he
had helped frame it,
Senator-elect Hehin, of Alabama,
asked Governor Harding if the law
makers could issue statement to the
public as understanding his testimony
to be that the Reserve Board was ia
vorable to banks extending all the
croolt possible 10 farmers
THE Federal Reserve Board prefers
to Issue its own statements" Governor
Harding replied
Approving efforts of the Richmond
tial purposes in 1919, Governor Har-
ding said:
81 know some banks in South Caro-
lima had been carrying large loans on
cotton, some since 1917, in the face of
an active market"
Holding such cotton then, he added
on Reserve bank funds, was plainly
specializing"
Says Banks VIII Do Their Part
Governor Harding declared farmers
need have no fear that the banks would
not DO their part and carry over loans
on staple crops for which there is no
market, provided the farmers would
make fair statement of their condi-
ton to the bankers He cited figures
which, he said, showed there had been
no restriction on redscounts of agri-
cultural paper.
Secretary Houston, who preceded
Governor Harding, strongly opposed
projects to revive the War Finance
Corporation for the purpose of hnan-
eng sales abroad of surplus farm
products. Present price declines were
due to readJustments following the
war, he said, and he saw no solution
for the problem, although the Treasury
Department had devoted more thought
to it than to any other sub ject for the
last two months.
In the course of his testimony Gov
crnor Harding said diversion of the
$4,000, 600 profits of the Federal Re-
serve Board for loans to cattle growers
would be more effective than if applied
10 agriculture generally. He had been
asked as to his opinion on the proposal
Of Senator Hitchcock for employment
Of these funds for relief.
Cattle Growers Need Relief
The situation Of the cattle growers.
Governor Harding said, stood by itself
and demanded relief. The suggestion
of Senator Hitchcock, he continued
WAS outside the province Of the board
and matter with which it was not
concerned.
Answering the charge Of proiteering
on the part of the Reserve banks, Cow
ernor Harding said they had earned
SO per cent on their capital stock Of
100000 900 and the reserve balances
of banks amounting to Sl,S0O,0OO, 900.
Governor Harding .old the commit
tee he was more apprehensivc year
ago over business conditions than he
is to-day.
"A year ago we were living in a
fools paradise" he said. "Puces and
conditions were just as abnormally
nigh in one extreme as they are now
IN some respects as low in the other
extreme" The first Warninp of the
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