The Birmingham age-herald., 1920-05-24

New York, May 23.-(Special)L In his address to representative bankers With whom he was in conference at
 Washington recently Governor Hard ing of the federal reserve board spoke
 in somewhat technical terms well un- dcrstood by bankers. but not entirely ineligible to the general public. The New York bankers who heard him re- port that he spoke with such earnest ness. emphasis and sincerity as to make it certain that he had in mind more than he really uttered in words. He feels that the situation while not alarming is somewhat serious. We are beginning to pass through the read justment period. If that be gradual and reasonably prolonged it may incur some embarrassment, but will involve no risk. Should this readjustment be suddenly brought to a head there might follow, as Governor Harding says, influences that would eventually bring on real crisis.
 Some of the terms used by Governor Harding were put into plain English this morning by bankers who heard him or who have read the condensed reports of his address. He spoke par ticularly of frozen credits" intimat- ing that these were in part responsible for the present strained condition. Bankers say that frozen credits ex- plain in some measure the suddenly | developed but now apparently vide spread discount or reduction from the l high prices which heretofore commodi- | ties have commanded. Many merchants l have been compelled to rely upon the l banks for assistance in carrying their stocks of goods They have redis- i counted bills which were originally is | sued for sixty days and these have been extended and then extended again until | in some cases they have been running 1 for six months or even longer.
 | The public has not known how gen. eral has been the pressure exerted by | the banks, especially in the past month or six weeks for the payment of these | loans. Governor Harding says that | much remains to be done to quicken | the release of money now in froz9n | loans, and he urged the bankers to use | the utmost discrimination in granting new loans.
 PEOPLE SUPPORT THE BANKS
 Just as the banks were beginning to | insist upon the liquidation of the | frozen loans the people in an unexpect- I ed way came to their support. As l though by a tacit voluntary and yet not planned agreement they began to 1 refrain from purchasing commodities 1 The first effect of this disposition was l felt in the retail shops which dealt in commodities not necessary for life. | Therefore with the pressure by the 1 banks for the melting away of these frozen loans and with the action of the people in declining to buy commodities l 1t became imperative that attempts | should be made to market commodities 1 To do that involved tempting reduc- l tons in price. It also involved the payment in cash on commodities that
 were bought at reduced prices. The re- suit has been that the retail shops have been for week Or more in receipt of | large amounts of cash. With this cash
 it has been possible to melt away some portion of the frozen loans.
 FARMERS AND SITUATION I One comment made by Governor | Harding to the bankers did not need any explanation, for they understood
 the situation as we'll as he did. His in-
 timation was clear that the farmers oi
 the United States are facing a situa-
 tion which may be more serious to the | lreopIe unless it is relieved than to the
 farmers themselves. For the man who
 owns a farm can, If necessary, with his
 own labor and that of his family ant
 friends cultivate crops enough to pro