Perth Amboy evening news., 1920-05-17
DISCUSS H.C.L.
At CONFERENCE
How to Make Working Money
Go Farthest and Production
Topics of Capital Confab

Copyright. 1920, by The Washington
Star.)
WASHINGTON, May N17.-How to
aake the working money of this
country go the farthest and how to
reduce the high cost of living by cur
tailDeeut of non-essential production
e considered at "a conference in
e. Capital, today. at which the best
banking judgment of the entire
try will be presented.
The credit situation in this country
has been more critical than the public
generally, or even h majority or
business men, ave realized. The
conference today which will be at
tended by the members of the federal
reserve board, the members of the
advisory council OF the federal reserve
system, the class A directors of the
twelve district federal reserve banks
and by a committee of five specially
designated by the American Bankers
Association. will be the most import
ant and practical effort thus far made
TO relieve the tense credit situation.
America is entering on an era of
unprecedented opportunity in trade.
both foreign and domestic. with mines
Rnd factories unable to produce fast
enough to meet the worlds demands
In spite of adverse exchange. This
world demand upon the United States
has ONE on the heels of the war,
when the United States had for two
or three years been concentrating its
industrial skill on production of mum
etions n the other essentials of a
Just as manufacturing has been try
ong to get back to normal production
of food, clothing and general mer-
chandise to restock the empty shelves
throughout the world, along comes
Gn orgy of demands for luxuries even
at previously unheard of prices. Lib
erty Bonds which represented war
time savings were thrown onto the
market, using up ready money that
would otherwise have gone into oaes
for Industrial development. The ready
money of this country has been pretty
well used up: SO much that the daily
papers report from various large cities
that important Industries are having
extreme difficulty in financing neces-
6ary engagements. n sometimes
even for ordinary costs of operation.
That's the situation that prompted
ahe conference here today to deal
with the credit situation.
Elimination of non-essential indus-
tries has been urged as a way of safe
guarding the working money for the
necessary industries, and by speeding
up of production of food and clothing
bring about a reduction in the cost
of living. 1t Is not probable, however.
hat the federal reserve system con
ference will decide upon any list OF
non-essential industries THAI. must. or
even should. operation as the
Wa Industries Board did during the
war. This offers a very delicate prob
lem.
The possibility of throwing large
numbers out of employment must be
carefully considered. During the war
fhc situation was entirely different.
oTha hoct efranrfh ~ tha cnItptrx- hcJ
been called into the military service.
The man-power was depleted. There
was no problem of unemployment,
because with depleted man-power,
factories previously engaged on manu-
facture OF some non-essential were
adjusted to manufacture some war
time essential, and all the shops and
factories were kept busy.
What the conference is expected to
do is ito pas the word down he
line to all federal reserve banks to
scrutinize strictly all applications for
loans and to husband their capital
for the more urgently essential in
Gustries. At the same time an unnlis-
sakable warning against extravaganza
and against demanding luxuries will
be given to the American people.
h federal reserve board has no
direct authority to define essential
and non-essential industries. as the
war industries board did during the
war. So. the wedding out of non
essential industries will be through
the exercise Of discretionary authority
by the heads of the twelve federal
reserve banks scattered throughout
the country.
Rediscount rates will also be dis
cussed at the conference. 1t Is prob |
able that there will be some modin- |
cation of those now in force, but no
general increase is likely.
Treasury officials and the members
of the banking n currency COM
mittee of congress which recently en-
acted legislation providing for gradual |
ed r~ediscunto rates as a means of curb
ing speculation are satisfied that this
nc.kesLift is working out well. Tho
Kansas City district has been the only |
one yet to take advantage of this
authorization. although one Western
district is contemplating doing SO.
Washington officials express their sat |
lsfaction that the operation of grad-l
uated ~rediscount rates by the Kansas
City bank is working successfully to
restrain unnecessary use OF cap.tai.
AS a result of the conference Ii
may we'll happen that the banks gem
orally will adopt a more uniform re-
discount rate on Liberty Bonds. The
federal reserve banks in Cricago and
minneapolis recently increased the re-
discount rate on Liberty Bonds from
S IL to 6 per cent. The San Fran !
cisco bank is already on a 5 "a per
cent. basis. 1t is rather generally ex-
pected among the leading bankers
that the rediscount rate on liberty
bonds will be placed at approximately |
six per cent, the same as on COM
mercial paper.