Arizona republican., 1920-12-04
Houston Opposed To
 Finance Corporation
Treasurer Sees No Solution For Price Decline Which, He Says, Is Due To Re- adjustment
[Republican A. p. Leased wIrel


 WASHINGTON, Dec. 3. - The con- gressionaI joint committee hearings on the agricultural situation developed to- day into a dispute. at times quite heat ed, between Governor Harding of the federal reserve board and members of congress.
 Mir. Chairman. what is the purpose of this hearing?" Governor Harding finally demanded while being ques- toned by Representative Byrnes. Dem- ocrat, of South Carolina If the fed eral reserve board is on trial. anu On trial here" he continued. declaring ha had been a target for ''aIl kinds ot abuse'
 Representative Byrnes said that ha meant no reflection upon Governor Harding
 Circulars issued by tie regional re- serve bank Of Richmond. Va, to mem Der banks. and which Mr Byrnes was attempting to show had resulted in rigid restriction of farmers credits. were under discussion Governor Harding said such circu- lars were not submitted to the board until printed, when they were looked over, attention of the regional bank issuing them was called to anything the board deemed unwise. The board, ! he added, was not central bank.
 At one point Governor Harding told Representative Byrnes he fought to read the federal reserve act and trv l to understand it." ,Mr. Byrnes replied l that he did understand the act. as he had helped to frame 1t
 Senator elect Heflin of Alabama asked Governor Harding If the law makers could issue a statement to the public as understanding his testimony to be that the reserve bank was favor able to banks extending all the credit possible to farmers. The federal reserve board prefers f., issue it's own statements" Governor Harding replied
 Approving efforts Of the Richmond bank to restrict loans for. non essential purposes in 1919, Governor Harding said:
 T 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, he added. on reserve bank funds, was plainly spec ulating"
 Farmers Need Not Worry i, Governor E~--s~ng 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
 
 ton to the bankers. He cited figures which, he said, showed there had been no restriction on rediscounts of agri- lcultural paper.
 Secretary Houston, who preceded [ Governor Harding. strongly opposed s projects to revive the war finance cor ! peration for the purpose of financing s sales abroad of surplus farm products , Present price declines were due fo re- aE ct ar.skr FrT1 Al. Q and he saw no solution for the problem \ although the treasury department had . devoted more thought to 1t than to any , other subject for the last two months
 In the course of his testimony Gov ernor Harding said diversion of the S40,000.o00 profits of the federal reserve Y board loans to cattle growers would be Y more effective than if applied to agri- Z culture generally. He had been asked Q as 10 his opinion on the proposal of ' Senator Hitchcock for employment of 7 these funds for relief.
 The situation of the cattle growers. Governor Harding said, stood by itself. The suggestion of Hitchcock. he con tinIscd, was outside the province of tho board and matter with which 1t was not concerned
 Governor Harding said there was no } couse of fear that the banks would not do their part in the present situation
 Banks Not Profiteers k Answering the charge of pfofiteering .e on the part of the reserve banks. Gov 1t ernor Harding said they had earned e 6.9 per cent on stheir capital stock of 'r S100,00000O and the reserve balances of st banks amounting to S1.S00, ,000. 900. n Doubt that exports could be in- t. creased unless some way was found to l. increase Europe's power Of buying and ability to furnish requisite securities d was expressed by Secretary Houston
 He did not see, he added, how much 'e relief could be expected at this time in ot that way.