The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-12-04

RESERVE BANK HEAD.
RESENTS PRODDING
sam ION Trial Here?' He Asks
at Congressional Farming
Inquiry.
DISPUTE BECOMES WARM
Governor Insists Banks Make
No Restrictions on Redis-
counts of Farm Paper.
DISPUTE BECOMES WARM

WASHINGTON, Dec. 9.-The Congress
sional joint committee hearing on the
agricultural situation developed to-day
into a dispute, at times quite heated, be-
tween Gov. Harding Of the Federal Re
serve Board and members of Congress.
"Mr. Chairman, what is the purpose
OF this hearing?" Gov. Harding finally
demanded, while being questioned by
Representative Byrnes. Democrat, of
South Carolina. rs the Federal Re-
serve Board on trial? Am I on trial
here7' he continued. declaring he had
been target COR "all kinds of abuse"
Representative Byrnes said he meant
no reflection on Gov Harding.
Circulars issued by the Regional Re-
servo Bank OF Richmond, Va. to mem
Der banks, and which Mr.. Bypes was
attempting to show had resulted in rigid
restriction of farmers credits, were I'M
der discussion. Gov. Harding said such
circulars were not submitted to the
board until printed. when they were
looked over and attention of the issuing
regional banks called TO anything the
board deemed unwise. The board. he
added, was not central bank. ,
At one point Gov Harding told Rep
resentative Byrnes he Ought to read
the Federal Reserve act and try to UNI
derstand It," Mr.. Byrnes replied that
he did understand the act, as he had
helped frame 1t.
Senator-elect Hefling (Ala.) ask21'
Gov. Harding IL the lawmakers could
l.
Outstanding his testimony to be that the
Reserve Board was favorable to banks
extending all the credit possible to
farmers.
THE Federas Reserve Board prefers
to issue its own statements" Gov.
Harding replied.
"Bnnks Plainly Speculattng."
Approving efforts of the Richmond
bank to restrict loans for non-essential
purposesAin 1919. Gov. Harding 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"
Gov. 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 mar
ket, provided the farmers would make
a fair statement of their condition to
the bankers. He cited figures which
he said showed there had been no re-
striction on rediscounts of agricultural
paper.
Secretary Huston, who preceded Gov
Harding, strongly opposed projects to
revive the War Finance Corporation for
the purpose of financing sales abroad of
surplus farm products. Present price
declines were due to readjustments fol-
lowing 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 subject
for the last two months.
In the course OF his testimony Gov.
Harding said diversion of the $4,000 900
profits Of the Federal Reserve Board for
loans TO cattle growers would be more
effective than II applied to agriculture
generally He had been asked as 10 his
opinion on the proposal of Senator
Hitchcock for employment of these
funds for relief.
The situation OF the cattle growers,
Gov. Harding said, stood by itself and
demanded relief. Ths suggestion of SEN
ator Hitchcock. he continued, was out
side the province Of the board, and
matter with which 1t was not concerned.
Banks VIII Do Their Part.
Gov. Harding said that there was no
cause for fear on the part of the pro-
ducere that the banks would not do
their part in the present situation.
Answering the charge of profiteering
on the part of the Reserve banks Gov.
Harding said they had earned SO per
cent on their capital stock OF SEQ, o00,-
900 and the reserve balances of banks
amounting to $500. 900 900.
Doubt that exports could be increased
unless some way was found for increas-
ing Europes buying power and ability
70 furnish requisite securities was ex-
pressed by Secretary Houston. He did
not see. he added. how much relief could
be expected at this time In that way.
He had no doubt. Mr.. Houston said.
that the War Corporation would "func-
zion" should Congress recreate 1t, but he
added:
81 believe It would be against the pub
lilo interest"
The Secretary said he believed that
the country was in for period of price
recession and that nothing more fateful
could happen than that this nation en-
bark on unsound fiscal policy in banking
in seeking relief for the growers"