The New York herald., 1920-01-09
URGES ECONOMY
At HOME To AID
EXPORT TRADE
Governor of Reserve Board
Denies Responsibility for
Wartime Financing.

BOSTON, Mass, Thursday.-ln an ao-
dress before the Massachusetts Bankers
Association w. p. G. Harding, Governor
of the Federal Reserve Board. said
"The trend of events in this country
during the year 1919 was not altogether
satisfactory. Specula ton became ram
pant In all sections of the country AND
individuals everywhere gave free rem
to extravagant tendencies hitherto re-
strained. Frequent warnings ISSUED py
the Federal Reserve Board had only
temporary effect Corrective measures
were applied, now conceded to nave been
necessary and salutary bue whicn at tne
time were denounced by some who ought
to have known better.
while the value of raw materials and
of manufactured articles produced dur
ing the year was the greatest in the his
tory Of the country. the physical volume
proved to be smaller than for any year
since 1916 During the last few weeks 1t
has become increasingly evident that ac-
tive steps must be taken II our exports
are to be maintained, especially to Eu-
ropean countries, in anything like their
present volume. 1t is highly important
that all long credits granted in connec-
ton with exports be kept out OF the
banks, whose policy should be to main
tain themselves in liquid condition.
Neither the Federal Reserve Banks, the
member and non-member banks, nor the
Federal Reserve Board are responsible Tor
the policies and methods adopted IN
financing the war and deserve neither
praise nor blame for them. Responsibility
for these methods and policies rests with
the President. the Congress and the Sec
retary of the Treasury, who authorized
and adopted them. and to them the results
should be credited
First consideration VIII be given to the
and commercial requirements OF
the country Everything possible Will be
done to restore the proper balance between
the volume of credit and the volume OF
goods The process necessarily Will be
and can be completed only when
very considerable redemptions OF bonds
have been, made, and the remainder
thoroughly absorbed by the public. Our
banking system therefore is passing
transition period, intermediate
between that of war finance and a stage
regarded as normal according to pre-war
standards. Owing to the necessity In the
Of aiding In the financing OF
Europe, it is probable that several years
will ella pse before an ideal relationship be-
tween goods and credit can be established
and normal conditions restored. During
this transition period there should be an
effective control Of credits, gradual
Iiouidatio and such temporary expansion
only as may be necessary to meet season.
able requirements or emergencies. There
should be a less lavish but more efficient
use of capital and credit, extravagance
should be discouraged in every way pos
sible. and the production of essential COM
modities increased.
"It is important that the world shouio
get back to work, but in order TO proVioe
AI.A n
even, it is necessary that tnere
should be sustained demand for the
products of our fields and factories, mines
and forests and in order to maintain this
steady demand it Is necessary to provide
markets abroad for our surplus produc-
tions In order for the populations OF
European countries to get back to work
and to produce the things needed for their
own support and for exchange with other
nations. II is necessary that we should
send to them the raw materials, commodi-
ties and equipment which they need So
urgently. In order to send commodities to
Europe we must have commodities avail
able, for we cannot send abroad what we
consume here. Voluntary restriction of
domestic consumption is in order that we
may have an adequate exportable sur
plusA
Had shipments to Europe been accom-
panied by corresponding voluntary cur
tailment OF consumption at home prices
would not have been forced up and from
the resulting savings there would have
been accumulated a capital fund available
directly or indirectly for the purchase of
of whatever Europe may have had TO sell
in order to finance her imports.
I'VE may after all be living in FOOLS
paradise. Hard work, economy and liberal
investment in foreign securities are neces-
sary II we wish to make our present ap-
parent prosperity real and permanent.
"Thc sale of foreign securities will Gre
ate additional demands upon capital and
credit. This demand is coming at time
when there will be other urgent demands.
The great railroad systems of the coun-
try, soon to be turned over to their own
ers. will require very large amounts. The
problems ahead of us are strenuous. but
the United States as a nation has reached
the years of maturity. and it never has
failed even in its infancy and during the
period Of its early youth, to meet success
fully every issue and to overcome every
obstacle and danger