Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1920-09-19

banking C.:afSeS winch nave tikcI
pace. within the pas. nine months.
Effort Was made to control unneces-
sary expansion of credit: In other
words. TO check expansion which was
eos, " living and was leading TO
catastrophe.
Rehabilitation Of Credit.
There has been no contraction In
there has hecn redistribution of
credit, and this redistribution has
been effected by the 'banhs % ths
country In dealing with heir custom.
ever criticism has been leveled
against tho discount operations OF
the Federal Reserve banks. Those
who have been hurt by the redistri-
button have probably been the chief
complainers. but such complnints
hh"uid not be permitted TO obscure
the situation. Loans for speculative
purposes only were contracted; other
loans were greatly expanded.
I. was fully realized that. II the
more essential industries were TO be
readjnatmn. was imperative. II was
also recognized that. IN order to take
care OF the crop raising and market.
ing OF crops. halt upon the indis
BE- made
Another thing should he realized
ny The public The Federal reserve
Just hs the individual member bank
deal with their customers; they gran,
credit according 10 needs and circum-
atincrs and the condition Or hanks
Earlier In the year. member banks
In the manufacturing and bus!ness
cnntecs OF this district. and In mos,
or tho other districts. were borrow
mean aeveral times their share Of the
lending power of Tho Federal reserve
banks. AT that time reserve bank
In ,hn more agricultural districts
were actually rediscounting for re-
ssIve banks In the manufacturing
centera. As thu season proxresseT
oanEa N the business centora grad-
ualiy curiailed their loans aud paid
.hry are ~ III borrowing heavily. Tho
banks IN the more agricultural dis
h m,e,I oeFE ar to Gsll more and more
membe. banks arc borrowing several
,inlcs--and In a number OF cases.
mary tincs. their proportion %! IN.
lending power of the Federal reserve
Banks Are Rsdisrounttnr.
N OF tho reaervc bnnks in the So
caned .nHricultural districts" ara
n ns% rSd!seounsing with the other
ar" gathered and marketed. the banks
IN me agricultural regions will b.
gHpet.ed TO rniense In part the credit
again IN tho centcrs which buy and
inanu'aciurc crops. This is the cycle
.! DuSiUcSS.
,, Thsre mua, OF necessity be sorne
the districts now heavily borrow
ihH. Every reasonable a,s,sianc.
however, viii be granted TO the banks
~ ,nsar sections TO market the crops
npon the top OF tho credit ALREADY
Granted to them. which, as has b,..2
",aS"d Is several times their share ~
~" '"soutces o. the reserve banks. 10
iin IT,. Iemanis Tor hundreds OF mill
aiHns OF dollars. 20 hold crops Tor an
asnitraIy or ideal price. and thus dc.
pti3a other sections OF credit esscn-
'iaI TOT their prosperity.
he redc,a! Reserve hank OF Rich
high as sao,ooo.oo0 from other rea
serve hanks. TO lend 10 the member
banks OF this district. You will see,
therefore. that a most liberal policy
by hanks has always been regard"d
As IN nnaound and sometimes unsafe
"a Elhs policy. Continuous borrow
ms has been looked upon as certain
evidence OF bad manasamcnt
There appeared in your issue Of tho
IL tStn. = letter signed y. c. A."
IN which the writer stated TIA; hs
wooIu thank you TO continue 10 "Yo
att'r the Federal reserve banks un-
their own people," Tho wri,cr ,I.o
stated; The Federal reserve Is tight
on money for real estate lcans"
Founded In Ignorance.
without Intending to he Disagree
ab!e. ~ Is but the plain truth 10
.a.e that thnt letter was founded in
ignorance and lack of UNDERSTANDING
Ihe writer has probably been rnislcS
The Federal reserve &C, does moi per
.hI the reserve banks to discount
paper occurred by real esta,e TO do
so would be wholly contrary 70 Tho
- D, a,,l.
rs. however. one fact for which ,ha
writer or that letter should he thank.
inl: although he does not know IL:
UNI. the passage Of the reserve act.
ien1 money on real estate They
evaded the purpose %! this law ~
taking real estate TO secure Ioans
preViousiy contracted. which was per-
as amended empowered national
banks. under some conditions. TO
mako percentage of their loans ON
t tsa oo eGstnte. and they were lending
eS",upo'oOo under the act according IN
the iaat statement of the. Compt roller.
National banks, underline old law
were not permitted to- become liable
LOT an amount greater than their
rnp,.al STOCK. Under the reserve act.
most or the borrowing banks exceed
that limit. and large number (manv
of the smaller banks) are borrowing
many times that sum. Moreover. the
~ '' itauiitu 10 ne kept nv IDem-
ner baakS was very much reduced by
IN" reserve act. so that member banks
are now enabled to lend thar diner.
eence to their customers. and they are.
lending IL. az
i.saps Increase Stendily.
hanks az a class do not like IN
oerrow in order TO lend. Hundreds
or banks have borrowed under the
rederai reserve system which never
borrowed before in their cxis,nrcn
By no means all banks, however, re-,
row under present conditions. Thns,
oehR3 manage to keep their cond;.
non liquia and turn their loans ovrr
now lending to one class and nov.
TO another, according to seasonnI Ia'
manda, NO wei managed bank uith
IN our knowladge or experience faai.
surrey comfortable when borroy,'
tns heavlIy or excessively. Many 81
shtnn nave round il serviceable m bs
~. " place 4 restraint anon Gus
t tO themselves disposed to borrnv,
n 20 hnaEiiE' by citing the adrnonition,
.nu reserve banks against iurthe,
vSVehssoh OF credit. They have toId
NJ, '.us. me member hanks know
orally. and ] do not believe W." vni, u mnI
una single complaint anoo WI
banks of this district OF ,ba liz m, nc
bank. vac 'edcrai reserve
T, Atready Heavy borrowers.
may he natural for borrow,n,
'"""S wheh pressed by their ems
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Gas Was Worst Enemy