New-York tribune., 1920-05-19
Financiers, at Confer
ence With Federal Re-
serve Board, Agree to
Help Bring Deflation
Harding g Tells of
Dangers Ahead
UrgeCurtailmert ofLong-
Standing Loans and I'm
necessary Borrowings

w ASNlNN VI lON, May 1o.-bank-
ers of the country, through repre-
sentatives attending a conference to-
day with the Federal Reserve Board,
pledged themselves to help the board
in drive on high prices and to aid
IN efforts at defation.
Specifically, the bankers agreed
unreservedly to support the boards
new policy in discouraging "habitual
and unnecessary borrowings" and to
seek curtailmert of long standing.
non-essential loans," as an initial
step toward ending the era of high
prices and speculation.
Governor Harding set forth the
boards policy in speech designed
to clarity the general situation and
to explain the governments views.
He warned of impending dangers in
the cycle of continued borrowings
and speculation and appealed to
bankers and public alike to be con
servative in their demand for bank
ing credits.
ut is evident" Mr.. Harding said.
that the country cannot continue to
advance prices and wages. to curtail
production, to expand credits and at
tempt to enrich itself by non-produc-
tive operations and transactions with
out fostering discomfort and radical
ism, and that such course, if persisted
in, will eventually bring on a real
crisis
Commodities Must Be Released
Mr.. Harding said ''everything mus,
be done" to expedite the release o.
money in frozen loans" and in com
modities held either for speculative
purposes or because of lack of trans
portation, and urged bankers to use the
utmost discrimination in granting new
loans
Reports laid before the conferences
by the Federal advisory council, direc-
tors of the Federal Reserve banks and
by committee repre- senting the Amer
lean Bankers Association were to the
effect that imitation has continued to
some extent since the flotation of the
Victory Loan last May.
This, Mr.. Harding declared to be one
Of the dsquieting features" of the
present situation. He asserted that th.,
expansion of banking credit, properly
attributable to the war" was about
$11 100000 900, while money in actual
circulation had increased $1,90O,000,000
Credit expansion, even to that extent,
was not believed by Mr.. Harding to be-
alarming or excessive when Viewed
from the standpoint of war necessity"
and when it was recalled that the goy-
ernment placed $4,000, 900. 600 in Lib
erty bonds IN the same period.
Industrial Effort" Slows Down
Mr.. Harding deplored the falling oS
IN production in practically all i'm
portant lines. He said it constituted
a very unsatisfactory element" IN the
national problem, because it indicated
slowing down of industrial effort"
Every effort should be made 20
stimulate necessary production, espe-
claiIy OF food products, and TO avoid
''N9NN' -4'. i1dtu4lIS COHIlnuSU. flHnt
ing operations IN many sections have
been delayed because of adverse
weather conditions, and should there
be an inadequate yield of crops this
year, the necessity for conservation
and conservatism will be accentuated.
Progress toward the restoration OF
normal relationship between the volume
OF goods and the volume of credit may
be made by reducing credit more ran
Il H..
by increasing production at a greater
rate than credit is expanded. If l.
should prove impracticable in the exist.
ing circumstances to increase Essential!
production, then we must through
economy IN consumption and througa
moderation in the use of credit checB
the tendency toward further widen.
ing or the margin between goods and
credit.
Problem Is to Check Expansion
Our problem, therefore, is to chec.
iurther expansion and 70 bring abou.
a normal and healthy liquidation with
out curtail.ne essential Production ana
without shock to industry, and, as far
as possible, without disturbing legiti-
mate commerce and business"
The Federal Reserve Banks, Mr.
Harding declared, could do much in the
direction Of curtailing credits of mem.
Der bahkS by informing them of the
normal amounts they could borrow
from the reserve institutions. He
asserted that this would compel the
Individual banker to examine carefully
all applications for loans.
Freight Congestion Big Factor
NO small measure of the difficulties
IN the present situation were attributed
by Mr.. Harding to the nationwide
freight congestion. He added point
edly, however, that the freight tie-aD
was not responsible for prohteerirg.
The board expects to deal with profit
eering 'in another way" he said. with
out indicating what methods were un-
der consideration.
The freight jam was discussed q.
length and revolutions with respect 10
means of bringing it to an end were
adopted. Their contents were not made
public, but they viii be presented both
to the Interstate Commerce Commission
now engaged in seeking a solution In
the problem, and to the Shipping BosrJ
70 tomorrow by committee nsked at
the conference. az