Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-10-13
FARMERS CR|T|C|SE
us, RESERVE BANKS
FOR PRICE DECLINE
Fear General Bankruptcy Un'
T. less Situation Is
Relieved.

General bankruptcy and ruin are
inevitable" unless some immediate
remedy is found to relieve the pres
ent price situation as it affects the
farmer. says a report submitted 10
the agricultural conference mere To-
day by a general committee appointed
to study the situation
The committee blames the federai
reserve system for present prices
charging that it has arol'rarhS
withheld from assisting the paslc III
dustry of this country to MAINTAIN
a level of prices that at least meet
the cost of production
Declaring that the condition OIL the
mind Of the farm population is oih'-
nous" the committee says. TINS STATE VI
mind can only be changed by IrahA
and fair attitude on the part OF those
in authority-the test of when Can
be only their acts.
The committee says cit is wrong
as a matter of policy artihcially 10
n-ess down the prices of common :
ties and it is particularly wrong 10
begin with the raw commooltles. 10,
such a program ineVltapiy
upon the producer inc HedNes.
den of reconstruction and reao1ust-
ment.' ,,s
The report of the committee says
rho present situation was Drouent
about by the following official acts:
Restriction of credits
Raising the rate of discount OH
farm products.
"Discontinuance of the war finance
corporation.
THE statements given out by the
Secretary of the Treasury. the gov
>rnor OF the Federal Reserve Board
and the federal reserve banks have
been construed to the effect the COM
odity prices. particularly the price
farm products. were too high ana
hat a pre-war basis. or an approx
ttation of pre-war basis, OF prices
blust be reached within a short time
bhe consequent effect of these utter
ances upon tie member banks of the
federal reserve system and the bank
ing industry of the country generally
was to cause them to withhold ac-
commodations because of the fear
that the security taken would neces-
Sariiy decline.
THE action of the federal reserve
board in counting the bonds held by
member banks as part of the COM
merciai credit of the banks holding
these bonds. thereby enormously de-
creasing the power of such banks to
extend the needed credits to the agri-
cultural interests of their respective
communities.
Blame. I. S. OmeIals.
"Your committee feels that the Of
feials, of the Treasury Department
and the federal reserve system have
exceeded their authority when they
publicly announced opinion as to
prices Of farm products. which have
resulted in disastrous price declines"
II is Of the opinion that the func-
tions. of these institutions as ex-
pressed in the law are to discharge
the duties imposed on them by the
law and spirit of the law. regardless
of what effect il may or may not have
upon the markets of the country and
prices Of commodities. We believe
that the rate of discount should be
determined. first. by the character Of
the paper. offered for discount. and
of the federal reserve system and
that the rate should not be used as
weapon~to deflate prices or discour-
age proper loans and commercial
transactions
I'VE therefore insist that the federal
reserve officers and officers of the
Treasury Department shall discon-
tinue and desist from issuing state
ments of their opinion as to prices
and their attitude toward the trend
Urges Low Disc0unt.
The committee recommends that the
rate of discount for the marketing of
the agricultural products be made as
low as justified by a sound business
and that the rate on a fixed or GER
tain class of paper shall be uniform,
and that the rate be not changed dur
ing the period of crop marketing. If
the federal reserve officers will take
such action at once, the report says.
with particular reference to a more
liberal policy in extending credits for
the encouragement of exports, we be-
lieve that the distress and unrest
among the farmers of the country
will be greatly relieved" -
Prices of commodities that farmers
receive will be determined by the law
OF supply and demand if artificial and
gainful advices and statements arS
withhe held." the report continues. THE
question for these officials (Treasury
and federal reserve board) to deter
mine is what rate of interest and
rediscount is justifiable under the law
and to leave the question of the mar
keting and prices to the natural laws
of commerce.
The people who consume our pro-
ducts are or should be vitally in
terested in the solution of these prob
lens, for as long as we have a de-
cadent agriculture we are sure tc
have increasing cost of living"