The daily star-mirror. (Moscow, Idaho) 1911-1939, 1920-08-19
CONGRESSMAN FRENCH'S PLAN
RECEIVES CONSIDERATION


they will not have finished harvesting
their wheat in Montana and the Da-
.kotas until sixty days from now. The
borrowing ON wheat paper in the first
instance will continue during all this
period. One farmer is borrowing to-
day and another farmer will not bor-
row until sixty days later The result
will be that wheat paper will be fall
ing due in the widest variety of time
and it will be renewed at equally wide
periods of time.
Again., many farmers would not
ask credit for ninety days. Some
would borrow for thirty days or sixty
days, while others at the end of the
first ninety-day period would nenew
for less time than ninety days.
1t must be seen that there is moth
ing at all in the idea that all the
wheat would have to be disposed of
on four definite dates thruout the
year three months apart.
Someone else who is in perfect
sympathy with the proposition asks
me whether or not the Federal Re-
serve Board has the power to do what
I have suggested and whether or not
it has credit sufficient to furnish this
relief.
In the first place, l would say that
the Federal Board does have the
power; and in the second place, I
would say that the credit at the dis
posal of the Federal Reserve Board
is ample. On the latter point, /
would refer to a circular issued by
the Comptroller of Currency, Treas
ury Department, under date of July
81, in which the Comptroller says
that the unused lending power of the
Federal Reserve Banks is 75O million
dollars and that by reducing require
ments on notes and deposits of 10
per cent of unused lending power, the
total amount available, if necessary,
would amount to two and half bill
lion dollars.
There is still another objection
that | must mention. Someone has
said that the banks are accommo-
dating and will be glad to extend re-
lief needed by the farmer. This far
mer is doubtless speaking from his
observation of the banks in Moscow
and the Palouse country. Surely
these banks are accommodating, as he
says, and further than that, if there
is any place in the United States
where the local banks can meet the
| believe the banks of Mos
cow and other parts of the Palouse
country can do so. In fact, I as
sumo that they can do so, but the
farmer 'forgets that conditions in the
lnfavored sections of the United
States fix the price of wheat in Mos
COW and the Palouse country.
Suppore bankrupt stock were to
,e brought here from Spokane and
,ut on the market at so cents on the
lollar. The mercnants If Moscow
-ouid need to meet thoaa prces or
lse not sell their goous until Tie
ankrupt stock had been disposed
f. That is exactly ,nc same as =
lie wheat situation If the ra,he in
he drouUn regInl prior years are
OF able to extend credit without Fed
raj Res e~"e 80 several million
ushels oi wraat lie dumped on
ne market during the nex- sixty
ays. it will inevitably drive down
ne price Of wheat not only in the
routh-affected country but in the
alouse country as well
Telegram From Governor Harding
Congressman French read the fol-
wing telegram which he had re-
lived from Governor Farling Of the
ederal Reserve Bank in reply to
ne he had sent to the governor. The
legram follows:
Washington, D. c., Aug. II, 1920.
Ion. Burton L. French,
[oscow, Idaho.
The advance arrangement with ref
renee to the renewal of any note is
latter solely between the bank and
S customer Banks are ordinarily
ath to agree definitely to renew
ote. Federal Reserve Board and
ederal Reserve Banks cannot as
ater of law require member banks
make such definite agreements
ith their customers. There does
1T appear to be any good reason
ay bank shrould not give sympa-
etic consideration to an application
+ renewal provided it is shown that
ere is a legitimate need for the re-
swal or why bank should not ad-
Sc it's customers in advance that
lch it is policy. Federal Reserve
oard cannot rule in advance as to
igibility for rediscount of a note
ven by a customer to his bank in
,newal of note already under dis
unit by that bank nor can Fed
al Reserve Bank agree in advance
rediscount any particular notes.
le eligibility of renewal note de-
,nds not upon whether the original
It is eligible but upon the circum-
ances actually existing at the time
renewal. On continuation of q
aturing credit if needed in order to
able a wheat producer to market
5 product in an orderly manner the
newal note may be eligible for re-
scount by Federal Reserve Bank
however the purpose of the renewal
solely for carrying the wheat for
e speculative purpose of holding
for a possible rise in price the re-
wal note is ineligible. AS a mat
: of law Federal Reserve Board
mot attempt to dictate to Federal
serve Banks as to what paper such
nks will rediscount. The board is
wever disposed to encourage Fed
Il Reserve Banks to rediscount the
gible paprse of farmers including
luding or course the paper of
eat growers in such amounts as
reasonably required for the or