Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1920-08-24
Senator Owen Says the Con-
tidence of the People Has
Been Shaken and Depres-
sion Has Taken Place.
(By Senator Robert Il. owen.


(By Senator Robert L. Owen.
Senator Robert l.. owen, who
was one OF the most active factors
in creating the federal reserve
board, suggests that the CONNER
elal organizations of the country
should protest against the della
ton of credits by the board. In an
article prepared by him for the
purpose Of reaching these CONNER
cial organizations, and published in
the Manufacturers Record, he says:
Eight months ago, having heard
the federal reserve board contem-
plated raising the rate of interest
on the reserve banks, ! entered a
protest against it on the ground
that it would have the effect of
raising the rates of interest of all
bank loans, municipal loans, farm
loans and private loans throughout
the United States and thereby
greatly increase the cost of living;
would slow up production and dis
tribution. and bring about period
of industrial depression.
my appeal was in vain. The pol
icy was adopted by the board Of
raising the rates and advising the
banks of the country to 'deflate'
credits.
Under this policy the confidence
of the country has been shaken, a
period of depression has taken
place in some parts of the country,
and is threatened in all parts of the
country. On the floor of the senate
] have made a number of speeches
against this policy, and have put in
the Congressional Record several
letters addressed to the president
of the United States. showing why
this policy was harmful.
Argument OF Board.
1.-The argument of the reserve
board is that credits have been un-
duly expanded by people speculat-
ing In stocks, by people buying
commodities for boarding.
This has a measure of truth,
but the remedy for such abuses of
credit should be applied individu-
ally by the banks, requiring large
margins for those specializing in
stocks and requiring gradual liqui-
dalton. The same should be a
remedy for those buying for mo-
nopoly of commodities and prof
iteering. AS a rule, the profiteers
are not profiteering on credit, but
on their own resources. To raise
the rates of interest and to demand
general deflation is not a remedy
that should be applied. 1t is a
gross wrong to apply such treat
ment to legitimate bushes engaging
in actual production and distribu-
ton when the world is in urgent
need of such increased production.
If, for example. oil men engaged in
production are denied credit FOR
production, it diminishes produc-
ton under the laws of supply and
demand, and will not lower the
price of oil. 1t will increase 1t.
"Of course, the producer in ex-
treme need might temporarily sell
his product at a sacrifice to save
himself from bankruptcy, but in
the long run the policy is false as
a means of reducing the price of
q commodity. The true way was TO
lower the price of commodities is to
stimulate production, and by in
creasing the production the price
under laws of supply and demand
will be automatically reduced.
Effect of the Policy.
1.-THE effect of the policy of the
board is shown in breaking down
the price or the market value of
all sorts of securities, especially in
dustrial securities, and not even eX-
cepting government bonds.
Municipalities cannot now sell
their bonds advantageously, and
the owners of Liberty bonds face
a loss Of the best security in the
world of from / to Is per cent,
due to the destruction of credit by
this policy.
..The normal rates of interest in
Europe for fifty years before the