Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1920-02-24
RESERVE BOARD WILL,
USE. IT'S. FULL POWER
Financial Systems Ruling Body Warns Against Radical
Measures to Bring About Defaton-Wou!d Limit
Banks Borrowings Opposes Financing Exports

DO materially aided. But the board Ji-
rected attention to dangers which lie
in the path OF great production unless
that production is immediately fol-
lowed by distribution and avoidance
Of wasteful consumption. 1t empha-
sHcd tnat boarding must not I've prac-
ticed, or the stimulant of production
will avail nothing.
Fundamental Processes
These are the fundamental eco
nomic processes upon which the proper
functioning OF the Federal reserve
banks must depend" the report said.
The Federal reserve system can do
much TO assist these processes. but *
cannot of itself alone compel them
Eiiicacious action along these lines in
wolves the Intelligent and earnest CO.
operation Of business and the commune
ity generally.
while the Federal Reserve Board
will Il ways be mindful of the inter
dependence of credit and industry and
the influence cxcricd on prices by the
general volume OF credit the primary
duty. as the guardian OF the nations
ultimate banking reserve, is to see
that the banks under its supervision
function effectively and properly as
reserve banks"
The granting Of extensive credits to
foreign trade and the resultant keen
competition in our own markets with
board as being one Of the potent
causes of high prices" 1t was shown
that the demand for commodities from
domestic as well as from foreign
sources was SO far In excess of sup
ply that increased cost of credit can
be absorbed in the price. Speculation.
checked by, advances in interest rates
because OF the anticipated-and usually
rcalized-!argc profits, according TO the
analysis.
Opposed to Financing Exports.
The board took occasion to restatc It's
n nF -.
which require long term credits
through banking operations as distin-
Suished from appeals to the securities
market OF Americas balance OF trade
FOR the calendar 900
Approximately $4,000. 100000 was de-
clarcd 10 have fallen as credit transac-
lions on the commercial banks. Treas
ury advances during the year amounted
to s1.157. 1890 600. but this was not re-
Eardsd as sufficient TO Offset he cor
necessitatcd by the carrying Of the
credit balance.
Al OF these credit arrangements, it
to the Federal reserve banks. Although
none OF the paper rendered by the
foreign BUYERS was discouniable at re-
serve banks because oC legal reStric-
tons. commercial banks which have
received ii We're believed 10 have
turned in other obligations for rcdis-
counting. which. otherwise. would not
have been sent through that channel.
Limits. hank. borrowings.
bill carrying out the boards rec
concentrations for Limitation of bank
borrowings was introduced late today
by Representative Phelan (DemocraO.
OF Massachusetts, former chairman OF
the House Banking Committee after "a
presentation of the report to Congress.
The bill would authorize the Federal
Reserve Board to review reserve bank
loans and increased interest rates on
loans to individual banks, as a means
Of reducing borrowings and increasing
credit distribution.