The Birmingham age-herald., 1920-10-23

reserve bank with the consent of the federal reserve board to fix basic line of credit for member banks anG to establish progressive rates of dis count to be applied to borrowings m excess thereof.
 "A number of the banks have al- ready exercised the provisions of this amendment with what they believe to be satisfactory results. The class A CT banker directors. representing thret groups of member banks. and the tankers who are members of the ad' sisory council, which body consists or enc from each of the twelve districts, gave their sanction to the soundness of the doctrine of credit control after taking part in conference with the members of the federal reserve board at which time the whole subject was Thoroughly discussed, not alone the general policy of the system under taking to induce a more discriminating employment of the credit supply af- forded member banks through the re- discounting functions of federal re- serve banks but the opportuneness of the time and the methods to be used that credit conditions might be the least disturbed.
 That your interest may be further stimulated in this problem of the fed eral reserve system, which is still uE solved I shall enumerate some of the things upon which that conference seemed to be in agreement,
 "a. That expansion must be fol- lowed by contraction through the cap acitv of control and the power of cur tailment.
 "b. That while there is no virtue in fixing an arbitrary minimum reserve of gold that. in the interest of sound ness low reserve position should ha rrs,fl 7a1
 "c. That deflaHon should be grad ual and orderly.
 "d. That while curtalment of the volume Of loans was not expected or desired that further expansion es- pecially in non essential credits should be prevented in order to secure greater supply for essential produc-' tion, especially as we were approach irg the crop moving period.
 ''e. That the federal reserve board nor the federal reserve banks should log ica1ly undertake to define essential loans, but that it should be left to ~fndi- vidual bank execusives.
 If. That the situation required a re- sponsiveness upon the part of banks and the public to exercise economy and con serve banking credit.
 "g. That the best picture of credit con- ditions was exhibited by the fact that notwithstanding that the peak of the seasonal requirements had not been reached, that seven of the federal re- serve banks were then borrowing from three, two of them neither borrowing nor lending.
 '"h. That the best means of regulating or controlling the credit situation is by ad- 'vancing the discount rates Of the fed eral reserve banks.
 The effect of that conference was to direct the attention of the public and the bankers to the economic value of check ing up the too free use of banking credit, and the result has been that while we have had no liquidation in the volume of bank loans that we have many evidences of more wholesome credit situation than obtained at the time of It's ad- 'journment. The meeting was followed by the raising of rates by number of the federal reserve banks, and by the appi- cation of the progressive rates by sev- eral more of them and was supported by an almost universal resolve Of the bankers of the country to do their share toward maintaining sound reserve po- sition, that the prestige of our currency and banking law might endure
 This was the first real effort of the
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