The news scimitar. (Memphis, Tenn.) 1907-1926, 1920-10-13
FARM CONFERENCE
BLAMES RESERVE
BOARD FOR CRISIS

/ WASHINGTON, Oct. 13.-"Gen-
eral bankruptcy and ruin are newt
able" unless some immediate remedy
is found to relieve the present price
situation as 1t affects the farmer"
says a report submitted to the agri-
cultural conference here today by a
general committee appointed to study
the situation. The report was adopt
ed by the Conferen .e without a dis
senting vote.
The committee blames the federal
| reserve system for present prices,
charging that it has arbitrarily
withheld from assisting the basic in
dustry OF this country to maintain
level of prices that at least meet
the cost of production"
Declaring the condition of the mind
of the farm population is ''ominous."
the committee says this state of
mind can only be changed by a frank
and fair attitude on the part of those
in authority--the test of which can
be only their acts"
The committee says 'it is wrong
as. matter Of policy artificaHy to
press down the prices of cOmmodi-
ties, and it is particularly wrong
to begin with the new commodities,
for such a program inevitably forces
upon the producer the heaviest bur-
den of reconstruction and readjust-
ment."
The report of the committee says
the present situation was brought
about by the following official acts:
Restriction of credits
Raising the rate of discount on
farm products.
Of hn ~ no
corporation.
The statements given out by the
secretary of the treasury, the COVER
ror of the federal reserve board and
til federal reserv banks have been
construed to the effect that com
modify prices, particularly the price
Cf farm products, were too high and
that a prewar basis, or an approx
nation Of a preWar basis, of prices
must be reached within a short time.
The consequent effect of these ut
teranCcS upon the member banks of
the federal reserve systems and the
banking industry of the country
generally. was to cause them to
withhold such accommodations as
they might otherwise have granted
because of the fear that the secur-
ity taken would neCessarilyS decline.
Bond Action Raped.
"The action of the federal reserve
board in counting the bonds held by
member banks as part of the COM
mercial credit of the banks holding
these bonds, thereby enormously de-
creaSing the power of such banks to
extend the needed rCedits to the ag-
riCulture interests of their respective
communities.
Your committee feels that the Of
ficials 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 de
cline"
The committee further reports that
it 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 it may or may not
have upon the markets of the coun'
try and prices of commodities. We
believe that the rate of discount
should be determined, first, by the
character of the TAPER offered for
discount and second by the aggregate
earnings of the fedora! reserve syss
tenn and that the rate should not be
used as Il weapon TO deflate prices
or discourage proper loans and com
DerCial transactions.
I'VE therefore insist that tle led
eral reserve officials and Officers of
che treasurS department shall dis