The Bridgeport times and evening farmer., 1920-05-27
GOV. HARDING OFFERS REMEDY
 FOR SITUATION
Economy, Increased Pro. duction, Improved Trans
 portation.
Tn. Meclur. Newspaper synde.4.-

Washington, May 27.---Econorny in individual expenditures, reduction of non essential loans by banks in creased production and improved tra importation are needed to reduce the cost of living and defiate credits Governor Harding of the federal re- serve board declared today in re- spending to a Senate resolution of inquiry.
 The board is not prepared to de- fine what are essential and non-es- sentia1 loans, Governor Harding stated. This, he said is a problem for local bankers familiar with local needs
 Governor Harding's letter, present. ed to the Senate toaay by Vice Presi- dent Marshall, came ina response to the resolution of Senat tor Mccormick Republican, Illinois, adopted recently requesting information regarding 2 what steps the board contemplated rency and credits and consequent high prices, and what measures were proposed to mobilize credits for movement of the 1920 crop.'
 Reviewing the boards warnings to federal reserve mem bers against ex- tending credits and it's increase of discount rates, Governor Harding said
 
 that the expansion of bank credits was proceeding at a rate not warranted by the production and consumption of goods" The dis count rate advances, Governor Hard ing said, have checked credit trans actions somewhat but tthave not been entirely effective in bringing about the reduction in loans desired and which might normally have been ex- fn6 +J,.z year,
 "On the contrary" he said. "corn- mercial loans have steadily increased. Thus it appears that the public has anticipated demands for banking g credit which usually are made later | on in the year.
 ''The average reserves of federal reserve banks now are a little over l AZ 1-2 per cent'' he added "as ] against 5 per cent. at the beginning 1 of the year and about 51 per cent l. l months ago.
 Governor Harding told of the re- 1 cent conference here of the federal l reserve advisory counsel and it's rec ] concentrations for curtailment of 1 credits together with the opinion that the congestion of transportatio | facilities is tying up great quantities | of foodstuffs
 
 nor Harding continued, "that if the | unsold portions of last years crop | can be brought to market before the 1 new crop natures, the liquidation o1 l credits which are now tied up in car 1 rying the old crops will be sufficient ] to offset to a considerable degree the l credit demands *% in moving | the crop of 192O'
 In the efforts to reduce non-essen- 1 tial loans, Governor Harding said banks were cautioned against drastic I curtailments and advised to seek | latlng essential production. | The problem of the banking sys- 1 tenn or the country he continued, is to check further expansion and to | bring about normal and healthy liquidation without curtailing essen | tia1 production and without shock to | Industry and legitimate commerce. It is the view of the board that | While the federal reserve banks may ! properly undertake in their transac- | tons with member banks to discrim-
 mate between essential and non-es
 sential loans nevertheless that dis
 crlmInatIon might much better 'be
 made at the source by the member
 banks then1se1ves..
 Regarding congestion of merchan
 disc and traffic, Governor Harding
 said:
 Ut is true that under. existins Iiconditions the volume of credit re
 qufred in any transaction is fnucf l greater than was the case in pre-Wa. ] times. but it is also true that th'