The evening world. [volume] (New York, N.Y.) 1887-1931, 1920-05-20
HousToN's LETTER ON BONUS
A WARNING TO CONGRESS.

the whole business world.
HousToN's LETTER ON BONUS
A WARNING TO CONGRESS.
Incidentally Secretary Houston's
letter to Chairman Fordney of the
House Ways and Means Committee
is intended as warning that Con-
gress had better cease thinking about
a soldier bonus and give serious con-
sideration to the prospect OF increas-
ing taxes to meet current Government
expenses. And altogether both Con-
gress and the Executive Departments
are to-day more deeply absorbed in
the economic situation than they have
been since the close of the war.
This renaissance comes at time
when Congress Is anxious to get away
for the political summer but tele-
grams already pouring in from con-
stitucnts indicate that back home
business men, bankers, merchants
and manufacturers are watching
Washington for any moves that may
affect what has been referred to so
Often as Essential" and mon essen :
tial lines OF business"
The effort to curtail the amount OF
borrowing by insisting that member
banks OF the Federal Reserve system
actually discriminate in the CLASSES OF
loans that they make is expected To
produce results. In fact, the Treas
ury believes results are already in
evidence But on Capitol Hill, Sena-
tor Owens suggestion that instead OF
increasing the interest rates they
should be lowered to 3 or per cent
has unquestiopably encouraged vari-
Gus borrowers to believe that II they
get behind the movement they car
| bring about O reduction instead OF ar
increase in interest rates.
SENATOR OWENS URGES DIS
ELIMINATION IN LOANS
Senator Owen argues, for instance
| that there should be discrimination
on the part OF the Federal Reserve
Banks in applying their interest rates
! and that loans for speculative anC
, unproductive purposes should pay thu
! highest rates and production shoulC
be encouraged in other enterprises BY
| correspondlngly lower rates. He ad
| Vocates uniformity OF discrimination
| which means that cattlemen In TeXal
| should be able TO borrow their monel
for tine same rate as cattlemen II
Montana.
Secretary Houston is inclined 7
| look upon Senator Owens economic
az faulty and contends that ninety
nine out OF a hundred ecoDomist
would not agree with the OkahOm
Senator's contention. The head OF tn
Treasury Department declares tina
The interest rates fiNed by the FEEDERS
Reserve Board must bear some rela
tlonship to the uses Of money out
Bide Of the Government circle.
| He asserts, for example, that
money loaned by the Government q
three on four per cent, the resource
OF the Federal Reserve system woul
not only be drained but would
used 20 make exhaustive profits
other lines. For instance, he poin
out that there would no nothing
l prevent the borrowing OF money fro
Federal Reserve banks at three an
four per cent. and lOaninE that san
- money To railroads and other entG
p pTises paying as high as six al
e seven per cent. and then collectiT
: the difference as a handsome profit
?. COOPER RATION NEEDED IN cAI
k RYlNG THE ECONOMIC LOAD.
d The whole question really revolv
not merely around the question
what Is an essential or non -essent
e line of business, but what Is an e
n sential or non-essential loan in
e particular business, The Treasury b
~ lieves the member banks In their 7
" spective communities can exert I
y only influence that can be at all a
It piled In Americas complex econon
II structure and that the co-operati
=, OF the public alone will successfu
~ carry the whole economic load
N Impressions that may have 20
l. out concerning arbitrary restrictio
Ne OF credit are unwRrranted. 7
tol TTe0sury's view Is merely that legi
D. mate and essential credits should
advanced and that the high inter
rates will drive speculative inve
ments from the borrowing mari
,,s and rnise. money for productive pl
poses, N.
'Jaa.odv % .c,,r.A -. saxy 6rl