Vernon Parish Democrat. (Leesville, La.) 1917-193?, 1921-12-08
Mismanagement of the
Federal Reserve System
troIIer Of the Currency
By John SHELTON Williams, Ez
Continued from last week.
MerciIess Pressure by the System

| now ask your attention 10 the
manner in which the Federal Reserve
Board responded to the earnest pleas
for relief and a revision of their con-
traction policies, which were made to
them September and October. 1920.
You see that their answer was practi-
cally-more pressure contraction
deflation!
On October IS, 1920, the total am
cunt of bills discounted and paper
purchase" by all twelve Federal Re-
serve Banks amounted to $3,0o2,000.-
900. By November l9, 1920, this
amount had been contracted by $l45.-
100000, leaving the total $2,947,-
900. By December II, 1920, the re-
duction as compared with October IS.
1920, amounted to $3.50, 100000, the
Reserve System continuing to call in
loans. By January Fl, 1921, the total
amount of discounts and purchased
paper which the Reserve Banks had
outstanding had been reduced as COM
pared with October IS, by $443,000,-
600. By February Is, 1921, this
contraction amounted to -$562,000.-
600.
By March IS, 1921, the Boards
policies had caused reduction in dis
counted and bought paper amounting
to $746,OOO,0OO.
On April %, 1921, the Board in re-
porting the complete success" of the
policy of deflation and contraction
showed that the total amount of bills
discounted and paper purchased had
been reduced to $2,I67,000,000;
which was an actual contraction since
October IS, 1920, of $925,OOO,00O.
During the 5L2 months between No
vember II, 1920, and April 28, 1921,
while the Reserve System was forcing
member banks at ruinous costs to pay
up or reduce their loans with the Re-
serve Banks by the sum of $780,000,-
600, the Withdrawals of deposits which
the national banks alone had to meet,
in that particular period, was $2,ll0,-
100000, in addition to the shrinkage
in deposits of 1905 100000 which had
already occurred, during "deflation, :"
in the. lOL2 months from January |.
1920, to November II, and the agri-
cultural and business interests of the
country, as a natural consequence of
such drastic and destructive pressure,
had been dragged into the depths of
the greatest depression this country
has ever seen.
The morning papers tell us that ac-
cording to Government estimates about
SIX million unemployed and hungry
men and women are now walking the
streets looking for work.
These may be ascribed as some re-
suits of the Federal Reserve Boards
successful policies.
On January /, 1920, the total de-
posts of all national banks in the I'm
tied States amounted to $I7,866,OOO,-
600. At the time of the call, April
28,l92l, the total deposits of all ma
tional banks were $I4,85l,O 100000.
This shows the terrific shrinkage in
sixteen months of $3,0I5,O0O,O00.
On January 2, 1920, the total amount
of "rediscouhted and purchased pa
per" held by the twelve Federal Re-
serve Banks, was $2,805, 100000. On
April 28, 1921, the total amount of
bills discounted and purchased paper
held by all the twelve Federal Reserve
Banks was $2,l67,000,000.
These figures prove that in the de
flation" period from January |, 1920,
to April 26. 1921. the national banks
of the United States were required to
meet withdrawal of deposits amount
ing to the huge sum of $3,0l5, 00O,-
900.
The only means, they had for meet
ing these huge Withdrawals without
drawing down their reserves, was, first,
by selling their Liberty Bonds and 9TH
er securities; second, by enforcing the
payment and collection of loans; third,
by borrowing money, practically the |
only source to look to being the FEEDER
al Reserve Banks.
System Should Have Aided Borrowers
1t was the purpose and theory of
the trainers of the Federal Reserve Act
that in such crisis as that through
which we have passed, the Reserve
Banks should aid by extending the
needed credits and prevent the slaugh- |
ter of Liberty Bonds and other secur-
tiles, and the wholesale calling in Of |
loans. But we find here that during |
this precise period, the twelve Federal
Reserve Banks instead Of increasing
accommodation to enable banks to
meet the enormous yyitbJrav,,aIe &c IL