Vernon Parish Democrat., 1921-12-01
Mismanagement of the
Federal Reserve System


! country banks (nearly all of which
were obtained from the Federal Re-
serve Banks) in September, 1919, were
$60,000,000 less than the accommoda-
tions obtained by the national banks
in the three big cities at the same time,
By September. 1920, the As nation
al banks in New York, Chicago and
St. Louis were being accommodated
| (nearly all from Reserve Banks) with
$300,000.000 more than all the 1873
country national banks throughout
the United States.
Comptroller of the Currency Criss-
inger's official statements show that as
late as April 28, 1921, the Federal
Reserve System was still actually lend
ing to the As national banks in New
York, Chicago and St. Louis Cover 96
percent going to the banks in New
York City and Chicago on bills pay
able and rediscounts, n proportion to
their total resources approximately
twice as much as the System was lend
ing at that time to all the country
national banks, then aggregating T.
732.
l appeal to the same record 10 fur
nish, if desired, further convincing
proof of my charges against the Fed
eral Reserve Board and some of the
Federal Reserve Banks that the re-
sources Of the System were distributed
unequably and improvidenlIy, SO that
great banks at the finane; centers
were lavishly supplied WI
use as they saw fit, VI
banks and their producing
were cramped and crippled.
In my testimony before the Congress
5ionai Committee. | showed that four Or
five large banks in New York City were
borrowing at enc time from the Fed
eral Reserve Bank as much as four OF
five thousand banks, including both
country banks and the larger banks in
important western and southern cities,
were borrowing from five Federal Re
serve Banks, embracing in their re-
spective districts twenty-one great
states.
Meager Aid for Farmers
The Federal Reserve official bulc-
lin Of December. 1920 throws light
upon the extent to which the Federal
Reserve Banks were accommodating
the agricultural interests of the country
in crop-moVmg time in 1920. Page
1916 Of the bulletin referred 10, shows
that at the end of October, 1920, the
II Federal Reserve Banks held of dis
counted and of purchased paper
grand total of $3,lOO,OO0,C0O, Of
which the purchased" paper was
$299,000,000, nearly all bankers ac-
ceptances" it is understood, mainly
New York City banks. But Of the ag-
gregate Of $3.I00,000,08O, the total
Of agricultural paper and Of live
stock paper" held by all the twelve
Federal Reserve Banks. was only $24G,-
OO0,000, which is less than 8 per cent
Of the total accommodations granted by
the Federal Reserve Banks.
The 8 per cent of the total accommo-
detions granted by the Reserve Banks
upon agricultural and livestock pa
per seems now small when we con3id-
er that the farmers now represent about
43 per cent of our population and when
the aggregate value of farm property |
according to the last census is about |
From October, 1919, to October, |
l920-between these particular dates
the twelve Federal Reserve Banks
did INCREASE tn amount Of their Dis
counts and bills payable with the mem-
Der banks. The total increase in the
amount of all discounted pa-
per held by the Reserve Banks in the
II months from October, 1919 to Oc-
tober, 1920, was $7l2,O00,0O0. But
an analysis shows that II per cent of
this increase, or say, $5l2.0G0.000, !;
was dispensed by the Federal Reserve
Banks OF New York, Chicago and
Cleveland. while the total increase
granted in that period by the Federal
Reserve Banks to all member banks in
nine other great districts, embracing
over 90 per cent of the total area of
he continental United States, was only
b200.000,000. or 28 per cent of the
-otal increase; y per cent of the IN
crease being dispensed by Reserve
banks in the three districts covering less
han 10 per cent of the territory.
The official figures also show that
one time last year the Federal Reserve
System was lending to four banking IN
in New York City an aggre-
gate of about $480,OOO,O00.