The New York herald., 1921-07-25
RESERVE BOARD
YIELDED POWERS
Surrendered to Small Group
of Bankers, Declares
Senator Owens.

ATLANTIC CtrY, July Ex-senator Rob-
ert L. Owen of Oklahoma, father of the
FeCeral Reserve act. In an interview here
to-day charged that the Federal Reserve
Board, in effect, had abdicated its pow
ers in favor of the bankers, who elect
six out of nine Federal Reserve Bank di-
rectors, and who were interested in in
creasng the purchasing power of the
dollar and increasing the selling value Of
credit. that is, interest and commissions.
In addition to surrendering its pow
ers, the Federal Reserve Board, Senator
Owen declared, had used its influence TO
bring about general and indiscriminate
defation, which had, in effect, impaired
the credit of the national Government. as
well as having Impaired, and in some
cases destroyed. crclit of legitimate busi-
ness.
Much Of the present stagnation in busi-
ness, Senator owen held, is due to the
fact the Federal Reserve Board has
failed properly 10 meet its responsible
ties
1.-THE Federal Reserve Board" Senator
Owen declared, was created to control.
regulate and stabilize credit in the IN
terests OF all people. Two years ago
in July, the Federal Reserve Board be-
gan to advise general and indiscriminate
deflation.
There Is no question that some defla-
tion or credit construction was necessary
in at least three directions. 1t was
necessary TO restrict credit which was
being used in unduly speculating In
stocks or in improper speculation in
commodities, as well as credit which was
being used in profiteering. but general
initiation was not only unnecessary, but
wholly unwise and ruinous to Legitimate
production
"-rhe Federal Reserve Board did no
distinguish between initiation and ex
pansion, because the Federal Govern
ment had issued some S25, 900, 900, 900 IL
bonds to save its very existence. Thii
was regarded as initiation, and thu
banks, through the influence of the Fed
eral Reserve Board, sought to deflat
this. A banker who asked for redis
count on United States Government
bonds was told. in effect, that the com
bined credit OF the Government. as ex
pressed In its obligations to pay, ant
himself, was not worth 100 cents on tn
dollar. WAT was the result? Govern
ment bonds for which the people hal
paid par were forced down. in some In
stances to SO, and the credit OF the ma
tional Government itself was impaired
"The Federal Reserve Board is tn
most gigantic financial power in all th
power as the Federal reserve act ir
tended that II should be used the boar
abdicated. Instead Of using this powe
In the interests of oil the people, tt
bankers included, II delegated this pow'
TO the bankers. II refused or neglecte
TO exercise the power which had bee
given IL by law, and In addition to tn
threw the weight OF its influence towar
the support OF the policy of general II
flation. II gave its influence and 3
support 10 the bankers, TO comparative
one small group OF bankers. who wei
interested in increasing the purchasir
mower of the dollar and increasing q
value Of credit, that is, interest ar
commissions.
''In addition TO restricting credit the
bankers increased the interest rate. The
sought and succeeded in making the do
lar buy more Of everything but cred
Various lines OF business were refus'
credit absolutely. People had invest'
hundreds OF millions of dollars In aut
mobiles. hut the men engaged In aut
mobiles industry found their credit e
off. Other lines of business were al
made victims this same unreasunan
and unnecessary effort toward gener
deflation.'
senator owen said the most hopef
sipn OF recent weeks was in the acti'
of the Federal Reserve Board In seekii
70 lower the interest rates, but In IN
TOO. ne charged, the board was conten
ing itself In an advisory capacity, VIII
A should use the power given IL by ia
and fix interests rates lower, mu
lower, and stimulate by its own acts