The Logan Republican. [volume] (Logan, Utah) 1902-1924, 1921-03-31
THE FEDERAL RE-
SERVE BANK

The following editorial is taken
from the March 4th issue OF wallaces
Farmer, published at Des Moines.
Iowa, under the editorial manage
ment of Henry c. Wallace, the new
secretary of agriculture in President
Hardings cabinet:
I Where is the proper function of
the Federal Reserve Bank? Is 1t to
be simply great reserve bank in
stitution, where the credit reserve Of
the country can be modified and
loaned as the needs of business make
necessary? Or besides being bank
ing institution for the mobilization
of credits is il to have the right.
through the arbitrary extension or
contraction OF these credits to raise
or lower prices generally and in par
ocular. and thus make good business
or bad business, according as the
members OF the Federal Reserve
board in their wisdom may decide7
I "Tt is highly important that it's
proper functions be defined For this
federal board now seems to have in
it the power to make and unmake
business as II may choose. And
further the power To make or break
almost any of the great industries OF
the nation.
'If the Federal Reserve Bank is
10 be great banking institution and
nothing else. then II Is etirely proper
that IL should be run by bankers. the
very best bankers in the entire coun-
try. l..
''Ir. on the contrary il is to eNer-
Z else almost absolute power over the
business OF the country, make and
unmake II as II may think wise. send
prices up and down al It's own sweet
viii. then II IL highly important that
the members OF the reserve board
should not be bankers alone. but cap
hi. -
ness OF the country and who are rep
resentatiye of the various great in
dustries.
I'VE have had an illustration dur
ing the past six months of the power
of the Federal Reserve board over
the business of the country. II is be-
ing held responsible for bringing
about the drastic deflation Perhaps
II had not intended TO deflate prices
10 the extent they have been Debated
Perhaps the thing got away from
them. BE that as it may. they start
ed II and the results are serious.
AT the present TIME the Federal
Reserve bank has excess reserves
amounting to little over five hun
dred million dollars, more than at
any time in the past eighteen months
Last summer It's excess reserves were
two hundred and fifty million dol
lars. At that time II could have er-
banded the credit of the country at
least five hundred million dollars
without imperiling its reserves Now
its reserves are sufficient to serve as
the source for five billion dollars
worth OF extra credits
THE increase in the reserves of
the Federal Reserve banks during
the past three months is pointed to
as reassuring. That all depends up
on how we look at il. They Indicate
that credit has been restricted: thar
liquidation has been going on at a
terrific rate They do not, howev-
er, tell the story Of what this liqu,-
dation has cost the people who have
liquidated, nor what it has cost the
farmer
'Tf the Federal Reserve board is
to be- allowed to continue to exercise
such powerful influence over the
business OF the country, then the
members of the board should not be
bankers alone but representatives OF
the various industries, the most In
talllGent representatives who can be