The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1921-02-17
CREDITS MUST
Be CONSERVED.
SAYS HARDING
HEAD OF FEDE RAJ REsERvE
BOARD SUBMITS ANNUAL RE-
PORT TO CONGRESS-.
UPON U. 8. THE soLvHNCY AND
STABILITY OF OTHER oouN-
TRIES DEPENDS.

pendlturcS ana the profound mOuIICd-
tons of the country's economic system
make it imperative. Governor Harding
Informed congress today in the annual
report Of the federal reserve board that
"the utmost care be taken to conserve
our credit and preserve the basis Of
our prosperity" to avoid the extreme
conditions prevailing in other coun-
tries.
Upon the United States IN a large
mcaSure." the governor declared. the
solvrncy and financial stability of many
other countries depend. This fact great
~ increases the responsibility which
rests upon the American banking sys-
TEN and calls for the exercise OF
sound judgment and the strict otser-
vance of sound financial and economic
principles"
In readjustment OF business. the
country. Governor Harding asserted, is
generally recognized as having passed
the crisis and in looking to the future.
spirit CT greater confidence prevails"
AS the year closed he said there were
many Indications that business gen.
orally was beginning to adjust itself
to new conditions and was preparing
to proceed on n sounder and saner
basis"
Because Of the accumulation of for
cSCn commodities. however. for which
there Is no Market Governor Harding
continued, countries which have been
sending us their surplus products find
they have nothing marketable with
which TO pay for their imports from
US
I'VE find ourselves. therefore" he
maintained with a large export trade
which Is being paid for only in rart by
great portion OF the world. and this
trade Is fast approx ching a point where
1t may be cut drastically TO the most
vital essentials unless the normal credit
and buying power Of Europe can be re-
stored"
This restoration, he added is only pos
sible II American raw materials 20 for
ward steadily over an extended per Tod
against long time credits IToodstuf.s.
he said. should be promptly paid for,
as they go into immediate consumption.
The Credit Problem.
I'VE are therefore, face to face Mr..
Harding continued. with the problem
how we can best extend long time credits
to European countries in order to enable
them to reconstruct their industries, and
how we can extend credit 70 other coun-
tries in order 10 enable them to make
shipments 10 Europe which otherwise
would be made to tho. United States and
glut our domestic market" ...'.
by means OF corporations organized
under the Edge act for financing for
eIgn trade. the governor contended long
time credits may be granted TO finance
exports not only from the United States,
but from foreign countries ms we'll. All
of these operations he described as nee
essary for the solution Of the present
world problem.
Financing exports TO Europe through
credits extended by the government was
considered by Governor Harding to be
wartime expedient.
Subsequent to the armistice." he e~-
planned. export trade amounting 20
about s@.50O,0Oo.OoO WAS financed
ury department. These credits were an
imporrnn factor In the maintenance ~
our foreign trade during the first half
Of the year, 1919. but II was rccor-
nized that methods of financing adopted
continued ms permanent peace policy,
for the funds necessary TO make such
credits available must he raised either
by taxation or through loans"
Bank Earnings Increase.
Gross earnings Of all federal reserve
ba nks combined. the governor reported.
increased from .Sl0",0U0.000 in 1919 To
$751; 900, 900 In 1920. Over s. per cent
OF these earnings came from paper dis
counted for member banks. the average
da lily holdings Of which aggregated 81
O.OON, 600 during 1920 as compared
with l.9OS.000.000 in 1919. Operating
expenses Cf the member banks COntin-
ued To increase during the year he rx-
planned. chiefly because Of the increased
volume Of business transacted.
Re-diSCOunt operations between fed
eral reserve banks including bills prr-
chased from other federal reserve In nks
during the year amounted TO S3.SI5.-
T@g 0On as compared with s2,65S.254.n 400
In 1919 and $G6O, 63S. 600 during the year
1915 Adding to these transactions the
hills purchased and allotted TO other
federal reserve banks ny the Federal
crnor said the total intcr-distriCt move
meut Of bills during the year agGrcgai ed
81 .iO3,SS6. 900 as compared with S%.397.-
80. uu0 for 1919, and SS35,ioS.0o0 for
1918.
No Amendments Suggested.
The board has no further amendments
to the federal reserve act to suggest
to congress ut this time. Governor
Harding announced 1T desires. how
ever" he concluded, ito express its OPP
position Ia any legislation which would
impair the ability Of the federal reserve
over their credit transactions as well
an Legislation tending 20 remove the
wise limitations now imposed by the
federal reserve act upon IN" character
of paper eligible for discount. The
board would point out that the power
Of the federal reserve system to- cN-
pand CREDITS in amounts sufficient to
meet great emergencies has been dem
onsi rated repeatedly during the rast
five years and il is not believed that
any greater latitude il necessary or
deSira BILE"