Cavalier County farmers press. (Langdon, N.D.) 1920-1921, 1921-01-27
lend FARMERS
TWO BILLIONS
Governor Harding Says Reserve
Banks Increased Instead of
Restricting Loans.
FIGURES REFuTE CHARGES
More Than Two-and-a-Half Times as
Much Paper Was Discounted in
Eleven Months of 1920 as in the
Year 191e-Report to Gronna.

Year lSlS-nSPOTS " StStluo'
Neutrality-suspicious. than two and
one-half times as much agricultural
paper was rediscounted by Federal
Reserve banks in the IL months down
to December l, 1920, as was redis-
counted during the entire year of 1919,
according to estimates furnished by
Governor Harding of the federal re-
serve board to Senator A. j. Gronna,
chairman of the senate committee on
agriculture. The estimates furnished
show that farm paper rediscounted
last year amounted to almost $4,000
100000. The estimates are: 1920, ST.
9%9O,O33,OO0; 1919, $729,266,OOO.
The farmers have been complaining
that Federal Reserve banks discrimin-
ated against them, and instead of
making credits to the growers more
elastic, actually restricted loans.
Treasury officials have consistently
maintained that credits were not re-
stricted but were greatly increased.
Nevertheless, the farmers have insist
ed that they have been Disseminated
against, and on this contention they |
have based their demand for a revival
Of the War Finance corporation. The
bill reviving the corporation has been
passed by congress.
More Loans Than Are Tabulated.
In his letter to Senator Gronna, |
Governor Harding intimates that while
his figures are merely estimates. based
on the production and sales OF farm
products, undoubtedly much more
money than is tabulated was actually
loaned to the farmers. He writes:
"In compliance with the request
made in your letter Of December IA,
for information regarding the amount
Of actual agricultural paper redis-
counted during the years 1919 and
1920 Ito date), based on agricultural
production and sales Of the respective
years, I have the honor to submit here
with copy of a tabular statement com
piled from telegraphic data received
from all Federal Reserve banks.
"Section IS Of the federal reserve
act provides that notes, drafts and
bills drawn or issued for agricultural
purposes or based on live stock hav-
ing q maturity of not longer than six
months, are eligible for r%ediscount by
a Federal Reserve bank, the limit Of
maturity in all other cases being 80
days. The Federal Reserve banks re-
discount large amounts Of agricultural
paper which has a maturity not ex-
ceeding 80 days, but such paper is
classified with other paper Of like ma
turity.
Therefore, agricultural and live
stock paper, as shown by the Federal
Reserve banks, applies only to paper
having a maturity Of longer than 80
days. The board receives this infor-
nation from day to day and the
amount of agricultural discount at
each Federal Reserve bank, that is,
paper having a maturity Of from nine
ty days to six months, is published
each month in the Federal Reserve
Bulletin.
"The special figures furnished by
the Federal Reserve banks in accord
ance with your request are in all cases
estimates, no exact figures Of the total
volume of loans for agricultural pur-
poses being available at the Federal
Reserve banks. In the first place, most
of the borrowings at Federal Reserve
banks by member banks during the
year 1919 and a considerable proper
ton of these borrowings during the
current year have been in the form of
the borrowing banks own notes, Sc
cured by government obligations or by
J commercial, industrial and agricul-
banks in New York city have made
large loans to their correspondent
banks throughout the country, and it
Is reasonable to suppose that part of
the proceeds of such loans have been
applied by the borrowing banks for
agricultural purposes, but it is impos-
sible to state the amount.
Conditions Similar in Other Banks.
1.-THE same is true with respect to
loans made by member banks in Chi
SdSO, III. 1Ioulo, NAluuCdpOllS hnuSdS
City, New Orleans and other financial
centers throughout the country. Non
member State banks lend large sums
in the aggregate for agricultural pur-
poses. But as they have no dealings
with the Federal Reserve banks their
loans to farmers are not reflected in
the figures furnished by the Federal
Reserve banks. although it is a fact
that all Federal Reserve banks have
been lending a large amount to mem
Der banks, which have in turn redis-
counted paper for nonmember banks.
ut should he borne in mind also
that the total amount of farmers notes
r~ediscounted by Federal Reserve
banks gives no indication of the
amount advanced by the Federal Re:
serve banks to finance the production
and sale Of farm products. since large
amounts advanced to member banks
In other districts on commercial and
industrial paper are used by these
banks for loans to agricultural inter.