Evening star., 1921-08-07
BY I. A. FLEMING.

Local bankers who have been
interviewed in the matter of the pro-
posed investigat ton of the Federal
Reserve Board by congressional
committee express themselves as
believing that if it is undertaken the
board will come off with flying colors.
but question the policy of going
beyond the hearing.
The federal reserve system is not
a new scheme; 1t Is tried and sue
cessfully working banking system;
it has proved it's usefulness in the
tightest possible places. and has pre-
vented anything like a panic in times
when, under similar conditions and
without the system in operation. even
the government and its resources
could not have prevented more serious
financial disaster.
We have suffered disaster. de-
preston and persistent dullness in
business but the public is being more
and more impressed with the fact
that it was not due to any failure or
abuse of the money supply and credit
of the nation. for much Of the dull
ness and depression exists even today,
when the government is offered a
billion of the peoples dollars at 5A
to 5l2 per cent while call loans have
recently been down to 3 " per cent.
The Federal Reserve Board has con-
stantly been the recipient of the
best available financial advice. the
advisory council being composed of
some of the very best bankers in the
field of finance, leaders in their
respective cities.
Moreover, the leading bankers of
the country have stood flat-footed in
approval of the general record of
the board.
Perpetual motion is still undis-
covered. There had to be an end to
the era of wild imitation and over
speculation.
And the end must perforce. either
be gradual and with as much sal
wage as possible, or as the bursting
of the bubble-with the accompany
ing smash.
The Federal Reserve Board ap-
piled the brakes: the pressure hurt
in varied degree, but it started the
liquidation. and stopped the wild ex-
travagance of the silk-shirt era and
the stock-dividend age at the same
time.
The business world would overlook
the ruin caused by the world war.
All that amounted to nothing and
our own money loaned to, allies main
tanned big foreign trade until such
time as natural conditions forced the
recognition of the true situation in
Europe; the pitiful depression of for
eign currencies and even our own
ina bility to carry on and maintain
without distressing and trade-injur-
ing taxation.
The brakes. grinding harder. pre-
dicted a speedy full stop and the pre-
diction was realized through the
only medium possible, the Federal
Reserve Board.
Some interests took their losses as
speedily as possible; others dragging
along with their semi-frozen credits
and are just beginning to see day.
light: the farmer who sowed two
dollar seed was forced to reap dollar
harvests and the cotton planters and
live stock interests. fighting bitterly.
were forced to take their losses, and
there are many who. unable to fix the
blame elsewhere, placed it on the
shoulders of the board.
state bankers who in the south. re-
senting the par collection plan of the
system. blamed the reserve board.
The Federal Reserve Board is for
tunate" said one banker, in having
at it's head, Gov Harding. who seems
to be an able exponent of it's opera