Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-02-16
UTMOST CARE
NECESSARY IN
U. s. FINANCES
Governor Harding Makes
This Statement Before
Congress Today.
Country Face to Face With
Problem of Giving Long
Time Credit.

= Washington, Feb. 1e.-War time
and profound modifica-
tions of the country's economic sys-
tenn make it imperative. Governor
Harding informed congress today in
the annual report Of the federal re-
serve board, that the utmost care be
taken to conserve our credit and pre-
serve the basis of our prosperity" to
avoid the extreme conditions prevail
ing in other countries.
Upon the United States in a large
measure" the governor declared, 'the
solvency and financial stability IT
many other countries depend. This
fact greatly increases the RESPONSE
bility which rests upon the American
banking system and calls for the ex-s
ercise Of sound judgment and the
strict observation Of sound hnanciaf
and economic principles" 4
Tt@@ Passed Crisis. Il
In readjustment Of business, the
country, Governor Harding asserted,
is GENERALLY recognized as having
the future "a spirit of greater conf
dence prevails" AS the year closed,
he said. there were many indications
that business generally was beginning
to adjust itself to new conditions and
was preparing to proceed on q
sounder and saner business"
| Because Of the accumulation of
foreign commodities, however, for
which there is no market" Governor
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
part by great portion of the world.
and this trade is fast approaching a
point where it may be cut drastically
to the most vital essentials unless the
normal credit and buying power OF
Europe can be restored"
eve are brought face to face. "
Governor Harding continued, with
the problems of how we can best ex-
tend long time credits to European
countries in order to enable them tc
reconstruct their industries and how
we can extend credit to other coun-
tries in order to enable them. also tc
make shipments to Europe which
otherwise would be made to the
United States and glut out domestic
market"
BY means of corporations organized
under the Edge act for financing for.
cign trade. the governor contended
long time credits may be granted te
finance exports not only from the
tries as we'll. All these operations hi
described as necessary for the solu.
ton of the present problem.
A War Time Measure.
Financing exports to Europe
though credits extended by the gov
ernment was. considered by Governo,
Harding to be a wartime expedient.
Subsequent to the armistice," he
explained. export trade amounting t
about $2,50e O0O,O was financet
through credits extended by tn.
treasury department. These credit,
were an important factor in the main
tenance of our foreign trade during
the first half of the year 1919, but /
was recognized that methods Of a
nancing adopted under the stress o.
war should not be continued as per
manent peace policy for the fund.-
q necessary to make such credits avail
: able must be raised either BY taxation
or through loans"
Gross earnings Of all federal re
serve banks combined. the governor
reported. increased from 100000, 90,
in 1919 to $181 100000 In 1920. Owe
from paper discounted for membe
banks. the average daily holdings o
7 which aggregated $2.530.OO0.00O dur
inc 1920 as compared with $1,S0s.
100000 in 1919.
Expenses Increased.
; Operating expenses OF the membe
!, banks continued to increase durinl
the wear. he explained. chiefly becaus
of the increased volume Of busines
transacted.
, Re-discount operations betwee,
! federal reserve banks including bill
|, purchased from other federal reserv
banks during the year amounted t
$&676.729,00O, as compared witt
s2.65s.254. 900 in 1918 and $se0.ssS.
900 during the year 1918. Adding t
these transactions the bills purchase,
and allotted to other federal reserv
banks by the federal reserve bank o
New York. the governor said the to
tai inter-district movement OF bill
. during the year aggregated $4,40O.
. 686,000 as compared with $3.397,753,
900 for 1919 and $S36.498,000 70
1918.
! The board has no further amend
s ments to the federal reserve act {
. suggest to congress at This time. Gov
~ IIa riding a annnlanrAA ~