The Bamberg herald. [volume] (Bamberg, S.C.) 1891-1972, 1921-09-29
OPTIMISM GOVERNOR
HARDlNC'S KEYNOTE
RESERVE BANK HEAD MAKES
ADDRESS AT CHARLOTTE.
Money Situation Improved
In Immediate Future Much Depends
on Agricultural Development
and Manner of Marketing.

and Manner of Marketing.
Charlotte, N. c., Sept 22.-Gloomy
forebodings of last winter with re-
spect to the banking situation are no
longer justified and can be dismiss
ed, Governor Harding, of the federal
reserve board, declared in an\address
here tonight at the Made in Carolinas
exposition.
''The banking situation has greatly
improved" Mr.. Harding said, 'and
although the process of readjustment
has not been completed evidences are
multiplying that the corner has been
turned and that we have passed the
most acute stage of the readjustment
period"
Governor Harding said that in the
immediate future much would de-
pend on agricultural developments
and the manner in which this years
crops were marketed.
with proper cooperation on the
part of merchants and bankers he
said, 'sthose engaged in agriculture
have opportunities and prospects
which were not anticipated few
months ago and it is Of vital impor-
tance that this cooperation be given. :"
''It should be remembered" Gov
ernor Harding continued, "that in or
der to maintain our production we
must push our foreign trade. We
can not maintain our foreign trade
on the basis of the gold stock of
other nations and some means must
- be devised for extending long time
credits abroad or of interesting Amer
ican investors in foreign properties
and securities in order that the ex-
! change rate which now runs so heav-
lily against other nations may be cor
rected.
eve must continue to buy from
foreign countries those things which
they can produce better or more
cheaply than we can and exchange
commodities with them. If we deter
mine to do business with and for our
selves alone, it seems inevitable that
we must reduce our production to
meet merely American require
ments."
The recent advance in the price OF
cotton was in no way due to any in
crease in the loans of federal reserve
banks or to any expansion in the cur
rency, Governor Harding declared,
but to the operation of the inevita-
BILE law of supply and demand. Fed
eral reserve notes actually in circu-
lation, he said, were about S500,000,-
900 less than when cotton reached its
lowest point last spring.
Governor Harding spoke at length
in explanation cf the workings of the
federal reserve system, about which
he said there was ''surprising lack
of knowledge" Any belief that there
was a preordained contraction of the
currency during 1920 to reduce pric-
es is "absolutely unwarranted,' he
said.
s.It is not the function of the fed
eral reserve system, or Of any bank
ing system to attempt to fix or con-
troll prices" the governor continued.
Banks are concerned with prices on
" in so far as the security of their
loans may be involved, and they are
interested more in the stability OF
prices and their margin of collateral
than the price level itself.
There was not only no contraction
of federal reserve note currency dur
ing the year 1920 but on the other
hand the total volume of federal re-
serve notes in circulation shows an
almost continuous upward trend dur
ing that year, rising from s2,S44,oOo
900 on January 23 to s3,404,o00,000
on December %, record high mark.
Since that time the volume of federal
reserve notes in circulation has been
greatly reduced until on September
IA, 1921, it stood at s2,4S1,661,Ooo.
"The volume of federal reserve
notes depends entirely upon the ac-
tivity of business. They are issued
only as need for them develops and
as they become redundant in any To-
cality they are returned for credit or
for redemption. The increase in vol
ume of federal reserve notes in circu-
lation from 1917 to the end of 1920
was, in so far as it was not the re-
sult of direct exchanges for gold and