Omaha daily bee., 1921-08-05
Harding Defends
Policies of i. s.
Reserve Board
Cessation of Pessimism All
That Is Needed for Good
Times, Governor of
Body Says.

Washington, Aug. 4.-Credit poll
cies of the federal reserve system
continued under examination of a
congressional commission today, in
continuously stormy atmosphere,
with Governor Harding of the re-
serve board as witness.
The federal reserve board didn't
create this financial depression"
Governor Harding exclaimed. 1T
saw it coming and got ready 10 pro-
tect things, and people ought to be
grateful it did. Now all we need is
cessation of pessimism, which marks
bad times as foolish; optimism marks
good times. We all know now ev-
erybody was going crazy in the
boom during the fall of 1919.
This situation is going to work
out. There's no comparison between
the condition a year ago and condi-
tions today. Take cotton, with a
low yield, and exports picking up.
Banks are fully justified now in
loans.
"All we've got to do is to get out
Of everlasting pessimism, and quit
saying everything is going to the
dogs. Why, a man has ia put up
a good cheerful face if he wants
credit. You can't talk to the bank
er like you do to the tax assessor"
Previously sharp passage had
aiken place in which Representative
Funk, republican, Illinois; Represent
.ative Mills, republican, New York,
md later Governor Harding partici-
oated.
Mills Gets in Fray.
'I'm keenly disappointed" Repre-
Funk said. Because the
'eserve system has been challenged,
of, criticized and charged
IN one ground, that it has discrim-
mated against agriculture .. i
And we've not heard one word from
his witness"
! Representative Mills leaped to the
ray, asserting that the commission
lad allowed John Shelton Williams,
ormer comptroller of the currency,
o make charge after charge" against |
he reserve board, land that Governor
Harding was entitled to common JUS
ice" in the privilege Of a detailed re-
ponse.
Mr.. Funk told Mr.. Mills to handle
our own affairs, and I'll handle
nine" while Chairman Anderson rul-
d that the governor was within his
lights. 4
HAS the reserve board called in
arm credits?" Mr.. Funk demanded |
ater.
mo sir, it never has" Governor
Harding retorted.
"How about the circulars of the
an Francisco reserve bank" Mr.. |
'unk continued, concerning the
rice of wheat in 1920"
News to Harding.
81 never heard that before" Cow
nor Harding said. Did it cause {
break in wheat prices?" l.
ut had some effect" Mr.. Funk
"The board has cautioned reserve
anks not to issue circulars" Gov
nor Harding continued. It's the
,b of banker to look to the value
his collateral, but to do it in a
liet way. 1t is not the function
the reserve system to regulate
rices, up or down, but to maintain
edits"
In general, Mr.. Harding said. the
titude of the reserve board toward
yricufture has been greatly misun-
,rstood and grossly misrepresented.
Giving the history of increases of
discount rates in 1919 and 1920,
overnor Harding asserted that
r. Williams, one of its chief critics,
ID participated in the rulings. The
cal system, he said, would be to
aintain rediscount rates just above
arket rates on money, thus avoid
g initiation, and yet offering prac-
ally unlimited credit.
Legal limitations. he held, govern
the board at all times and the
after of credit policies ought and
d center on Il district reserve
INKS.