The Washington times., 1921-04-27
HARDING ACTS
FOR FARMERS
President Announces Project for
Credits Agreed Upon at
Cabinet Meeting.
BY NORMAN HAPGOOD,

President Harding stated yester-
day that at the Cabinet meeting the
credit situation was discussed and
a plan agreed upon for making
credit easier, especially in business
connected with agriculture
SIDES WITH FARMERS.
For technical methods the Presi-
dent referred to the Federal reserve
chairman of the board. 1t happened
that the chairman was out of town
at the time and will remain out of
town for several days.
President Harding is a sympathetic
man. Various organizations of
farmers have been meeting in this
town during the past fortnight. and
they have all urged easier credit
Just as the agricultural regions have
urged II before the Populist days
and since the days of Bryan's highest
influence. President Harding Is
sympathetic with these interests and
anxious to help them.
NOT BINDING ON BOARD.
1t is unnecessary to state. however.
that the law is the law and that
nothing said or done at the Cabinet
meeting can be binding on the Fed
eral Reserve Board.
The only way the President can
affect the policy of that board is by
changing it's membership. He has
already said that he had no such in
tention. Indeed. he urged the chair
man to give up a lucrative offer in
order to continue his work
The Federal Reserve Board has
taken no sharp action. II has, how
ever, been expressing a certain spirit
to the banks which are members Of
the Federal reserve system. It must
Re remembered that the reserve
board does not give orders to these
banks. 1t receives suggestions from
them there is consultation, and in
the end the board decides. But II
does not, and cannot, under the law,
Issue orders in the first place.
DEFLATION TOO RAPID.
Nearly everybody agrees that de-
flation has been going on too sud-
denly and fast. The reserve board
is of that opinion. 1t has there
fore suggested to its banks that
they be not too particular about
technical forms in deciding whether
they will rediscount paper for mem
Der banks.
OF course. this affects the credit
the member banks will give to the
business men and farmers who do
banking with them, because they
can only lend where the paper will
lie accepted in turn by the Federal
reserve banks.
To all the banks in the system.
therefore, the board has made II
clear that A. wants as much credit
issued or continued as the customers
assets Justify. II, must take the
risk. But II he actually has the
assets the bank should not insist
on forms.
PROPOSALS TO FIX RATE.
the rate. Nevertheless, certain legis-
lation now in it's initial stages deals
with the rate. Various bills fixing a
maximum rate have been drawn, but
President Harding is thcLgAt to be
tretty sound financially. and it is not
believed that he will support such
legislative Interference with the judg-
ment of the banks and the board.
What is important is not the rate,
but the TACT that many manufacturing
and business concerns, especially
those dealing in agricultural products.
require more credit than in ordinary
times and at the same time cannot
make as good financial statements as
formerly
The Federal Reserve Board has re-
rently had a survey taken to find out
whether the banks in The system were
handling this situation wisely, giving
as much credit as the customer actu-
ely deserved, regardless of rules and
forms.
MOST BANKS LIBERAL.
They found that at least 60 per
cent OF the banks were acting with
liberality.
The Federal Reserve Board makes
II clear. wherever possible. that 1t has
not done any so-called dei.ation. De-
sation has been ar economic process.
What the board has done has been
to slow up that process AZ much as
1t could by looking at actual assets
rnd not insisting too much on fluid
assets.
The farm loan ranks do not come
into the question to any considerable
extent. A prosopal has been put for
ward to increase their pow ers by Civ
ing them the excess earnings OF the
Federal Reserve.banks up to 500, 0OO,-
600, so rs to permit them to make
loans on farm products through such
methods as warehouse receipts and
crops liens. They now only loan on
mortgages.
The reason the credit difficulties
occur most in agricultural regions is
hat in those regions there has been a
drop in prices more sudden than else
where.
When the bottorr falls out Of cotton
all local prices in such regions as the
Atlantic and Richmond districts fall
also. and so do wages. but the boots
and shoes and agricultural implements
which have to come from the North
Lave shown no such fall.
Wheat in some points in the far
west has fallen 20 S1.1U That Of
course affects the amount a bank can
lend on wheat. 1t affects the relation
Of the grain dealer and the -four
miller to banking, and unless the
banks can be more liberal than ordi-
arily the miller or the dealer may