Cleveland County herald., 1921-03-17
Governor Harding Says Reserve Banks Increased Instead of
 Restricting Loans.
FIGURES REFUTE CHARGES
More Than Two-and-a-HaIf Times as Much Paper Was Discounted in
 Eleven Months of 1920 as in the
 Year 1o1o-Report to Gronna.

paper was rediseounted by Federal Reserve banks in the II months down to December 1, 1920, as was redis- counted during the entire year Of 1913, according to estimates furnished by Governor Harding of the federal re serve board to Senator A. ]. Grohna chairman of the senate committee on agriculture The estimates furnished show that farm paper rediscounted last year amounted to almost S2,000,- COG. 0.OO0. The estimates are: 1920, Sl,- 0S0,033OO0; 1919 SIPS, ,2660o0.
 The farmers have been complaining that Federal Reserve banks discrimin- ated against them, and instead of making credits to the growers more elastic, actually restricted loans. Treasury officials have consistently maintained that credits were not re- stricted but were greatly increased. Nevertheless, the farmers have insist ed that they have been discriminated against. and on this contention they have based their demand for a revival of the War Finance corporation. The bill reviving the corporation has been passed by congress.
 More Loans Than Are TabuIated.
 In his letter to Senator GrOnna, Governor Harding intimates that while bis figures are merely estimates based on the production and sales of farm products, undoubtedly much more money than is tabulated was actually loaned to the farmers He writes:
 "In compliance with the request made in your letter of December IA, for information regarding the amount of actual agricultural paper redis- counted during the years 1919 and 1920 (to date), based on agricultural production and sales of the respective years, I have the honor to submit here with copy of a tabular statement com piled from telegraphic data received from all Federal Reserve banks.
 "Section 13 of the federal reserve act provides that notes, drafts and bills drawn or issued for agricultural purposes or based on live stock hav- ing maturity of not longer than six months, are eligible for rediscount by a Federal Reserve bank, the limit of maturity in all other cases being 90 days. The Federal Reserve banks re- discount large amounts of agricultural paper which has maturity not eX- ceedine % days. but such paper is classified with other paper of like ma turity
 "rhe9efore, agricultural and live stock paper, as shown by the Federal Reserve banks, applies only to paper having maturity of longer than 90 days The board receives this infor- nation from day to day and the amount of agricultural discount at each Federal Reserve bank, that is. paper having maturity of from nine ty days to six months, is published each month in the Federal Reserve Bulletin.
 ''The special figures furnished by the Federal Reserve banks in accord ance with your request are in all cases estimates, no exact figures of the total volume of loans for agricultural pur- poses being available 1t the Federal Reserve banks In the first place, most of the borrowings at Federal Reserve banks by member banks during the year 1919 and a considerable propor- tion of these borrowings during the current year have been in the form of the borrowing banks own notes, se- cured by government obligations or by commercial industrial and agricul- fa r banks in New York city have made large loans to their correspondent banks throughout the country, and 1t is reasonable to suppose that part of the proceeds of such loans have been applied by the borrowing banks for agricultural purposes but it is impos- sible to state the amount. s..
 Conditions Similar in Other Banks.
 "The same is true with respect to loans made by member banks in Chi cago, St. Louis, Minneapolis, Kansas City. New Orleans and other financial centers throughout the country. Non- member State banks lend large sums in the aggregate for agricultural pur- poses. But as they have no dealings with the Federal Reserve banks their loans to farmers are not reflected in the figures furnished by the Federal Reserve banks. although it is fact that all Federal Reserve banks have been lending large amount to mem- Der banks, which have in turn redis- counted paper for nonmember banks.
 "It should he borne in mind also that the total amount of farmers notes rediscomted by Federal Rese..Ye banks gives no indication of The amount advanced by the Federal Re serve banks to finance the production and sale of farm products. since large amounts advanced to member banks in other districts on commercial and industrial paper are used bv these banks for loans to agricultural inter- ests. Only the Federal Reserve banks of Richmond, Atlanta, St. Louis and Minneapolis have taken account of