The Birmingham age-herald., 1921-05-28
GOVERNOR OF>FEDERALI RESERVE SAYS BANK S'I PROFIT IS 2.9 PER CENT
Birmingham Business Men Hear w. P. G. Harding An alyze Financial Conditions of Past Year and Effect on Domestic and Foreign Trade--Two Inn
 portant Addresses Are Made

Profits of the federalreserve banks far from smacking of profiteering were shown by W. P. G. Harding governor of the federal reserve board in his address to the Junior anc Senior Chambers of Commerce at the Tutwiler hotel last night, to have been small compared with the vast sums employed.
 'In fact. said Mir. Harding at ] point in. his address. the net earnings | of s149, 100000 against items of $521S, 100000, which I have listed as having teen employed by the federal reserve hanks, are equal to only 2.9 per cent Is that profiteering?"
 Speaking on this subject, Mir. Harding said, .'The federal reserve banks did not make the s149,OOO,OOO they earned last year only out of their average capital of SO4,O00, 900. They had an average surplus In 1920 of s143.OO0,O 900. their members reserve deposits averaged SI,S35,-
 00O.000 and the banks also had s3,- | 146,O0O, ,0G0 in currency issued to
 them by the government. The government is empowered under the federal reserve net 10 charge interest on the proportion of the
 federal reserve notes not covered
 by gold. This charge is not man.
 dntory, and it has been the policy
 of the board not to impose 1t. If
 thc charge had been imposed the
 earnings would have been reduced.s Still" said the speaker, "net earn ings of s149,000,000 against items Of s5, S.00o.000 are only 2.9 per cent"
 By means of a chart, MT. Harding illustrated the various phases of his address, which otherwise would have been difficult to grasp but with the eye on the charts, the youngest men in the audience were fully able to follow him in his explanatis of the operations of the federal reserve bank and the rise and fall of values in the imitation and deflation processes.
 Referring to the warning issued by the federal reserve board of the in- coming deflation bound to follow the high point of deflation Mir. Harding said:
 Warnings Given
 New York looked nuon me as fi- rancial kill-joy when these necessary warnings were given. When the wea- tEer bureau forecasts violent storms or cold wave, l have never yet heard anybody blaming the weather bureau Tor storm losses or freeze damage to crops. We gave a warning. It was needed.
 What was done was done in the face of,a emergency. It was necessary to raise discounting rates and to con- serve credits to prevent collapse
 "We would have had a collapse if
 loan expansion hnd not been stop
 ped. l have no apologies to offer
 for the policies adopted fin 1920.
 They saved the country from
 great collapse.
 Some economists hold that prices fluctuate with the supply of currency. That is technically correct, but prices yere going down last year while cur rency circulation was going up. World conditions brought about the price de- ciines last year.
 People RebelIed
 The population of this country and Of the world rebelled against mount ing prices. For time laborers bought $50 silk shirts and many women paid Slo0 for hats, but the people became aroused over these prices. That which we call the public was in arms against them"
 Ailudfng to the expansion pro-
 cess, Mir. Harding said, "Between September 1919, and January 2S, 1920. the loans of the federal re-