The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1921-02-18
TAKE CARE OF THE CREDIT
Basis Of National Pros
perity Rests Upon 1t
WORLDWIDE INFLUENCE
Annual Report of Federal Re-
serve Board Laid Before
Congress Today
ASSOCIATED Press Dispatch.1

Washington, ID. c., February 10
War time expenditures mi profound
notifications of the country's eco
n0,hsc system make 1t imperative,
Governor, Harding informed con
gross today in the annual report OF
the Federal Reserve Board, that 1.-The
utmost care be taken 10 conserve on:
credit and preserve tho tasiS OF our
prosperity, to avoid the extreme con-
ditions prevailing in other countries
"Uron the United States in a
large measure" the governor declar-
ed "the solvency and financial sta
hiIity of many other countries de-
paaI. This fact greatly increases
the responsibility which rests upon
the American banking system and
calls for the exercise Of sound Judge
ment and the strict observation of
sound financial and economic princi-
pies In readjustment of business,
the country, Governor Harding as
serted, "is generally recognized as
having passed the crisis and in look
ing to the future spirit OF greater
confidence prevails.
Business Adjustment Seen.
"As the year closed" he said.
t'there were many indications that
business generally was beginning to
adjust itself to new conditions and
was preparing to proceed on a SCUM
der and saner business because of
the accumulation Of foreign commo-
dities. however, for which there is
no market Governor Harding con-
tinued: Countries which have been
sending us their surplus products
find they have nothing marketable
with which to pay for their imports
from USE We find ourselves, there
fore" he maintained, with a large
export trade which is being paid for
only in part by a great portion of the
world, and this trade is fast approach
ing point where it my be cut dras-
tically to the most vital essentials un
less he normal credit and buying po-
wer of Europe can be restored. We
are brought face to face Governor
Harding continued, with the prob
lens of how we can best extend long
time credits to European countries
in order to enable them also to make
struct their industries and how we
can extend credits to other countries
in order to enable the malso to make
shipments to Europe which other
wise would be made to the United
States and glut our domestic market.
ed under the Edge act for financing
foreign trade" the governor contend
ed long time credits may be grant
ed to finance exports not only from
the United States but from foreign
countries" as we'll. All these opera
tons" he described as necessary for
the solution of the present problem.
Financing exports to Europe through
credits extended by the government
was considered by Governor Harding
to be a war time expedient. "Subse-
ouent to the armistice," he explained,
"exDort trade amounting to about
$1,000, 900 was financed through Gre
dts extended by the treasury de-
partment. These credits were an
important factor in the maintenance
OF our foreign trade during the first
half of the year 1919. but it was rec
ognized that methods of financing
should not be continued as a per-
manent peace policy, for the funds
necessary to make such credits
available must be raised either by
taxation or through loans.
Increase Of Reserve Bank Earnings
"Gross earnings of all federal re-
serve banks combined" the governor
reported. increased from $102, 000.
600 in 1919 to s181 100000 in 1920
ings came from paper discounted for
member banks. the average daily
holdings of which aggregated 81.
$40 900 during 1920 as compared with
81 .90S. 600. 900 in 1919. Operating ex-
penses of the members banks con-
, tinued to, increase during the year,
he explained, chiefly because Of the
increase volume of business transact
ed. Rediscount operations between
federal reserve banks including bills
purchased from other federal re-
serve banks during the year amount
ed tn l3.676729. 900 as compared with
s2.65S254. 900 in 1919 and $3.50 $685.
600 during the year 1918. Adding
these transactions the bills purchas-
ed and allotted to other federal re-
serve hanks by the federal reserve
bank of New York." the governor
said. "the total inter district move
ment of hills during the year aggre
gated s4An068s. 900 as compared
with SO. 297. 752 900 for 1919 and $685.
498 200 for 1913. 1.-THE board has no
further amendments to the federal
reserve act to suggest to congress at
this time" Governor Harding an
nounced.