The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1921-08-05
CREDIT, j |. /.
CAUSES STORMY
CONTROVERSY
Governor Harding Of Federal
Reserve Board Defends His
Policies to Committee
SAW HARD TIME COMING
Declared That He Merely Pre-.
pared Ranks to Meet the
Credit Strain

i WaSnlnGCOn, Aug. 0.-CFeulC pOlI
cies of the federal reserve system con
tinued under examination of con.
gressional commission yesterday, in q
continuously stormy atmosphere, with
Governor Harding of the reserve
board as the sole witness. ...
"The federal reserve board did not
create this financial depression" Gov.
crnor Harding exclaimed. l saw II
coming, and got ready to protect
things, and people ought to be CRATE
full did so. Now all we need is ces-
sation of pessimisfn, which marks bad
times assfoolish, optimism marks good
times. We allf know now everybody
was goiS ,acrazy in the boom during
the fall tial919. r. i,
! Situation VIII Work Out, ~...
"This situation is going to work
out. There is no comparison between
the condition year ago and condi-
tions today. Take cotton, with low
yield, and exports picking up. Banks
everywhere are fully justified now in
carrying loans.
"All we've got to do is to get out
of everlasting pessimism, and quit
saying everything is going to the
dogs. Why, man has to put up a
good cheerful face if he wants credit.
You can't talk to the banker like you
do to the tax assessor" ~, ..
! Previously 4 sharp passage had
taken place in which Representative
Funk, Republican, Illinois; Repre-
sentative Mills, Republican, New
York, and later, Governor Harding,
participated. ..., 49,:
"I'm keenlyt disappointed" Repre-
sentative Funk said, because the re-
serve system has been challended,
complained Of. criticized, and charged
on one ground, that it has discrimin-
ated against agriculture. And we've
not heard one word from this wit
ness"
| Not Called in Credits.
Representative Mills leaped into the
fray, saying the commission had "al-
lowed John Shelton Williams, former
comptroller of the currency, during
two days to make charge after
charge against. s the reserve board" !"
and that Governor. Harding was ZEN
titled to common justice" in the pri-
vilege of q detailed response.
Mr.. Funk told Mr.. Mills to "handle
your affairs and I'll handle mine,"
while Chairman Anderson ruled that
the governor was within his rights.
HAS the reserve board called in
farm credits ?" Mr.. Funk demanded
later. t." gas.
mo, sir, it never has," Governor
! Harding retorted. Va
'How about the circulars Of the
San Francisco reserve bank ?" Mr..
Funk continued, concerning the price
of wheat in 192O?" ..St,.ggs.. s,.gg.
Had Effect on Price.
II never heard that BEFORE" Gov
|ernor Harding said. "Did it cause q
break in wheat prices ?" L.
1T had some effect" Mr.. Funk re-
sponded.
"The board has cautioned reserve
banks not to issue circulars" Govern
or Harding continued. "It's the job
of banker to look to the value of
his collateral, but to do it in a quiet
way. It is not the function of the
reserve system to regulate prices, up
or down, but to maintain credits"
! In general, Mr.. Harding said, "the
attitude of the reserve toward agri-
culture has been greatly misunder-
stood and grossly misrepresented.
Cannot Loan to individuals
"The whole trouble with the re-
serve system in meeting agriculture
demands is that reserve banks do not
and cannot lend to individual bor-
rowers," he added. -.
"The paper of borrowers must get
into the hands Of member banks be-
fore it gets to the system"
Giving the history of increases of
rediscount rates in 1919 and 1920,
Governor Harding asserted that Mr..
Williams, one of its chief critics, had
participated in the rulings. The
ideal system he said, would be to
maintain rediscount rates just above
market rates on money, thus avoiding
initiation, and yet offering practically
unlimited credit.
Legal limitations, he held, governed
the board at all times and the matter
4of credit policies ought and did center
upon IL district reserve banks.
lit n. NIIIn nnInn