Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1921-07-29
THE FEDERAL RESERVE BOARD.


ministration. AS such official he examined and con
troled the national banks Of the United States ant
was ex-offico a member Of the Federal Resery
Board. Mr.. Williams is. of course, a democrat
During his of office the federal system
was under the control of a democratic president
What he has to say concerning the management o
the board during that time not therefore, b
regarded as political propaganda
On July a. Mr., Williams made speech concern
ing the workings of the federal reserve system, be
foreMa distinguished audience at Augusta, Georgia
1t would be well if every voter could read this speech
1t is too long for reproduction in the Journal An
one interested get a copy by writing one of GU
senators 1t is published in the Congressional Recor
of July 20.
Mr. Williams approves the system, but unmer
cfully flags its management. Senator owen Of Okla
homa father of the federal reserve act has been do
ing the same thing for many weeks. This lates
assault has moved Governor Harding of the boar
to ask for an investigation. He hopes for white
wash. The public hopes for the facts.
Listen to what Mr.. Williams says after watching
the effect Of the management, both from within thu
board and from the vantage ground of his favored
position as comptroller He says:
II question nobOdys motives. The dismal,
cold fact as it seems to me- is that the Federal
Reserve act, Which designed to provide a
system OF banking and currency supply pliable
and elastic, adaptable to the variations Of sea-
sonal and sectional requirements, and of supply
and demand and commercial development, be-
came stiff and nelastic consequently oppressive
and injurious where it should have been helpful,
and dangerously lenient where it should have
been repressiye.
"a valiant little country bank in Alabama,
striving and straining to help its farmer GUS
toners, needed $4,000 to meet the needs Of
its community in crop-moving time, the latter
part of September 1920, and that little bank
was charged for the use of that money for about
two weeks by it's Federal Reserve bank an aver
age rate of about per cent-not per cent per
annum. gentlemen but about per cent per
month average; in fact, the rate charged
for portion of that money was actually 81 IL
per cent per annum,"
while small banks in the farming districts
were being taxed in this manner, great banks in
New York were being supplied with practically
unlimited amounts of money at 5, and per
cent. The official record will show that while
the reserve bank collected $4,000 equal to
per cent the banks entire capital stock for
- months) from little bank in your adjoining
state of Alabama for the Of about SIP, 900
for two weeks in crop-moving time year ago,
a big bank In New York. whose funds
largely employed in speculative operations and
deals for the same cash consideration, or, say,
$4,000, was given the of about 100000 for
the same time
1.-THE policy of the Federal Reserve board and
of certain reserve bank authorities seemed to be
that If certain big banks wanted anything. why
let them have it promptly and questions
asked; but If little bank farmer needed
funds comb him we'll; make him give up every
thing he has as security, and then make the
directors as well, guarantee the loans for all
they are worth. This policy was carried so far
that have been informed recently of a national
bank in the southwest claims that It was not
saved but broken by the eXactions of
reserve bank and its directors planning
to bring suit against federal reserve bank de-
handing that they pay its depostors In full
The prodigality with which certain big banks
dispose of the funds unstintingly loaned them
by certain reserve banks may be illustrated by
loan of $500, 900 to fisheries company made by
big northern bank which came to my notice
When inquired what the security for the loan
was, was informed that the collateral was fish,
And when 1 asked where the fish were, l
informed officially that the fish had not been
caught at the time the loan was made, but that
they supposed to be swimming in the
oceans thousands of miles away; but that the
corporation had promised to go fishing and If
they caught any fish, pack them and them
and then put them in warehouses and then de-
post the warehouse receipts as security for
their loan, which, when I last heard from it.
had not been paid reduced"
Mr.. Williams reports the of a New Yor
bank. favored with federal reserve loan at pc
cent. This bank charged a customer, who was
manufacturer and in need of $3.50 000 200 per Ger
Tor the net amount of money it loaned to him. A
The same time they were making loans for specu
ative purposes at low rate.
After asserting that the heads of many of tt
great banks are wild and unworthy spectators an
lfter predicting that enlightened public will 500
demand a higher type of ability and integrity
uch positions, he adds:
"If this not the richest and strongest
country the world has ever known, with it's big
element of the best people, immeasurable power
of production, and natural resources, would
face today disaster by a comparison with which
the disaster following the explosion of the South
Sea bubble would appear trivial, despite adj
mirable banking system intended to make dis
aster impossible.
"Yet while this orgy Of usury and speculation
was raging in New York many of you here had
the experience of going to your local banks for
money with which to pick hold your cotton
or to carry your paper through the dull season,
and of being told of the difficulty of getting
money through the reserve bank and of the lim-
tation being put the small borrowers Seeing
these things as do nobody on earth can con-
vince me that there is not something wrong,
perverson Of purpose somewhere. l do not
mean to suggest that the New York banks. for
instance, handed out money without Sc
curity. l do mean that they could and should