The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1921-02-20
PAGE TWO
OKI AHONLA BANKERS
ASSOCIATION. GROUP FIVE,
ADJOrRNS CONVENE IN 1922
AT III RANT, OKLAHOMA

homa Bankers Association, responded,
by refuting the contention that the
banks are responsible for the situa-
tion.
Aside from the patriotic influences
growing out Of the war" Alr Gum
said, the greatest public interest is
centralized on the rise and fan of
prices.
since much criticism has been
hurled at the banks for lowering
prices and industrial inactivity, pause
To return the contention. II is charg-
cd that the Federal Reserve Banks re-
fuse rediscounts and credit extensions
and that the situation could be saved
bv granting additional credits. Such
policy would only add fuel to the
fire through which we are passing and
at one time So nearly consumed us.
In times of deflation. men who find
themselves picking goat feathers often
mistake the origin of their growth.
More credit, more greenbacks, more
banknotes and free silver cannot spon-
sor for destroyed capital and under
production. Credit structure must be
based on sound capital grouting
arising out of industry and savings.
To issue bank notes and currency in
war activities ut once causes an in
flation that fastens ficticious value
TO all commodities.
An countrys added stone upon stone
to this credit structure by issuing
bonds and certificates of Indebtedness.
National debts trebled and quadrupled
prices doubled and trebled in iucon.
ceivably short periods. labor climbed
In the band wagon, everything went
up--up--loans We're extended TO meet
the demands, q so per cent margin
seemed good when the margin in
creased to 80 or 90 when the obliga-
lion matured and yet in the face Of
this endless chain of ever.increasing
prices there are those who say, 'EX-
tend more credit. Wars may come
and go but let prices continue to SO
up forever"
Credit Financing since 1914 is as
founding. Bank deposits increased
rom eighteen and one-half billions
In 1914 to thirty-three and one-half
billions January |, 1920. Loans and
discounts rose from fifteen TO twenty
five billions in the same period. This
credit financing necessltated issuing
bonds and other forms OF government
Indebtedness OF over thirty billions
since April C, 1917
.
necessary TO meet the emergency and
created vast credits often by unsound
methods because results had to be
obtained quickly.
After hostilities the banks found il
necessary TO eliminate all unsound
principles in banking. This was not
brought about as speedily Us desired.
All businesses, eager to take odvant-
age Of great opportunities following
the war. made enormous demands on
the banks ami while the people were
on a borrowing and spending orgy
bankers are TO be justly condemned
FOR going on a loaning orgy.
In reality the banks have not cur
tailed credit but business has used
up the surply of credit. Credit is
subject to the law OF supply and de-
mand like any other commodity. To
show how the people demanded cred
II. the federal reserve banks alone
discounted through member banks
10 the borrowing public in 1915, sl61,-
$4,000 and in 1919 s7s,sto.73O and Q
similar amount in 1920, an increase
in four years OF over seventy y-nine
billions.
Prices had reached point where
the people refused TO pay without
protest that at last shook the sheckles
from the public eye. After sending ou
many unobseved warnings TO confin,
loans TO necessities and cut out ad
vances and speculations, the fedora
reserve bank issued an order estab
fishing base line for each membe,
bank up 20 which they could redis
count al the preferred base rate bu
beyond whicA they were severely pen
allied. The purpose of this order wa
10 reduce thgir discounts and check tn
abnormal demand for money. The,
were successful in both as man,
banks found themselves over1iscounte,
Us 70 their base line, the penuliza
ton forcing them into heavy liquida
tons, and member banks made n
(urther demands FOR speculation 0
non-essential purposes
In order 10 meet this demand IN
larger banks called loans with m
smaller ones and the small banl;
called on the rank and file that mad
up their portfolio. Merchants foun
their shelves loaded with goods pun
chased at high prices. The farmer
suffered nhst as he was contronte
with an nnsold crop and no read
cash. Deflation set in. Prices con
mencod TO fall. Merchants unloade
quickly but farmers held for recoN
ering prices wAich dil not recove
Banks are thus criticized .or the fal
ing prices when ia fact they shoul
only share the blame.
The federal reserve banks soon u
ter the war found their reserve rat
In q condition TO stand the plac
ment OF several billions. Natural
they released vast sums for indn
trial requirements. II tie banker 10
his sense OF values tho public d
likewise as thry continued 10 d
ncrd --onter prctact.oA .s.aftle
of tho price.
We are only returning TO Il
rormal through natural channels n
JOY ride IS over, We are getting In
our old clothes and tightening up Z
belt to flt the new conditions. tn
return TO normal nay be traInpii
on our rVes but We knew Il had
come and after all. with our Va
natural resources and financial pow
TO develop them. we not only Ia
no cause for alarm, but can feel
cure IN the best industrial position
the world
In the mattpr Of the Eedefri