The state herald., 1921-01-25
Governor Harding Says Reserve
Banks Increased Instead Of
Restricting Loans.
FIGURES REFuTE CHARGES
More Than Two-and.a-HaN Times a.
Much Paper Was Discounted In
Eleven MonthA Of 1920 a. In the
Year 1o1e-Report to 0ronna.

Washington.-More than two and
one-half times as much agricultural
paper was rediscounted by Federal
Reserve banks In the II months down
to December l, 1920. as was redis-
counted during the entire year OF 1913.
according to estimates furnished by
Governor Harding Of the federal re-
serve board to Senator A. J. Gronna,
chairman Of the senate committee on
agriculture. The estimates furnished
show that farm paper rediscounted
last year amounted to almost $2.OO'-
100000. The estimates are: 1920. $l.-
96O, ,033. 900; 1910. $720. .2GG, 600.
The farmers have been complaining
that Federal Reserve banks discrimin-
ated against them, and instead OF
making credits to the growers more
elastic, actually restricted loans.
Treasury officials have consistently
maintained that credits were not re-
stricted but were greatly increased.
Nevertheless, the farmers have insist
ed that they have been Disseminated
against, and on this contention they
have based their demand for a revival
Of the War Finance corporation. The
bill reviving the corporation has been
passed by congress.
More Loans Than Ar TabuIatsd.
In his letter to Senator Gronna.
Governor Harding intimates that while
his figures are merely estimates based
on the production and sales Of farm
products. undoubtedly much more
money than IL tabulated was actually
loaned to the farmers. He writes:
"In compliance with the request
made In your letter Of December II
for Information regarding the amount
Of actual agricultural paper redis-
counted during the years 1919 Qnd
1920 Ito date). based on agricultural
production md sales Of the respective
years, l have the honor to submit here.
with copy Of tabular statement COM
piled from telegraphic data received
from all Federal Reserve banks.
Section 13 Of the federal reserve
act provides that notes, drifts and
bills drawn or issued for agricultural
purposes or based on live stock hav-
ing maturity OF not longer thnn six
months, are eligible for rediscount by
a Federal Reserve bank. the limit Of
maturity In all other cases being 90
days. The Federal Reserve banks re.
discount large amounts Of agricultural
paper which has n maturity not ex-
ceeding 90 days. but such paper is
classified with other paper Of like ma.
turity.
therefore, agricultural and live
stock paper. as shown by the Federal
Reserve banks, applies only TO paper
having n maturity Of longer than 90
days. The board receives this lnfor.
nation from day to day and the
amount Of agricultural discount at
each Federal Reserve bank. that II,
paper having maturity Of from nine.
~ days to six months, is published
each month In the Federal Reserve
Bulletin.
"Thc special figures furnished BY
the Federal Reserve banks In accord.
nncc with your request are In nll cnscs
estimates. no exnct figures Of the total
volume Of lonns for agricultural pur.
poses being available mt the Federal
Reserve hnnks. In the FIRST place. most
Of the borrowings at Federnl Reserve
banks by member banks during the
year 1919 and considerable proper.
tion Of these borrowings during the
current year have been In the form Of
the borrowing banks own notes, se-
cured BY government obligations or BY
commercial. industrial and agrlcui.
turai paper. II il known that member
banks In New York city have made
large loans 10 their correspondent
banks throughout the country. and Il
Is reasonable to suppose that part Of