The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1921-12-25
Federal Reserve System
May Play Important art
in Impending Campaign

times through which we have passed
{ wish To avail myself OF this op-
portunlty TO say word Of com
mendation OF the manner In which
the officers and directors OF the
twelve federal reserve banks have
performed their arduous duties and
Of their skill and courage in dealing
with the many grave and complex
uonal in scope, with which they
have been confronted during the
acute world crisis, which happily
vs. now a thing OF the past so far az
'his country is concerned"
Defends Its Administration.
Governor Harding sttll defending
the administration OF the federal
reserve system then went into "A dis
cussion of what he regards as the
cause OF the present depression, re-
viewing the period OF speculation,
| high wages and high prices for COM
nodities
During the year 1920. when these
drastic changes in price levels We're
/ taking place. the total earning as
sets OF the federal reserve banks,
| which include rediscounts for mem
! Der banks, increased from 5000
J 100000 at the end Of January to S3-
! 396,000, 600 at the end of october"
! he said. At the same time there
! was not only no contraction In the
/ federal reserve not currency, but
on the contrary there was an almost
! of federal reserve notes in CirCula.
! 81 S44000,O00 on January card to
$3,404, 100000 on December 23rd,
! t920. a record high mark.
rl L., tn
pressed upon the minds Of the pub
lie, for the reckless and unwarrant-
ed statement is often made that the
federal reserve authorities delibcr-
ately set out TO bring about defla-
tion and to accomplish this purpose
caused sharp curtailment OF credit
and drastic contraction of currency.
"The events of the past two years
have demonstrated that there Is no
continuous increase I'm the volume
unalterable relationship between
commodity prices and the volume OF
credit and currency. II is not the
function of the federal reserve
system nor any banking system to
attempt TO fix or control prices ana
Federa Reserve discount rates have
have never been established with
that idea in view Banks should be
as the security of their loans may
be involved and they are interested
more i'm the stability of prices and
their margin Of collateral than in the
price level itself Banks do not ere
ate general conditions but they must
adjust themselves to changing condi-
tions, which, in recent eventtul
months, have been brought about by
unseen and Irresistible forces
throughout the world.
"Tarly in September there was
much rejoicing throughout the
southern states because of the
marked advance in the price Of cot
ton The advance is not due to any
Increase in the loans OF The federal
| Reserve banks nor to any eXpan-
| sion of the currency. As a maatter
OF fact the amount of federal re-
| serve notes in circulation on sep
tember Is, when cotton was selling
at about 21 cents per pound, wa
about $500. 0O0. 900 less than whef
cotton was selling at IL cents
pound early last spring. The ad
| vance in the price OF cotton wa
due to economic causes and TO th'
Ioperation of the inevitable law OF
lgupply and demand. After the re
| mort OF the department of agricul
ture early in September the worI'
awakened TO the fact that the pres
sent cotton crop is abnormalN
small, and it was thought at one
fine that less than seven Diilol
bales would be produced, AS IN
g!nners' reports were made, IL De
CAME evident that the department
Of agriculture had underestimate
The size Of the present crop OF cot
ton and the price declined or
cents a pound. ,.,.
This decline took place notwlth
standing the reduction which wa
made about the same time in IN
discount rates Of all federal reserV
banks. including those In the south
The fact should be emphasized ina
the net advance which has taKel
place In the price OF cotton has bsel
duc not to credit or currency hu
rather to the deflation OF the antic
mated supply of cotton ana TO th'
probability of increased consump
ton" ....,.,,
There were several thousan'
words more Of defense OF the ad
ministration Of the federal reserv
system in Governor Hardihg
sneech. and it was delivered IN
manner indicating that tho boar
, would be ready to defend ltseh
: tho campaign next year.