South Bend news-times. (South Bend, Ind.) 1913-1938, 1921-08-05
HARDING DEFENDS
FEDERAL RESERVE
CREDIT POLICIES
Is Sole Witness at Stormy SEES
sion of Congressional
Committee.

WASHINGTON. Aug. Credit
policies Of the federal reserve sys-
tenn. continued under examination
OF congressional commission
Thursday in n continuously stormy
a atmosphere. with Gov. Harding of
the reserve board "a the sole wit
ness.
The federal reserve board did
not create this financial depression"
Gov Harding exclaimed toward the
end Of the day. IT saw II coming
and got ready TO protect things and
people ought 10 be grateful ID did
so. Now all we need is cessation
OF pessimism. which marks bad
times as foolish optimism marks
good times. We all know now
everybody was going crazy in the
boom during the fall Of 1919.
This situation Is going to work
out. There's no comparison between
the condition a year ago and condi-
tons today. Take cotton, with a
low yield. and exports picking up.
Banks everywhere are fully justified
now In carrying foans.
Get Out of PessimisIn."
"All we've got 10 do is TO get out
OF everlasting pessimism. and quit
saying everything is going TO the
dogs. why. a man has to put up a
good cheerful face il he wants
credit You can't talk to the bank
er like YOU do TO the tax assessor. -
Previously a sharp passage had
taken place in which Rep. Funk, re-
publican, Illinois; Rep. Mills. re-
publican, New York. and later Gov.
Harding participated.
I'm keenly disappointed" Rep.
Funk said, because the reserve sys-
tenn has been challenged. complain
ed OF. criticized. and charged on one
ground. that il has Disseminated
against agriculture Now we've not
heard one word from this witness.
Rep. Mills leaped to the fray, as
sorting that the commission had
allowed John shelton Williams
former comptroller Of the currency
during two days. 20 make charge
after charge against the reserve
board" and that Gov Harding was
entitled TO common justice" IN the
privilege OF a detailed response
MI Funk told Mr.. Mills TO cha =dls
your affairs. and I'll handle nine.
while Chairman Anderson ruled that
the governor was within his
rights"
Never Called I'm Credits.
HAS the reserve board called in
farm credits?" Ma Funk demanded
later.
no sir. it never has" Gov. Hard
F ing retorted.
How about the circulars OF the
san Francisco reserve bank?" Mr.
Funk continued. concerning the
price of wheat in 1902"
'T never heard that before GOV,
Harding said Did it cause a break
in wheat prices"
1T had some effect Mr.. Funk re-
spouded.
THE board had cautioned reserve
hanks not 70 issue circulars" GOV.
Harding continued. ITS the Job Of
a banker 10 look 10 the value OF his
collateral. but 20 do II in a quiet way.
10 is not the function OF the reserve
system 10 regulate prices. up or down
but 10 maintain credits
In general Mr.. Harding said, the
attitude Of the reserve board toward
agriculture has been greatly misun-
derstood and grossly misrepresented.
The whole trouble with the re-
serve system In meeting agricultural
demands IS that reserve banks do
not and cannot lend to individual
borrowers, he added The paper
or borrowers must set into the hands
Of member banks before Il bets TO
the system"
Giving the history OF increases OF
rediscount rates in 1919 and 1870.
GOV. Harding asserted that Mr. VIII
lians one OF It's chief critics. had
participated in the rulings. The ideal
system he said. would be 70 main
tain rediscount rates just above mar
ket rates on money. thus avoiding
imitation and yet offering practically
unlimited credit
Limitations Govern.
Legal limitations. he held. gov.
erned the board az all times and
control of credit policies ought and
did center upon twelve district re-
serve banks.
"Curiously I have never heard a
/ complaint from one bank in the At
lanta district which Mr.. Williams
charged had 20 pay 81 percent on