The Birmingham age-herald., 1921-07-12
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 OlLLlsUL Ul UUHNU |SD|SAPPO|NT|NGT ID SOUTHERN SENATOR
HefIin Says Body Should Have Allowed Banks to Carry Farmers as It Did
 Once Before
By HUGH W. ROBERTS Washington Bureau The Age-Heraid
 300 Davidson Building

washington Bureau The Age Herald
 500 Davidson Building
 Washington. July 11.-(Special.l The silence of the officers of the federal reserve board in a distinct disappointment to the several south ern senators who have mercilessiy flayed that board. In a series of in tcrviews today, this correspondent learns that the senators are secure in belief that all their charges were preferred in good faith, and not sole ly because it is good politics" to attribute disaster to some constituted authority which "could if it would'' give relief.
 The senators are convinced that the silence of the board is due to the tn- ability of the board to disprove tho case brought against it. They were prepared to make immediate and con- tinuous rejoinder had the board se- lected to defend itself.
 The senators had even prepared attacks against the claims of the board, that 1t had avert ed the most disastrous panic in the history of the country, and that It had lent more. money to the agricul- tural south and west than ever be- fore in it's existence.
 The Real Panic
 The argument of the Senate would have been that while 1t Is true that the federal reserve board averted Wali street panic. 1t failed to eN- tend aid to the stricken south and west with the result that in those sections a producers panic of unpre- cedented proportions does actually exist.
 The Senate was prepared to de- clare it's belief, also, that the pulk of the money lent the agricultural sections, ,>of the country was in the form of Liberty Bonds, bonds whlch the patriots of the country bought with the promise that the govern ment would "carry" them until paio for. These bonds, according to the several senators who have bitterly proceeded against the board, cannot he redeemed at their face value, even to relieve the most acute distress, anu cannot be utilized in securing loans from private banks, or members or the reserve system.
 The greatest offense of the board in the opinion of the senator's Was its failure to hold out helping mana when such action, in their oplhioi' would have made it possible TOT tue farmers of the country to have saveh themselves.
 HefIin states Case
 Tn this connection, Senator Heflth of Alabama said: Some years ago, shortly. after the establis shment ol the federal reserve system, there Was distress in the south. But the ooard q permitted the word to go out tha' the banks would carry the farm would not, in other words call their loans. The period of distress was short.
 "In the beginning of the present emergency. the board should have again sent that word to the farmers
 and suffered the banks to carry them This would have stabillzeu conditions, and cotton would nave maintained a value of 20 cents pc. pound. The farmer would easily nave jiouidated, although he would nave made no money.
 But the board issued no such eh- couraging statement. On the olnsf hand, the rate of interest creased from Az and 5 per cen. There was always the intimatlon that loans would be called, forcing the dumping of cotton on the market. Tn their dilemma, the farmers, feartns the worst did dispose of their cot ton at heart-breaking prices.
 Rate of Interest
 .At the present time, the word le heard that loans will be called. ooine loans are being called in the sou.n, The rate of interest on comheIoia' aoar has heen reduced. but not on farmers' paper. The legal rate Of m terest in North Carolina is per cent The hanks cannot lend federal re serve money, secured at per cent, ir North Carolina. In Alabama, ana otber southern states, the interes, rate is per cent. The banks VII not lend secured federal reserve money at per cent and assume all risks in lending 1t to farmers At a profit of only 1 per cent.
 The most interesting cnaIs brought against the board py oenas.i HefIin was contained in a senate .neech last week. He declared that Wall street speculators were secur- ing enormous sums at low rates or interest, whereas small country banks. the chief business of which IS with farmers and merchants, are charged from 25 to STA per cent, lie declares that he has information that one banking firm in Wall street dis trict, has secured more money from the federal reserve system than 4,ooo smaller banks in a certain agricul- tural section of the country.
 
 It was only a few short months ago that democrats were contending that the establishment of the Nd- eral reserve system, as check against the operation of panic pro- dueers of Wall street, was the great- est achievement of the democratic adminis stration of Woodrow Wilson. They still so contend. The system they say, is wonderful. But its ad- ministration Is subject to the most seyere criticism, in their opinion There is an intimation, also, that the succession of the republican adminis- tration has had much to do with the continuation of thu present policy. Senator Simmons of North Carolina, declares that the Secretary of the treasury, and the comptroller, are di- rectly responsible for the policy, certainly for it's continuation and per petuation.
 There is a-yeiled charge, also, that the reserve board is playing with Wall street, and not operating as a check to Wall street. It IS insinua- ted also, that in effect the repuDH- : can idea of a central bank, patterned after the Bank of England, prevails. rather than the democratic Idea or regional system
 The great majority of senators rep- ,..artinr the agricultural districts have criticized the policy Of the hosrd Senator Carter Glass of vir- Siria. author of the federal reserve sct1 and former ex-officio chairman l ce inc board. has said nothing. Sem l ator Oscar w. Underwood has con | fined his criticism to the expression -s h;. on,nion that deflation, al-