The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1921-08-10
GOVERNOR OF
RESE'RVE BANK
ON TIHESTANI)
Harding De
fends His Policy of
Deflation and Re
striction of
Credits

.CI6uitS
Washington. Aug. A-Credit, pol
hsies of the federal reserve system
Icontinued under exanlinatioc Of a
lcongressienal committee today, in q
continuously stormy atmosphere
iiMsith Governor Harding Of the re-
Eserve board as the sole witness.
The federal reserve board did
Enot create this financial depression"
;Garernor Harding exclaimed toward
THE end OF the day. 1t saw it COM
tlng and got ready to protect things.
land people ought to be grateful it
EdsH SO. Now all we need is cessa-
ftion of pessinaism which marks bad
fumes as foolish optimism marks
Igood times. We al know now ev-
Ierybcdy was going crazy in the
Ehoom during the faH of 1919
This situation IS going to work
Font. There's no comparison between
1.-THE condition a, year ago and con-
Editions today. Take cotton, with g
How yield, and exports picking up,
Banks everywhere are fully justi-
Lied now in carrying loans.
e'An we've got to do is 10 get out
log everlasting pessimisn, and quit
Isaying everything is soing to the
fdogs. Why, a man mas to put up a
igood, cheerful face if he vents
lcredft. You can't talk to the bark
Ter like you Go to the tax assessor" "
/ Previously a sharp passage had
taken place In which Representa-
i've Funk (RepuDhcan) OF Illinois,
Representative Mills (Repubiicanl
Iof New Ysrk and later Governor
Harding participated.
seI'm keenly disappointed" Rep
lresentative Funk said, because t5e
Preserve system has been challenged,
feonplained OF, criticised and charg-
led on the ground that, It has dis
terminated against agriculture and
we've not heard one word rom this
witness rs Z -.
Representative NJ MS ieaped to
ithe fray, I ttaatt the Commits
tsion had Gal Owed John sSske1ton
IsWisltsms. former comp ptrolfer OF the
Icurrency. during two days TO naake-.
charge after charge against the
reserve board and that aSs44lpr sa,S|4 4}f:
Hayding vas entillssaf entilsaf 5a. to eanHR1op es.snlH 2.
13stfes I}if tns pgivillags ilffgssS pf1 81 feE eE
tailed resppnSs falq i
~ T-o,Jfs a Hairs; :lI,;I-
tI'll handle nine, vEasale G3aa{FTnfan}, 3 Il f!! !,
lAnderson ruled that the governoEl
was within his rights
HAS ane reserve board called IN
farm credits?" Mr.. Funk demanded
flater.
/ no. sir, it never has Governor
Harding retorted.
..EIow about the circulars OF the
tSan Francisco reseve bank Mr..
Trunk continued, concerning the
Ipriee Of wheat in 192o?"
"I never heard that before
iaovernor Harding said. '.D;d it
scause break in wheat prices?''
cit had some effect Mr.. Fs;as
lresponded.
f sThe bosrd has cautioned re-
Eserve. banks net to issue circulars,
IGeyerRor Harding continued. It's
1.-THE job of a banker to look to the
value Of his collateral, but TO do Il
lin a quiet way. 1t Is not the func-
ltion of the reserve system to regu-
Hate prices. up or down, but to
Imaintain credit"
| TN general Mr., Harding said,
i"the attitude Of the reserve board
towards agriculture has beer, great
tly misunderstood ana grossly mis-
represented"
.AThe whole trouble with the re-
fserye system In meeting agriculture
demands is that reserve banks Go
mot and can not lend to i.Adiyid-
f1al borrowers" he added. 'Fhc
paper Of borrowers must get into
hands of psember banks before It
tgets to the system. -
I Giving the history of increases Of
lrediscount rates in 1919 and 1879.
Governor Harding asserted that Mr..
iWiiliams, one Of it's chief critics had
participated in the rulings. The
ideal system, he said, would be to
maintain rediscount rates just
fabove the market rates on money.
thus avoiding imitation and yet Of
Ifering practically unlimited credit.
Legal limitations, he said, gov
Termed tho board at all times and
.fcontroI Of credit pof>,es ought and
ibid center upon the II federal
tdistrict reserve banks.
"Curiously I have never heard g
Icomplaint from one bank in the
Atlanta district which Mr.. Williams
charged had to pay 81 per cent on
freserve borrowings" Mr.. Harding
said, "but the board after learning
LOT the extreme instances Of penal
Ities and charges which resulted
from the progressive rate system.
now no longer in effect. did order
money returned to every member
bank in excess Of 1s per cent. The
tamounts were small, about 100000
in the United States, and in the ex-
Itreme Alabama case the total re-
turned VS. s2,281.
7 Governor Harding gave a detail
led explanation of the restraints
Imposed on credits during what he
referred to as the crisis" Geclar-
ing that their principle was that
fof penalizng borrowers who took