The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1921-09-23
GOVERNOR HARDING
MAKES ADDRESS AT
CHARLOTTE MEETING
Says Gloomy FOrebOdings of
Last Winter Regarding Bank
ing No Longer Justified.
PASSED ACUTE STAGE OF
READJUSTMENT PERIOD
Future Depends on Agriculture
Developments and Manner
Of Handling Crops.
tBy Tho Associated Prsas.l


CHARLOTTE, n. c., Sept. 22-
Gloomy forebodinga of last winter
with respect to the banking situation
are no longer justified and can be
dismissed, Governor Harding, OF the
Federal Reserve Board, declared in an
address here tonight at the Made-In-
Carolinas exposition.
THE banking situation has great
w improved" Mr.. Harding aaid and
although the process Of readjustment
has not been completed evidences are
multiplying that the corner has been
turned and that we have passed the
most acute stage OF the readjustment
period"
Governor Harding said that in the
immediate future much would depend
on agricultural developments and the
manner in which this years crops
were marketed.
with proper cooperation on the
part of the merchants and bankers, 2
he said those engaged in agriculture
have opportunities and prospects
which were not anticipated q few
months ago and it is Of vital Inn
portance that this cooperation be
given.
TT should be remembered" Gov
ernor Harding continued, THAT in
order to maintain our production we
must push our foreign trade we cam
not maintain our foreign trade on the
basis OF the gold stock OF other ma
tions and some means must be de-
viaed for extending long time credits
abroad or Of interesting American in
vestors in foreign properties and se-
curities in order that the exchange
rate which now runs so heavily against
other nations may be corrected.
"We must continue to buy from for
eign countries those things which they
can produce better or more cheaply
than we can and exchange commodi-
ties with them. IL we determine to
do business with and for ourselves
alone. 1t seems inevitable that we
must reduce our production to meet
merely American requirements"
The recent advance in the price of
cotton was fl no way due to any In
crease ia the loans Of federal reserve
banks or to any expansion In the cur
rency Governor Harding declared.
hut to operation OF the inevitable law
IF supply and demand. Federal re-
serve notes actually IN circulation, he
said, were about s500.0Oo.0o0 less than
when cotton reached its lowest point
last spring
Governor Harding spoke at least In ex-
PLANTATION Of the workings of the federal
reserve system. about which he said there
was "a surprising lack OF knowledge"
Any belief that there was a preordained
contraction OF the currency during 1890
70 reduce prices Is absolutely unwar-
ranted," he said.
1T IS not the function Of the federal
reserve system or Of any banking system
10 attempt 60 Fix or control prices" the
governor continued. Banks are concern
ed with prices only insofar as the security
Of their loans may be involved and they
are interested more IN the stability OF
prices and their margin OF collateral than
tic price level itself
t'There was not only no contraction Of
federal reserve note currency during the
year 1890 but on the ether hand the total
volume 81 federal reserve notes In circuIa-
lion shows an almost continuous upward
trend during that year. rising from s2,-
s4t,0o00o0 on January eS to s3,405, 600. 900
on December 2S, a record high mark
Since that timethe valume Of federal re-
serve notes IN circulation has been greatly
reduced until on September IL. 1921, 1t
stood nt s2.4si, 66l. 000,
"The volume OF federal reserve notes
depends entirely upon the activity Of busi-
ness. They are ISSUED only as need for
them develops and as they become re-
dunant IN any locality they are returned
for credit or for redemption. The fn~
crease m volume OF federal reserve notes
in circulation from 1917 to the end OF
1920 was. insofar as it was not the result
of direct exchanges for gold and gold
certificates, tho effect Of advancing wages
and prices and not their cause AS long
as federal reserve notes are redeemable
Ia gold and the required reserves are
maintained, il y difficult to see how there
can be any initiation of the currency
growing out as the issue Of federal re-
serve notes"