New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1921-08-05
End Pessinnisn1
And Prosper, Is
HardiIng's Plea
Reserve Bank Head Advises
congressman All Nation
Needs l. TO Take Cheer
ful View Of Situation
Defends Bureau Policies
Attitude Toward Agriculture
Has Been Grossly NI;arep-
resented, He Declares

WASHINGTON. Aug 4-Credit poll
cies Of the Federal Reserve System
continued under examination of a
Congressional commission to-day, in
continuously stormy atmosphere,
with Governor Harding, of the reserve
board, a. the sole witness.
"The Federal Reserve Board didn't
create this financial depression" Gov
ernor Harding exclaimed toward the
end of the day. "It saw it coming
and got ready to protect things, and
people ought to be grateful it did so.
Now all we need is cessation Of pes
simism, 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
ehe condition year ago and condi-
lions to-day. Take cotton with a low
yield and exports picking up. Banks
everywhere are fully justified now in
carrying loans.
All we've got to do is to get out of
everlasting pessimism and quit saying
everything is going to the dogs. VIM
Il man has to put up good cheerful
face if he wants credit. You can't
taik to the banker like you do to the
tax assessor"
Funk and Mills Clash
Previously 2 sharp passage had takon
place, in which Representative Funk
R,espubllcan, of Illinois; Representative
MINIS, Republican, of New York. and
i"t s1t, Governor Harding participated.
m deeply disappointed" Repre-
sentative Funk said, because the re-
serve system has been challenged. com
planned or criticized and charged on
one ground-that it has discriminatoJ
against agriculture. And we've not
heard one word from this witness"
Representative Mills leaped to the
tray, asserting that the commission had
allowed John Shelton Williams for-
mer Comptroller of the Currency. dur
ing two days to make charge after
charge against the Reserve Board" ana
that Governor Harding was entitled to
common justice" in the privilege of a
detailed response. Mr. Funk told M
Mills to handle your affairs. and ri
handle mine," while Chairman Ander-
son ruled that the Governor was "with-
In his rights"
Has the Reserve Board called in
farm credits?' Mr.. Funk demanded
later 20
mo, sir, it never has" Governor
Harding retorted
How about the circulars of the San
francisco Reserve Bank" Mr.. Furk
continued, concerning the price of
wheat in 1o20?'
Never Heard Of Wheat Circular.
Il never heard Of that before" Gov
ernor Harding said. Didn't it cause
nreak IN wheat prices?"
spondrd. '''h io
"The board has cautioned reserve
banks not to issue circulars" Governor
Harding, continued. "Its the lob of a
pahker to look to the value of his col
IIa "a but to do it in a quiet way.
IL IS not the function of the reserye
system to regulate prices, up or down.
put to maintain credits"
IN IN general, MI. Harding said "the
attitude Of the reserve board toward
a ata, has been greatly misunder
re whole trouble with the reserve
system in meeting Agricultural de,
mands IS that reserve banks do not
ana cannot lend to individual hor-
roWers," he added. "The paner Of hor
rowers must get into hands Of uon,-
tenn" ~ ''o Sys-
Giving the history of increases of
redlscount rates in 1919 and 1920. Gov
ernor Harding asserted that Mr. VIII
.;ai one OF it's chief critics, had par
.lclpateu IN the rulings. The ideal
system, he said, would be to maintain
rediscount rates just above market
rates on money, thus avoiding imitation
ana yet offering practically unlimited
credit. -'''''' ''eu
District Banks Fix Credits
Legal limitations, he held, povernsd
the board at all times, and control If
credit policies ought and did center
upon the twelve district reserve banks
"Curously, | have never heard a
complaint from one bank in the At
lanta district which Mr.. Williams
charged had to pay 81 per cent on re-
serve borrowings" Mr.. Harding said.
.nut the board, after learning of the
charges which resulted from the mo-
sresslve rate system, now no longer in
effect, did order money returned 70
every member bank in excess If 10
per cent. The amounts were small
about $4,000 in the United States and
in an extreme Alabama case the total
returned was $2,281." '"'
Governor Harding gave a detailed
explanation of the restraints imposed
on credits during what he referred to
as the crisis declaring that their
principle was that of penalizinp hor.
rowers who took out of the reserve
system sums disproportonate to their
own resources. Tables, charts and ex-
plantations were LETT to be dealt with
tomorrow.
Postmistress Does Not