The Mena weekly star., 1921-02-24
WORLDS FATE
 HANGS ON Us.
liability of Europe Depends Cn Amer ican Bankers, Governor Harding De- clares-FOreign Countries Are
 Hard Pressed.

IdIu I ItNSCu-
 Washington, Feb. 16.-War-t ex- penditures and the profound modifi-
 ations of the country's economic sys- tenn made it imperative, Governor Harding informed Congress today in the annuaT report of the federal re- serve board that the utmost care be taken to conserve our credit and pre- serve the basis of our prosperity" to avoid the extreme conditions prevail ing in other countries.
 "Upon the United States, in a large measure, the governor declared, "the solvency and financial stability of many other countries depend. This | fact greatly increases the responsible | ity which rests upon the American banking system and calls for the exer- else of sound judgment and the stIct observation of sound financial and economical principles"
 In readjustment of business the country, Governor Harding asserted, is geneally recognized as having passed the crisis and in looking to the future, " spirit of greater confidence prevails" As the year closed, he said, there were many indications that business generally was beginning to adjust itself to new conditions and was preparing to proceed on sound CT and saner business"
 Because of the accumulation of for eign commodities, however, for which ] there is no market" the governor con- tinued, countries which have been sending us their surplus products find they have nothing marketable with which to pay for their imports from us"
 May Lose Trade.
 "We find ourselves, therefore," he maintained, with large export trade which is being paid for only in part | by great portion of the world and this trade is fast approaching a point where it may be cut drastically to the most vital essentials unless the normal credit and buying power of Europe can be restored"
 This rstoration, he added, is only possible if American raw material goes forward steadily over an extend ed period against longtime credits. ! Foodstuffs, he said, should be prompt ly paid for, as they go into immediate consumption.
 We are, therefore, face to face, Governor Harding continued, with l the problems of how we can best ex- tend long time credits to European countries in order to enable them to reconstruct their industries and how we can extend credit to other coun- tries in order to enable them also to make shipments to Europe which oth- erwise would be made to the United States and glut our domestic market. !" By means of corporations organized under the Edge act for financing for eign trade, the governor contended longtime credits may be granted to finance exports not only from the United States, but from foreign coun- tries as we'll All these operations he described as necessary for the so- lution of the present world problem.
 Opposes Government Aid.
 Financing exports to Europe thru credits extended by the government was considered by Governor Harding to be wartime expedient. Subsequent to the armistice, he ex- | plained, "export trade amounting to about 2,000,O00,000 was financed thru credits extended by the treasury de- partment. These credits were an inn ] potant facto in the maintenance of our foreign trade during the first half of the year 1919, but it was recog- nized that methods of financing adopt ed under the stress of war should not be continued as a permanent peace policy for the funds necessary to make such credits available must be raised either by taxation or thru loans." | Gross earnings of all federal reserve banks combined, the governor report ed increased from $102, 2,000,0 900 in 1915 to $l8l, 100000 in 1920. Over S2 per cent of these arnings came from paper discounted for member banks, the average daily holdings of which az gregated 2,540000,000 during 1920 was compared with Sl,S90,000 900 in 1 I19.
 Operating Expenses Grow.
 Operating expenses of the member banks continued to increase during the year, he explained, chiefly because of the increased volume of businss trans acted.
 Rediscount operations between fed eral reserve banks, including bills pur- chased from other federal reserve banks during year amounted to $3,676- 729000, as compared with $2,65S, ,240,- 900 in 1919 and $660, ,638, ,000 during the year 1918. Adding to these trans actions, the bills purchased and allot- ted to other federal reserve banks by the federal reserve bank of New York the governor said the total inter-dis- triet movement of bills during the year aggregated $4,503, ,6S6,000, as com pared with $3,397, ,752 ,000 for 1919 and $S35 ,49S, ,000 for 1918
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