Norwich bulletin., 1922-10-27
SEC'Y WALLACE SAYS
The Farmer. the War Finance Corpora

The Farmer, the War Finance Corpora
 tion and the Federal Reserve Board
 Referring to the demands which led up to the revival of the war finance corporation and which resulted in provid- ing for agricultural representation on the federal reserve board, Secretary Of Agriculture Wallace. speaking on the agricultural situation at Manhattan Kansas Thursday said:
 During the winter of 1s2a-31 and the following spring. there was a per sistent demand by the farmers that the activities of the war finance corporation be extended and that agricultural rep resentation should be added to the fed eral reserve board The experience of the year preceding convinced the farmers that agriculture was not being fully considered in the administration of our larger credit machinery, especially by the federal reserve board. They were convinced that the effect of some of the policies of the board was to depress prices of farm products They knew that the board had helped inflate prices and they felt that it had a good deal to do with defiating farm prices.
 Congress needed the demands of the farmers and in August, 1921, enlarged the activities of the war finance corp oration, and later provided for agricul- tural representation on the federal re- serve board. The story of the war fin- ance corporation is interesting. It was created originally to help finance exports. | In the spring of 1920 the secretary of the treasury suspended its activities. When farm prices began to crumble later in
 the year efforts were made to per suade the administration to revive the corporation, but without success, these ] efforts being denounced as agitation to maintain prices,
 1 When congress met in December it l promptly passed a resolution directing { the secretary of the treasury to revive | the war finance corporation. This reso- lution was opposed by the secretary and when passed 1t was vetoed by Pres ident Wilson. Congress promptly passed 1 the resolution over the presidents veto, but the corporation did not function ac- lively until the new administration came 1 in in March. 1921. Later in the sum
 mer congress authorized the corpora 1 tion to carry financial help directly to | domestic agriculture. This help was | given through the banks It has to be. 1 There was no time to set up the ma''
 elrinery for loaning to individuals Banks l in agricultural states were overloaded with farmers notes which could not be paid without great sacrifice. The war finance corporation took these notes from the banks as collateral for loans. This I relieved the banks, enabled them to car
 " their farmer customers and to loan more freely Within a few months i 1000 loans were made to banks in az riouhural states. amounting to more than i $200, ,o00, 900. SS4,0o0 900 was loaned dS-
 rect to live stock companies and banks
 upon live stock security. S64,0oe,ooo
 was loaned direct to farmers co-operat- 1 i've marketing associations.
 This stream of new money flowing in- to the agricultural states helped in two ways. It relieved the financial tension and undoubtedly saved hudnreds of
 banks from going into the hands of re- ceivers and thousands of farmers from going bankrupt. Also if brought re-
 newed confidence. Money at once be- came easier to borrow The sanrinctne of grain and live stock was in part checked. The hope of the farmers was renewed.
 If the activities of the war finance
 corporation had not been suspended ir Il 1920 it is reasonable to believe thai prices of farm products would not have
 dropped as far as they did. It is not
 fair to say that all of the trouble
 would have been averted, but certainly
 some of it might have been avoided. Under the law as it has been amend ed by congress, the appointed member.
 of the federal reserve board will repre-
 sent not only banking, but agriculture commerce and industry. The surprising thing is that this provision was not mad, , when the board was first created. Tn,
 policies of the federal reserve board cal
 make or unmake industry and business :, By administering credit the board cal increase or decrease prices, make eas,
 money or tight money, make high inte rest rates or low Interest rates. It i : one of the powerful Of government in l-stit4tions. Consequently 1t should b