The herald and news. [volume] (Newberry S.C.) 1903-1937, 1922-04-25
FEDERAL RESERVE
ATTACKED BY JORDAN
Secretary of American Cotton Asso-
citation Writes of
Deflation
70 the Editor of The State:

country during the past IL monLns
has resulted in striking down the
prosperity of American agriculture
and left the farmers OF the nation
bowed under the burdens of stupen-
dous debt, and unable to revive their
former activities in crop preparations
and production. The losses of Am
erican farmers and the debated va
lues of farm products through enforc-
ed sales upon stagnant markets are
estimated to be $12,000,000,000, or
equal to practically the entire cost
of the World war to this country. The
losses forced upon the cotton growers
of the Southern states during this pc
riod of time on the production and
marketing of two cotton crops are es-
timated at S2,300,000,000. These
enormous losses are largely repre-
sented in unliquidated obligations in
the form of notes held by local bank
ers, supply merchants, fertilizer COM
pnaies and other business institutions
as frozen assets. These losses do not
include the sacrificed sale of Liberty
bonds, loans negotiated on life insur-
ance policies, the heavy depreciation
in farm land values and improve
ments, nor the large number of bank
ruptcies which have occurred in the
agricultural sections.
Saddled with these unprecedented
losses and debts, with market values
of farm products continuing below
the cost of production, the rehabilita
ton of American agriculture becomes
matter of deepest concern, not only,
to the farmers, but to the entire ma
ton. The nations commercial life
can not rebuild so long as the basic
industry is foundering in the quag-
mire of unprecedented financial de-
preston.
The policy of the federal reserve
banking system as announced by
Governor Harding of the federal re-
serve banking system as announced
by Governor Harding of the federal
reserve board wnen the campaign of
artificial dehation was inauguarated
in 1920, was that the federal reserve
act did nto permit the rediscounting
of paper secured by agricultural COM
modities being held for higher prices
becadse such practice would be in the
nature of speculation. He further
stated in reply to appeals made to
him by representative farmers from
all sections of the nation in the fall
of 1920, that the reserve act only per-
mitted furnishing fnancec for pro-
duction purposes alone, and he has
recently again confirmed this policy.
This can only mean that when sta
pie farm products are harvested they
must be at once dumped upon the
markets of the country without re-
gard to orderly selling or whether
such markets are below the cost of
production are in condition of stag
nation. 1t is manifest, therefore,
that the federal reserve banking sys
tenn was created, and is being admin
istered, for purely short term COM
mercial banking and should have no
place in supplying needs of agricul-
tural finance.
There is at this time an impelling
necessity for the speedy creation by
congress of a broad and liberal short
term agricultural credits act which
will meet the needs of farmers for
both productive and orderly market
ing purposes. The system should be
completely divorced from short term
commercial banking and the control
of the federal reserve banks. Nation
al officials of the American Cotton as
sociation have for months been in
consultation with senators and con-
gressmen relative to the vital aeces-
sity for such legislation in the face
of existing conditions and the policies
of the federal reserve board. Our
national law makers are now thor
oughly aroused over the matter, and
Senator Simmons of North Carolina
has recently introduced bill, en-
titled the agricultural credits act of
1922" which, if speedily enacted in
to law, will establish a federal bank
ing system of short term agricultural
| finance that will not only supply the
needs of individual farmers for loans
running from six months e. three
years, but also farmers cooperative
marketing associations which are now
being so rapidly organized through
out the country for the more efficient
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