The Big Sandy news. [volume] (Louisa, Ky.) 1885-1929, 1922-02-03


count rnfes III All was ID check n dan
ce,,,ue ,,fation ma M, M mako a
nront Tor ire reserve hanks
Those institutlons are moi operated
for praat, As the Term 4 usually un-
derstood Thar canital stock "A held
nv the member hanks and dividends
are limited 10 per cent All profits
above ner cent ara turned into The
Natlonai rr.aa .ur,, paJ.Irg f.a "a
discount ratss aid af course Increase
the nrof,ts ~ the Federal Reserve
hanks which maant increasing the
revenues az The Government "A
II is charged tbat Federal Reserve
Ranks dlscriminated ayains, agrlcul.
tural naner but 4 have seem No evil
dence ID sunnort the charge II n trne
that many farmers and stock raisers
needed long time credit-nine months
or year-which the Federal Reserve
Banks are wisely forbidden by law 70
extend. But as to paper which they
are permitted 10 rediscount there was
no discrimination against agricultural
paper.
Naturally the Federal Reserve Banks
were rediscounting much more paper
at New York than at Atlanta or KAN
sas City because there was much more
paper there to be rediscounted. A
great number OF the local banks In the
agricultural regions are state banks
which do not belong TO the Federal
Reserve System and cannot therefore
rediscount paper directly at Federal
Reserve Bank, Such banks manage
their reserves and rediscounts ON the
nlas that ATTAINED hafcra the reserve
system was inaugurated--that Is. they
keep certain proportion OF their re-
serves on deposit with d national or
state bank In Atlanta, Omaha. MIN
neRpoiis. Chicago or New York, and
when they require credit they turn 10
their city bank for 1t.
Pressure From The Treasury.
As a rule such nonmembar con,,rv
hanks keen two raser,,o ac.o,,n,. 80
In the nearest commercial cantor ora
one in New York or cb,cag, II,
pinch such banks borrow from their
city banks bur In aImns, everv case
the city bank il 3 member 81 The Fcd-
eral Reserve systam ana 4, a. ,,,r,
borrows from the Federal Reserve
Bank in Its city. Tins n MN fton, ,ha
country falls with Cumulative force
upon the Federal Reserve rnnits ~ tba
big reserve cities In Inc Kansas c,tx
region. al least until the nrogrsss,ya
discount rate was nut INFO effee, conn.
try banks. even though thew wara nne,n
bers OF the Federal Rescrve sys,aw
very generally radtscauntad 4, ,hafr
civ hanks lnstead ~ ~ ,he Fadas,l
Reserve BANK ana lat Tho clt, harL
hand tho load on 10 Tho radaral Isa-
serve. Tint was the way they had
been used 10 borrnuinr NM; ira, i.,.,,
Il up.
The experlence OF Tho Iaat haIf 81
1920 has often haen deacrIhaa - a..
worst Calamity IN the Iynit-
cd states Ineyitahly the .tra,r fau
upon the country banks. / think there
Is no doubt that there would have
been many country hank failures ex-
cent for ire helm extended nv tho Fed.
eraI Reserve system. In view Of tha
sit,tation country hank failures were |
few. Apparently the FEDERAL Reserve
Banks permittcd no really soften,
member bank 10 fail
Perhaps IL il human nature 10 look
TO ones INJURIES rather thnn 10 ONES |
benefits. Many applicants vera de-
MED further credit. there was much
ana much criticism. Ineyitab-
~ the blessed old tribal tomtoms Of |
'sWau Street. and "Big business" wore |
dragged out ana whached iustilv AL
n matter OF fact liouidatl.n Al New
York was rs drastic ns elsewhere. The
Federal Reserve Banks are moi per.
mitted 10 rediscount stock market ma |
per--paper secured by stocks and
bonds. other than government honda /
In fact the reserve system served tho /
country well through defiation. The |
one consplcuous BLOT on lis record 4
believe. Is that II failed 10 raise redis- !
count rates untll pccember ials Th.ye |
seems no doubt that failure r. trace
able 10 political pressure from the I
Treasury Department. which wanted
an easy money marker whiIe itE hin
financial operations were carried OUT
The Treasury would have done better
Il Il had mid somewhat more for the /
money II borrowed.
The agricultural calamity furnishes
nearly ali The Ammunition for attacks
an the Federal Reserve system In
General the obvious purpose OF the At
acks Il TO gel mora politIes into the
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