Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-08-08
Federal Reserve Facts
IN HIS authoritative and admirable speech

IN HIS authoritative and admirable speech
on "The Truth About the Federal Re-
| - serve SYSTEM" Senator Carter Glass, OF
Virginia, disposes once for all of the idle tale
| that certain Reserve banks have charged, on
occasion, "extortionate" interest. Some per-
sons may have been 2misled by not understand
ing the so-called progressive interest
| provision, which was not part of the original
| Reserve measure but was added, about three
| years ago, by a special act of Congress as
| penalty upon any bank which might persist
| in borrowing more than its fair quota of
Federal Reserve funds and in so doing de-
| prive others of their rightful accommodations
| Senator Glass properly observes that if Con-
gress did not wish this to be done, cit should
not have authorized 1t to be DONE" AS a
fact, however, the penalty, which was design
ed as protection for the interests of the rank
and file, was resorted to by only four of the
twelve Reserve banks, and by them was ap-
piled to only a few borrowing banks who
were "incorrigible offenders against caution
and safety. Further, in the four districts
where the progressive" rate was occasional
ly imposed, the average rediscount rate
charged by the Federal Reserve bank against
the great body of borrowing banks was much
below the rate charged by the borrowing
banks against their own customers"
So much for the broad truth Of the case.
AS touching the solitary bank, somewhere in
the Atlanta district, which has been pictur-
ed as a victim of "extortionate" Reserve
charges, Senator Glass points out: "This
bank was far below it's lawful reserve for
eleven months out of the twelve. 1t ex-
ceeded it's basic line of credit nearly ten
times. Ninety per cent of its capital was
loaned on notes Endorsed by its president.
1t was penalized under the act of Congress
in order to restrain it's excuses and to COM
pei it to get back in line. 1t could not have
complained fairly had it been put in the
hands of receiver" It appears, moreover,
that despite all this, after the offending bank
had ceased its abuses, the amount OF the
"progressive' rate was returned it.
1t is anything but good turn to the in
terests of merchants and farmers and the
people generally to misrepresent an institu-
ton that means as much to their financial
security and their prosperity as does the
Federal Reserve banking system. Why not,
instead of magnifying and distorting such a
minor detail as the progressive" interest
charge, show something Of the great and
manifold services Of the Reserve banks? Why
not tell what they did to avert ruinous pan
ic amid the stresses of world war? Why
not relate that in the period of sinking re
actions which followed peace they expanded
(not, as is sometimes enormously said, en-
fettered) credits and currency? Why not
gratefully acknowledge the good of this and
similarly helpful policies, particularly to ag-
ricultural regions like the South? Thought
full friends of business and Of farming inter-
ests, far from belittling the value Of the
Federal Reserve system, will do their ut
most to impress its true meaning upon the
public mind and to bring within the pale of
it's protection and service those banks which
now linger without.