The Mt. Sterling advocate., 1922-10-10
General Review OF
Banking Conditions

Bankers Association, Eugene Meyer
Jr., managing director of the War Fl
nance Corporation, outlined his views
regarding a nationwide policy for ag
ricultural financing
"The keynote of our national pol
ICY" he said, should be the develop
ment Of the usefulness of the federal
reserve system to the maximum. New
machinery should be held to the min
imum. II would be uneconomical and
unsound-it would be the height OF
folly-to set up other agencies for do
ing the things the system can and
should do.
Agricultural financing" continued
Mr.. Meyer, must be based, first OF
all, upon the fundamental facts OF
American agriculture and, second, up
on the existing economic and finan
cial structure Of the country. Not to
meet the first requirement is to force
agriculture into the impossible posi-
tion of endeavoring to make produc.
ton and distribution conform to bank.
ing practices. Not to meet the sec.
ond is to weaken, rather than strength
tu, tHc HHduCldl iHdCuiucIy VI TIE nd-
ton.
Those who object to adjusting the
eligibility rules of the federal reserve
system to the time required for the
orderly marketing of agricultural pro-
ducts seem to fear that the sound
ness of the system will be jeopardiz-
ed. But the system suffers from
friends as well as from foes-those
who defend its every act and policy
and who stand for the immutability
of its present law and regulations
may be as harmful as those who are
extreme in their denunciation of the
part played by ii in the collapse of
cOmodity markets and prices. The
true friends of the federal reserve
system are those who are willing to
see its machinery adjusted along
sound lines to meet changed condi-
tions, both in this country and abroad.
"The acute phases of the agricultu-
raj crisis of 1920-21 are now happily
pa ssed The aftermath, in the form
OF a burden of debt on the farmers
and stockmen, still remains and some
thousands of banking institutions in
the country districts are still in an
over-extended condition. But prob
ably at no time in our history has
there been so rapid and extensive an
Improvement in our economic condi-
tion as during the past eighteen
months. The position of the farmer
and stockman has been immensely
strengthened, the harvest prospect is
favorable, and. although there were
declines recently in the prices of
some commodities, most staple farm
products are considerably higher
than they were in the summer and
fall of last year.
Now is the time to determine the
features of our recent experience
which may properly be classified as
unique and, therefore, unlikely to re-
cur. and those which may be attrib-
uted to definite changes in our eco
nomic position, internally as well as
With exact knowl-
edge of the facts and with a thorough
of the complex forces
that have been of chief influence in
the crisis, we may hope to arrive at
sound conclusions as to what modifi-
cations are necessary to adapt our
banking methods and machinery to
the needs of agricultural finance"
Mr.. Meyer pointed out that the cri-
sis served to emphasize one outstand-
ing fact-the need for the more grad
ual marketing of agricultural pro-
ducts, with longer term financing to
correspond with this slower process.
PROFESSIONALLY" he said, "it would
have been advantageous, even under
pre-war conditions, to market our
products more gradually. Under pres
ent conditions, ii is more than a mat
ter of advantage-it is an absolute
necessity
1T is idle to designate as specula-
tion the carrying of agricultural COM
modities by farmers or farmers or
ganizations for orderly marketing, or
osay that by forcing the products
out of the hands of the producers
speculation will be avoided. Some
body must carry crops between sea-
sons. When an agricultural product
has been produced, either the con-
sumer must buy it and carry it until
ii is actually needed, or the dealer
who supplies the consumer must do
so, or the jobber must stand between
the producer and the manufacturer
who ultimately takes it for distribu-
tion TO the consumer, or, going back
still further, the producer himself
must find ways and means of carry
ing his product and marketing ii
gradually.
paper based upon the security of
nom perishable comodities should be
made eligible for rediscount for the
length Of time necessary to market
a seasons product before the next
harvest The view seems to prevail
In some quarters that paper in order
to be liquid must have a maturity OF
sixty to ninety days. But sharp
should be drawn between
bank paper and the ques-
ton of the liQuidity of the security
that underlies bank paper, long or
short. Long time paper may be
more liquid as to security than short |
time paper. During the past year II
was clearly shown that commercial
paper depends for its liquidity on the
orderly buying of the manufactured |
goods, and that this orderly buying, |
N turn. depends largely upon a pur-
chasing power based upon the order
y marketing of our basic agricultu-
al products. Indeed. If our late ex-
established any definite diff