The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-07-07


ers. business men and farmers 10
all sections Of the United States
are awaiting with almost breath
less impotence to learn whether
or not President Harding will re-
appoint w. P. G. Harding OF Bir'
mingham, Ala. as a member OF the
federal reserve board. The reason
for this interest Is that the act Of
reappointing Mr.. Harding. or fail
ing to do so, will indicate what the
policy OF the federal reserve board
for the next two years Is likely
to be.
1t is seldom that the appointment
of one Official occupies such key
position in relation to broad ma
tional policy. The reason IL that
Governor Harding stands for . def
mite credit policy and that factions
which are opposing his reappoint-
ment stand for an opposite policy.
Governor Harding's term expires on
Aug. 10. and SO far the president
has declared that he has not yet
taken up the matter. 1t 10 known
that bankers and business men
have written him urging that he
name Mr.. Harding and that agri-
cultural interests have written him
opposing the resppointment of the
Alabama banker.
The issue is one of unlimited cur
rency issues and extensive credit
for farmers versus restricted cur
rency held absolutely to the gold
standard and restricted credits. The
farmers want the former and Gov
ernor Harding stands for the latter
The events which brought the is
sue before the American people are
familiar to most citizens, but have
been presented under the color of
the opposing prejudices. There has
been bitterness between the fac
lions which on some occasions has
led almost to blows on the floors
Of congress and in committee
rooms.
The boom years Of 1890
brought about a tremendous expan-
sion Of credit through the Reserve
banks which are regulated by the
federal reserve board of which Mr..
Harding has been governor during
and since the war. During the war
the discount rates at Federal Re-
serve banks were kept low by the
influence OF the secretary of the
treasury. The treasury had bonds
to sell and desired to sell them ut
the lowest possible rates of inter-
est. The secretary Is ex-officio
chairman of the federal reserve
board. His influence was strong
enough to keep the discount rates
low. He exefted it because he
knew that If these rates we're in
creased the interest rates the gov.
eminent would have to pay or
bonds would have to be increased
also. With low bank rates, bust.
ness men, farmers and others Dor
rowed more money than they would
If rates had been high and there
fore circulation Of paper currency
rose higher and higher and the vol
ume Of the loans on the books Of
the banks increased progressively
A Change Of Policy.
In the winter Of 1880 Cover
nor Harding announced the email
cipation Of the board from tn,
treasury influence, saying tina
rates would be regulated independ
emily of the treasury bond rate
Rates were increased with the re
suit that within two or thre'
months 81 Zoo, 100000 was squeeze'
out of the stock market. This bill
lion had been borrowed by stocl
market traders to speculate on til
exchange. When their interes
rates were raised they paid pacl
the money and reduced their op
erations. This was the first effec
of the new policy. The billion dol
lars was freed to be lent to farm
ers and productive borrowers.
: Next the board intimated to tn
member banks that they should III
crease rates and reduce loans I
profiteers in food and other essen
tails. Especially was it desired tina
: people who had stored up food t
hold for higher prices and had Dor
rowed money to enable them I
make this speculation should b