Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-05-13
RESERVE BANKS
CRITICS ANSWERED
q,


'etore the school Of economies OF
ne university here Tuesday night
Z. 3. Wellborn, governor Of the
eoeral reserve bank of the sixth
atlanta) district, replied to critics
'no have charged that the reserve
vstem was in part to blame for
ne period Of depression, particularly
, the agricultural districts.
ne said that deflation naturally
oiiowed the abnormal initiation that
ncceeded war conditions and de.
JARED that the only part the reserve
s1nks played consisted in warning
uet!oer banks to be careful in ex-
soi,ulns credits, especially for ar
scies OF luxury. He maintained that
uts was a sound and necessary bus
less policy in a period of extrava-
sahce that economists foresaw
.ouIo be followed by an era of de.
nesslon. But in no instance" he
assisted, did we withhold credit
rom the legitimate and necessary de
uolos OF trade and commerce"
g.. Credit for Farmers
80 TAR as the farmers were con-
srneo, he continued, I'VE at no
uile denied. them credit. In the
L,e summer and autumn of 1920,
snen the price of cotton was fall
~ rapidly, and fears for the fu-
ufe were expressed by those who
arectly represented the farming in
sIests, We issued, in order to allay
ue prevalent anxiety, statements
rom time to time to the effect that
would extend ample credits, and
axe care of our banks in furnishing
uIlos TO their customers for the
urpose of preventing the dumping
COTTON on weak and falling mar
se. shall give you here some fig
Ees to show to what extent the
tianta bank went in order to take
are OF the situation in this dis.
elct. On January /, 1920, our loans
member banks aggregated $685.
$1,000; while. on November 1, 1920.
UT total loans to member banks had
1925, 900.
The federal reserve notes issued
our bank amounted to $165, 0O0,.
w on January /, 1920; and increased
leadlly to $174,000,000 on January
1871. These borrowings were al.
lost entirely for agricultural pur-
oses. Can any one, in the light
lnese facts, assert that there was
restriction Of credits or q contrac.
on OF currency? The Atlanta
Ank, during this time, not only
aned its capital. it's surplus, and it's
eserVes, but. after all it's own re.
ources were exhausted, actually
proved from other federal reserve
anks $69,O00,000 to take care of the
tuat1on in this district. Does this
now that we denied credits, or fail.
TO do our duty to the country in
ais crisis? Does it not rather show
nat we were liberal-extremely lib.
rain extending credits to our
lember banks?
State Banks Burden
THE subject of AGRICULTURAL cred.
mas peen or paramount interest
tne pubic for the past twelve
tontns' and discussion has taken
uoe range. I admit that there has
cen lack OF credits in many parts
{ our agricultural sections, but
sady explanation is to be found of
ais In the fact that most OF the
anks which serve these commune
rs are state institutions and non
MEMBERS of the federal reserve sys-
IN, although they have been re-
eatedly urged during the past seven
ears to join the system, availing
themselves Of the privileges which
membership affords, and placing
themselves in a position to be Of
etter service to their communities
"Forty-two per cent of the south's
anking power rests in the state
anks; and, If these institutions had
cen fit to ally themselves with the
sderal reserve, we would, by the ex-
ansion of federal reserve notes,
ased upon their reserves with US,
cen in a stronger position to help
ne business and agricultural inter.
SITS Of this district.
.'.In the Sixth Federal Reserve dis.
rict, during the period Of which !
peak, there were 1872 state banks
Iigible for membership in the sys-
sm-that is, having a capital Of
$4,000 or more-and, Of this num-
err, only 81 state banks saw fit to
ecome members of the system.
While a few Of these institutions
anne in, the vast majority stayed
ut; and therefore, when the inevi-
sbie crisis came, in 19209, they were
oyerless to help the situation to a
reater degree than they did be-
ause they were not members of our
reat financial system-a system
reated by congress for the purpose
{ dispensing its accommodations to
fate banks as we'll as national
anks, and for the benefit Of all the
aople in this great land of ours"
AII~ uon1o Aoo,,;4&ol