The Brookings register. [volume] (Brookings, Brookings County, S.D.) 1903-1971, 1923-01-18
THE NATIONAL CAPITAL

BY ]. E.. Jones
The national lawmakers are busy
ing themselves with many plans and
schemes intended ito make the FEEDER
al Reserve Banks more responsive to
the needs Of the people" Particular
emphasis is made on the requirements
of agriculture, and numberless charges
bank loans in rural districts have been
relatively less than in the industrial
sections. However, the Joint Com
mission of Agricultural Inquiry, OF
which Congressman Sydney Anderson
of Minnesota, a farm bloc" leader,
was chairman, found that such was
not the case, and it reported that cred
it was not absorbed during the period
of Initiation early in 1921, by the
financial centers for speculative pur-
poses at the expense of the rural com
munities. Students of the economic
situation are agreed that there has
been pretty fair work done by the
bankers, who have distributed credits
with consistent fairness to industrial
and agricultural sections. But this is
not enough, since the depression in
agriculture is not being cured by the
present financial palliatives. Eugene
Meyer, Jr., managing director Of the
War Finance Corporation, has issued
a statement vigorously criticizlng some
of the member-banks of the Federal
Reserve system, who he says are car
rying in their statements or i'll their ad-
vertisements the announcement that
they do not borrow from the Federal
Reserve Bank or that they have no
loans or rediscounts" in these institu-
tons. He questions whether such
banks are serving the best interests
of the people of their territories. he
says this is especially true III the agri-
cultural territories. Meyer was at the
head of the War Finance Corporation
when its function was to arrange WaE-
financing. The Federal institution was
r~esurrected and put in motion IN order
to supply emergency credit to the ag
ricultural regions. Millions Of dollars
have been made available for the farm.
ers. The plan is operated in connec-
ton with the Federal Reserve system,
and elastic money for the benefit of
farmers has been obtained by working
various known and unknown schemes
of borrowing. When the banks them
selves begin to shut down on obtain
ing new money to loan their custom
ers. from the Federal Reserve banks
of the districts in which they were To-
Gated. then in consequence followed q
curtailment of credit to farmers. This
came on top of a suspected movement
on the part of some Of the great prl-
vate banking interests throughout the
country. Director Meyers therefore,
donned the war-finance-paint n sailed
into the offending Federal Reserve
banks directly, but by addressing his
protest to the attention OF n Amer
ican Bankers Association he killed two
birds with a single shot. The private
bankers are skilled enough to dissect
in Meyers statement the reproach that
they were regarded as largely respon'
sible for the increasing inelaSticity In
the motions of elastic money"
The Federal Reserve Banking sys
tenn is only nine years old. When il
was instituted there were thousands
Of bankers throughout the country
who joined the croakers in predicting
that 1T won't work" But is was moi
long before they covered themselves
under its benign protection, and when
ever they got into a pinch they Dor
rowed money from the Federal sys
TEN, and thereby not only succeeding
in providing more elastic credits fol
their patrons and community, but add
ed to Their hours Of sleep and the les
SEEMING of headaches that were common
to most bankers Gin the good old days
before Uncle Sam furnished a%ntidote:
for bapk-runs and panics. The Fedora
banking law was worked out at the
latter end of the Civil War. Under 1t!
provisions the national banknote cur
rency was based upon Government
bonds deposited in the United State!
Treasury, and the currency thus is
sued was classed by economists a.
b~ond-secured currency. Under thu
more recent Federal Reserve system
every National Bank is required to be