, 1925-10-14

farmer gets for his
wheat and cattle de-
M. A. Trav,or Ponds not a little on
that gold.
The farmer sells his wheat to the
elevator man and yet the real buyer,
in many cases. is an Englishman. a
Frenchman. a German, or an Italian.
About one-third OF the wheat crop is
usually sold abroad and this part Is a
large factor in fixing the price OF the
entire crop. Between the farmer and
the foreign buyer there are many
steps. In recent years the most i'm
portant step has been that at which
the foreign buyer has to pay the
American exporter, for the interna-
tional mechanism of payment has
been badly out of order because
Europe was off the gold standard. 1t
was just as though an English buyer
drove up to your farm house. bar
gained for your wheat and drew IN
the contract. But when you discussed
payment, he said: I'm sorry | haven't
any good United States money to pay
you with; I'll have to pay you In my
English paper money. which isn't
worth its face value in gold. l don't
know what 1t may be worth next
week, but that is your risk"
A Deadly Foe Of Trade
How many would be willing to sign
the way most of the worlds trade has
had to be carried on since the Armis-
tice. In practically all countries ex-
cept the United States the c%urrencies
have had no fixed value in gold. but
have changed in value from day to
day. Whenever one country sold any
thing to another country. somebody
had to take the risk Of loss because
the value Of the money might change
before payment was made. Such IN
certainty OF payment n . deadly foe
Of trade. and people were afraid to do
any larger international business than
they had to.
Exports Of food stuffs from the Unit
ed States fell from two and q half
billion dollars In 1919 to eight hundred
millions In 1928, and the difficulties Of
European buyers In making satisfac.
tory payment for American farm prod
ucts was one Of the large factors In
the drop in the prices Of farm prod
ucts. But now the recent action of
Great Britain In declaring that II will
again redeem Its paper money In gold
ear that British buyers of American
which is accepted the world over at its
face value IN gold. With the return of
Great Britain TO the gold standard. a
majority of the countries OF Europe
have paper c%urrencies equal to gold.
How Reserve Banks Helped
American bankers have assisted in
the British return to the gold standard
by giving a 500, 000. 900 credit to the
British government. But more impor.
tant than this was the action OF the
Federal Reserve Banks in granting the
Bank OF England material co.opera-
ton. They placed $500. 0O0. 900 gold at
the disposal Of the Bank of England
for two years. to be used by It. II nee
essary. in maintaining the gold stand
ard. The readiness OF the Reserve
Banks thus to cooperate was m i'm
portant influence in the willingness OF
the British to take this all important
step.
This action OF the Reserve Banks
was . most constructive step In aid
Of American farmers and producers
who will benent greatly by the re-
moval Of this element Of uncertainty
from their export transactions. If'ail
the sins Of omission and commission
charged againts the Federal Reserve
System BY banker. business man, live
stock man or political b~latherskite In
the last nve years were true. and prac-
tica1ly none OF them are, the service
rendered commerce and industry by
the System In connection with the res
toration Of the gold standard in so
large q part OF the world would far
outweigh any mistakes that those In
charge Of the System may have made.
No banker. business man or farmer
should permit any self serving declnr.
alton by favor seeking %demagogue to
swerve him from = determination to
see that the System is maintained for
the future welfare OF the country.
Fundamentally conditions afe very
sound and we are doing a very
large volume OF business. no little part
Of which Is due to the equalizing and
stabilizing effect exercised by the Fed.
erai Reserve System on the credits OF
the country. Throughout all the stress
Of the last nve years there have been
no times OF either stringency or pie
thora Of bank credit. Rates have run
along on n rather level keel and In
my judgment have had much to do
with the stable volume OF business
which vi have enjoyed. and which IL
quite contrary to the old experience of
the aftermath OF panics. With a credit
structure such as only the Federal
Reserve. System a guarantee. I feel
we need have no apprehension but on
the contrary sound optimism for the
future