The producers news. [volume] (Plentywood, Mont.) 1918-1937, 1928-01-27

Which brought on a smash. at is
literally true that they planted a
mine under our economic system and
blew it up"
The following testimony of DIR.
John X. Commons makes the reason
and method very clear Testimony OF
DR.. John r. Commons of the Univer-
slty OF Wisconsin, on February 4,
1927, before the House Committee on
Banking and Currency at a hearing
on the Strong Bill, House Bill No.
1913, to amend the Federal Reserve
Act DR.. Commons quoted a speech
by w. A. Day, then Deputy Govern
or OF the Federal Reserve Bank of
San Francisco, November, 1920, be-
fore a meeting of bankers of south
em California, in which he told the
bankers there assembled that, they
were not to loan any farmers any
money to hold any crops beyond har-
vest time. If the did, he said, the
Federal Reserve Bank would refuse to
rediscount a single piece of paper
taken on such a transaction. He de-
clared that all farmers should sell
all OF their crops at the harvest time
unless they had money of their own
to finance themselves, as the Federal
Reserve Bank would do nothing to-
wards helping the farmers hold back
any part of their crop, no matter
what the, condition of the market.
Similar instructions were sent forth
by the Federal Reserve Bank through
out the country. (You can't coop
crate and market orderly when credit
is refused and marketing forced re-
CARELESS of condition of the market. }
DIR. Commons said: 81 think | was
e only person present who was not
a banker and this was in a way con-
tldential advice being given by the
Federal Reserve Bank for the guild
ance of small bankers. ! say that was
the admitted, declared policy of the
Federal Reserve Board made bv an
officer of the Board delegated for the
purpose of making an announcement
for the information and guidance of
the bankers of my district. No one
could be in doubt for one minute as
to what the natural and logical con-
sequence of such policy would be.
II the entire crop of the country is
thrown on the market at the time OF
harvest, of course, the market will be
depressed. You can bear the market
or you can bull the market. The Fed
efal Reserve Bank deliberately set out
to bear the market. Now if thew
could do that at that time, have they
not done that with other commodities
and cannot the same system be used
to stabilize money and stabilize whole.
sale prices p Question to Dir Com.
mons: THAT speech was supposed
TO be given in November, 1920. SUP
| pose that at that time the Federal
reserve Bank had known these things
which they learned in 1922 and 1923 >
MY idea of what they have done is
tins: If they did not want prices tc
TALL as rapidly as they did from So. az
Gown to S1.3S they could have started
buying securities, which they did star
buying in 1923. They could have
started buying securities in 1920. In.
stead OF keeping the discount rate M
to seven per cent they could from
1871 down to the middle of 1921 have
reduced that discount rate gradually
dhey could not have stopped the de.
tlatlon but they could have put :
cushion on it. They might have stop
ped 1t at one sixty by buying securi.
ties. They held up the rediscount
rate until they squeezed the blood oIIt
OF everybody. They might have short.
ened that discount rate much earIia,.
They might have prepared for + h,
buying securities.
i would add also the presidential
campaign. We had to have prosperit,
IN 1924 and they brought on pros
perlty. They began buying, begar
reducing the rates, increasing the vol
ume OF money, sent prices up from
40 to l61 and agricultural price,
ment up 31%, industrial prices wen
up lIo, and the average was from la
to 1911" -
Enforced Liquidation
This policy of enfored lioui6atioy
resulted in affecting prices and value,
so that returns obtained for livestock
marketed were practically nil. II
many cases not being enough to nav
freight. In Minnesota corn sold a,
~ cents per bushel, some using corr
for fuel; oats sold as low as Ia cent,
per bushel; sheep brought 81 cents nc,
mead mead by the carload; hay raised il
minnesota not even paying the freigh
to market within the state
Now, Mr.. Jardine, with the enforc
ed detlatlon edict of the Federal Re
serve Bank anyone knows full wei
how, impossible it is to organize .
workable cooperative marketing svs
tenn when the Federal Reserve Banl
conceived as Federal project of sta
bllization for the public good, one ant
all, degenerated into a price fixins
and mOney-controlling system domin
ated by large financial interests t,
the ultimate detriment of any indus
try or labor not we'll organized o