Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-08-26

system with new emergency powers. and
in each of the IL Federal Reserve dis
tricts voluntary organizations of bankers
and business men ready to give their
time and best efforts to the problems
If their communities and to the Nation
wide problem of stimulating the revival
of industrial activity and increased en-
ployment.
That is the picture which, after the
adjournment of Congress, presented
| itself to those Of us who have lived
with all phases of the manifold diff
culties with which we have wrestled
these many months. In a sense the
picture was complete. In so far as
providing the necessary instrumentali-
| ties, all that was essential seemed to
have been made available. Yet one
element appeared to be lacking.
Though the Reconstruction Finance
Corporation has done a magnificent
| job in setting up countrywide agencies,
! and though our Federal Reserve Banks
| are in the several Federal Reserve dis
| tricts. the central points through which
credit policies can be initiated and CO.
ordinated. and though the Banking
and Industrial Committees in the sew
eral districts are the logical agencies
| through which contact can be estab-
liShed for the more effective and wide
| spread use of available facilities, the
| element of coordination and of ade-
| quate exchange OF information on the
entire front was lacking, and this was
| particularly true of the Banking and
Industrial Committees, which, 1 think,
it will be admitted have not been de-
veloped hitherto up to the maximum
point of usefulness.
IT n Of ar
so ago that there was a truly useful
purpose to be served-first by promot-
ing a more general understanding
throughout the country of what agen-
cles are actually available and the
| character of service they are prepared
| to render, and in the second place by
creating a central point of contact
which might serve as a means of in
terchange of ideas, suggestions and
experiences.
With that in view an informal con-
ference vas held, attended by some of
the members of the Banking and In
dllstrial Committees, the governor of
the Federal Reserve Board the gov
ernor of the New York Federal Reserve
Bank and the Secretary of the Treas
ury at which the aforementioned OBJ
jectives were discussed.
Purposes Found Feasible.
1t was the unanimous opinion of
those present that the purposes out
lined were not only entirely desirable,
but wholly feasible; that the time was
opportune for such an effort, and that.
in addition to bringing into being q
central clearing organization, it might
be possible to develop a definite, if in
the first instance limited program to
stimulate employment and possibly to
move forward the gradual resumption
OF business activity for the considera-
| tion of tie Banking and Industrial
Committees and the creation of GER
tain subsidiary committees to carry out
| on purely voluntary basis these lines
OF activity
As result of those preliminary dis
cussions memorandum was prepared
which may be said to present the
basis for the movement which has been
initiated and which has led to the
| calling of this general conference, COM
posed for the most part of the mem
berS of the Banking and Industrial
| Committees CT the II Federal Reserve
| districts, together with representative
| groups from all sections CT the coun-
| try who can render invaluable assist
ance in strengthening the hand of
| existing organizations and in the de-
! Velopment of such programs 9S may be
| undertaken. 1t will be of interest to
you, therefore, to have me summarize
the preliminary memorandum prepared
| under date of July 81 1882.
For nearly three years the economic
| curve has moved precipitouslv down.
ward; prices have fallen steadily; in
dustrial activity has become more and
| more restricted; bank deposits and
credits have shown the greatest shrink
| age in our history. We have sought
| through the creation of emergency or
carnations to protect the key points in
cur economic structure. We have sue
ceeded in doing so. But COR over "a
months now We have been in full re-
treat all along the line.
More recently the economic curve
has shown tendency to f1atten out
Commodity prices have steadied ano
shown moderate advance over the pc
| ROD OF the last several weeks. The
shrinkage in bank deposits and bank
credits, which had been proceeding at a
rapid rate, has been partially checked
and in some districts there has been an
| actual increase in deposits. The bond
| market has shown a steady and con-
slstent rise for period of five weeks
| The stock market for shorter period
has shown tendency to move upward
| Perhaps most significant of all, large
short-term foreign balances, which were
a subject of anxiety and constituted
| more or less of threat to confidence ir
| our credit system. have been reduced
| from high of $3,000,000,000 to less
than 100000, which is probably 6
subnormal average.
Gold Outflow Ceased.
| "The huge gold outflow which we have
| witnessed since September, aggregatine
over one billion dollars. has ceased, anc
it appears that from now on the golc
movement will be decidedly in our ia.
vor. A steady gold inflow, apart from
, its direct monetary effects, will probably
have psychological effect reflected ir
a return of currency now boarded espe.
cially by large hoarders. The Lausanne
agreement seems to have had a pro-
| found effect. In spite of the necessity
I OF financing the Reconstruction Finance
| Corporation, the credit of the Fedora
Government stands high, as witness the
success Of the last offering of Govern
ment notes.
| THE powers of the Reconstruction
Finance Corporation have been extend.
| ed so as TO make 1t more potent
agency for usefulness, and the authority
of the Federal Reserve banks has beer
extended so as to permit them to take {
| more active and direct part in stimu
| lating the use of credit.
| "All of these circumstances Justify
the conclusion that the time has come
to make definite and concerted effor
to use the present low plateau upor
which we now stand as a base for thu
beginning of an upward movement tina
will make for increased employment
and the betterment of business.
THE most effective way to brinl
about this result would seem to be tt
concentrate our efforts at those point.
which can be most effectively attacked
The agencies Immediately available
for use are the Reconstruction Finance
Corporation. the Federal Reserve SyS
TEN, the banking and industrial com
| mitteeS formed in each Federal Reserve