Carbon County news., 1937-10-15

age person-Mr.
Fedef0t John @. Public
Reserve has very little in
terest in the do
ings Of the federal reserve system.
It may be true that the average
citizen accepts the federal reserve
banks as a thing apart and Of little
or no concern to him because they
are so far removed and, further,
because they indulge in what the
demagogues used to call ''high f.
nance"
Whether my information is cor
rect and regardless of the public
concept of the federal reserve sys-
tenn, ! am devoting some space this
week to a discussion of certain de-
velopments in the federal reserve
banking structure in an attempt to
show the trend of money conditions
in this country at the moment.
Lately, the federal reserve board
OF governors announced a revision
Of its regulations governing dis
counts and advances by federal re-
serve banks. Now, it may be said
that these regulations affect only the
banks that are members of the re-
serve system. That is true but it
is not the whole truth because ev-
erythfng that the federal reserve
board Of governors and the federal
reserve banks do affects you and
me and everyone else whether we
are little fellows and, therefore, I'M
important individually, or whether
we are trustees Of great sums Of
money such as is the case with cor.
poration presidents.
The board Of governors, in the
revision Of it's regulations, has
made it possible-if not obligatory
for the reserve banks to take al
most any kind Of paper that is an
evidence Of debt. That is, the re-
serve banks are now empowered to
receive from the member banks
that paper upon which you and I
borrow, any paper that shows that
citizen owes the bank money, and
to give that bank money in ex-
change for the evidence of that debt.
Everyone, Of course, is familiar
with a note or a mortgage on a
piece of real estate. Most people
about installment paper
which is simply note providing
for payment Of the amount due over
a period of months. But there are
many other kinds Of evidence of
debt that is in frequent use among
business men from the smallest
storekeeper in a rural village to the
greatest banker in the world. Tn
der the regulations now operative
in the federal reserve system there
seems to be almost no paper which
the local banker cannot send to the
federal reserve bank and receive
cash in exchange. Of course, that
obligation must be paid off some
time and the arrangement simply
permits the federal reserve banks
o carry the debt until its maturity.
All of this obviously sounds as
;hough the federal reserve system
IS at last to be helpful to US little
fellows. That is true. 1t is going
to be helpful in increasing the num-
per of us little fellows who get our
selves in debt. It is going to do
hat because it makes getting into
1ebt easier.
I think no one should object to
he reserve board regulations in all
letails. There must be credit given
where credit is needed; that is to
;ay when you prohibit borrowing
money you choke off eighty-five per
cent of all Of the business done in
he United States. Yet, credit is
dangerous, a double-edged sword
md must be handled with extreme
caution by the borrowers as we'll
IS by the lenders. AS we have seen
rom the inglorious debacle Of 1929,
here can be too much credit ex-
ended, and when I say that, refer
lot only to loans by banks but the
iale of goods, wares and rnerchan-
lise that enter into everyday life.
Ind, going a bit further on that
inc, there can be too much cred
t extended by the manufacturer
md jobber to retail merchandising
Establishments just as easily as
here can be too much credit ex-
ended by the retail merchants to
vou or to me. One can get into
lebt over his head just as easily
y purchasing at retail or wholesale
IS by buying more land than we can
lfford to own or a home larger than
We need.
So, discussion Of what the board
# governors of the federal reserve
ystem has done can lead in this
Instance only to conclusion that
LANCER flags are waving.
do not want to exaggerate pres |
mt conditions or signs as l see them. |
This is no time to |