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432
X-1933
OPENING REMARKS OF GOVERNOR HARDING AT THE CONFERENCE
WITH THE FEDERJIL RESERVE BO.ARD OF THE FEDERAL ADVISORY COUNCIL AND THE
CLASS "A" DIRECTORS OF THE :FEDERAL RESF.RVE BANKS, TtJESDAY, MJY lS, 1920.
Gentlemen, the Board desires me to welcome you to Vvashington ana. to
ex:pr<oss its arpreciation of your consiu.eration in leaving your business anci
coming i..ere to t"nis conference.
We have been vary judiciously ndvised from time to time by the Federal
.Advisory Council, which body Las always held its four statutory meetin6s
a year. and 8ot times its executive committee hc.s come on by request for a.
specic>.l m.:e ting; but the !'resent ~itui.ctio:n is such thEt we felt it vvould
be helrful i f 'lYe could have vfi th us not only the Advisory Council but also
the Class''A"Directors of the Federal Resorve Banks.
We should have liked
to t1ave bad c 11 of the Directors, but we could not o.sk them all to come to
Washin:, r.on at one time, for it is necessary that a quorum of directors be
left at home to attend to the business of the Federal Reserve Banks •
. Tb.e Class''A"Directors are the banker members of the Boards of Directors
of Federal Reserve Banks.
They have a dual relationship.
They are not only
directors and, as a rule; very influential directors of Feaeral Reserve
Banks, but they are officials of member banks ana. thus they see both sides
of the ric ture.
So it seems to be peculiarly appropriate, at a time wnen
there is a bankin15 situation to discuss, to have bankers here to dif;cuss it.
433
X-1933
- 2P.s you are busy men it will be our purpose to detain you for as short
a time as possiblet and i f it is agreeable to the members of the Conferl:lnce,
we will try to finish our discussion by half past 1 or 2 o'clock so that
you ccm then be free to take afternoon trains home, i f you wish, or to dE::vote
your time» i f you stay in Washington, to such other enga5 ements as you may
have.
Of course, we all realize that the credit position is extended and
very considerably extended.
turbed over the situation.
There is no occasion, though, to
~e
unduly dis-
We want to look at the facts as they are and not
aeceive ourselves in any particular.
Having diagnosed the case, .then we
want to determine what is the proper policy to pursue.
We have had an analy-
sis made of the general banking credit expansion in this country, and without going into details I am going to save time by stating the result.
After allowing for the
norma~
credit expansion in a growing country,
we find that since the 30th of June, 1914,
in this country has
amo~ted
the exransion of bank cr;;;di t
to about eleven billion dollars.
At the same
time the expansion in the volume of currency in circulation, deducting from
our starting point the currency held in the Treasury, and deducting from
the present figures the amount held in the Treasury.and in the Federal
R..;serve Banks, has been about one billion, nine hundred million <iollars.
~~en we remember that during
the
last three years the Government has floated
twenty six billion dollars of securities to take care of its own war requiremJnts, and to enable it to make advances to governments associated
~,rith
us in the war, this expansion of bank credit does not seem to be exces-
sive or disturbing, when looked at purely from the standpoint of war necessity;
but the situation that we want to discuss particularly today, and •Nhich seems
434
X-1933
to b"' disquieting, is the expansion the.t has taken place in
tA<::
last twelve
Fran th6 lst of Ppril, 1919, to the 1st of April, 1920,
or fourteen months.
.
the expansion of bank cre.di t was about 25 per cent.
This he.s been in spite
of the V3ry large reduction of the amount of Government obligations outstancling.
The reduction in Government obligations hes ell been absorbed
by c~Jmercial crGdits, with the net result of expansion of bank credits of
about 25 per cent.
During the same time th6re has be.:.:n an advance iri com-
modi ty prices of about 25 per cent.
This has be'-n accompanied by a decrease
in production of essential articles •
.Assuming for the year 191S an index. numbur of 100 in eeeh of tt:Jn
principal articles of everyday use and n2cessi ty--not necessarily production
figures, but distribution and consumption figures, such comnodi ties as
grain, live stock, wool,
co~per,
cotton, petroleum, pig iron, steel bars--
putting all tham at 100 for the year 1916 we e,."t an inde\lt;. number for the
year 1919, on the avurage of the ten commodities, of 89.07.
Whlle these
figures cannot be accepted as indicating a positive decline in
product~an,
they do indicate a decided trend in that direction, a certain trend toward a reduction in
ana
th~
distribution of those products, so to all intents
purposes we may assume that there was a decline in essential production
duril)g the year ·.·J. 1919 of about 10 per cent.
At the same time credit has
expanded 25 per cent.
It is this tendency of :production to decline, particularly in some
essential lines, which consti tut~s a very unsatisfactory element in the
present outlook..
:prices and.
~;rages,
It is evident that the country cannot continue to Srl.vance
to curtail production, to expand eradits and to attempt
to enrich itself by non-productive
one uneconomic
operations w·ithout foster-
435
X-1933
- 4ing discontent and radicalism, and that such
c.
course, if persisted in,
will eventually bring vn a real crisis.
~1ere
is a word-wide lack of capital, and with calls upon the in-
vestment market which cannot be met there is an unprecedented demand for
bank credits~
The fact must be recognized that however desirable on
g2neral princiFles continued expansion of trade and industry may be, such
developments must accommodate themselves to the actual sup~·ly of ca1)ital
and credit available.
Official bank rates now in force in the leading countries· are hifYlt r
than at any time during the present century, except_ during the war panic
week at the beginning of August
1914..
Only within the last few weeks the
official rate in Italy has been raised from
rate from 5-1/2 to
61 and
5 to 5-l/21 the
the Bank of England rate· from
6
~ank of France
to
7
per cent.
Every effort should be made to stimulate necessary production, especially of food :;roducts, and to avoid waste.
Planting operations in many
sections have been delayed because of adverse weather conditions, and should
there be an inadequate yield of crOFs this year the necessity for conserv&tion and conservatism wiil be accentaated.
War waste and Wt>r financing·
goods
result inevitably in diminished supplies of
,and increased volume of
credits.
Now I.ussume, looking at the matter from the standpoint of the economist
that the
tro~ble
with the gen8ral situation throu6hout the world, and in this
country, is the disruption of the proper prorortion or relationshiithe
vol~~
of crGdit and the
vol~e
of 5oods.
occurs, there are two r;:;r:.:edies which suggest
in the volur.:.e of credit, credit contraction.
bet~•esn
Whenev0r that phenouenon
ther.:~selves:
That is a
first a rc<luction
drasti~
•
436
X-~933
-5remedy, it is unpleasant medicine, but it may be necessary at times
to take medicine pf that kind.
The other and better method is to
restore the proper equiiibrium by building up production, in
other words, letting the country catch up with itself.
can approximate this result in two ways.
We
We can· restrict credit
and expand production, letting the expansion of production proceed at
a greater rate than the restriction of credit, and we are then
working along in the right direction.
This is our essential
problem today, the formulation of some constructive policy to be
adopted by the Federal Reserve. Banks which will build up essential
production and at the same
ti~a
preserve the solvene.y of other
concerns which may not be essential per se, but which are highly
essential as. part of the general situation, because there is no
chain which 'is
stron~r
than its weakest link.
Now, there is undOQ.btedly·, however, a spirit of extravagance
in thi.s country Which must be curbed. ·There ..are some indic::>..tions
.
that the people are waking up to what the consequences will be if
this Wild orgy of extravagance and waste should be continued
indefinitely.
It may be that some real personal sacrifices must be
made for the .,general economic gocd.
if we find it
~possible
But it is very clear tbat
under the present circamstances to increase
the volume of production of tbe most essential articles,
the
only thing for us to do is to reduce consumption of those articles.
Now, we might as well look at the situa\ion as it is.
..Prudent man never lives for the day alone.
..
A
He always looks to
437
~6-
the morrow and the months to come.
X-1933.
%at is the situation in regard
to the output of the mines and of the farms in
h~s
time
been done to get
~d
particul~r?
nonnal output and production
~t
~t
the present
to provide proper me3ns of distribution of the output in
order that there ma;y be no 3.cute short3.ge
necessities of life next Winter1
ip the fundarr.enta.l
In this connectiont I might call
attention to one circurnstcmce which h'3.s caus<!d a good de'll of
uneasiness.
It :mey not prove as bad upon
an.:~.lysis ~s
it appears
at first blush, bat I refer to the lack of liquidation which we
have experienced during the early months of the present year •
.
We all know that noriml.ly, after the fall tr'2tde is over and the
crops have been harvested 3.11d distributed, there is a marked easing
of rroney accorrpanied by the liqui1ation of debts.
This occurs
usually in January and February and up to the middle of March of
each year.
Liquidation of this kind is entirely natural and is
necessary in order that the banks may strengthen their resources
in order to meet the dleHlands which will be made upon
X-1933
-7-
438
them later on in the vear as the crops are in the 'Process of ma.l.':"ing or harvesting.
This year we have had no such liquidation.
Commercial loans have expanded
steadily, and while there has been some reduction up to the last week or so in
loans secured by Government obligations, it is noticea~le in the last few days
that those loans have increased.
It would awear that this means an anticipation
on the part of the American people for their requirements for bank credit which
inquire
they usually make later on in the year. We may well
that as we have had
this demand at a time when we ought to have had liquidation, what is our situation
going to be in the later· months, when we are going to have the demands which we
ha~re been aCcustomed to having?
Now, I hope that the answer to this is -- and if
this is correct it is the reassuring feature of the situation --
that the
demands which have been made in the past few months, when we should have had
liquidation • are due, at least in part, to the fact that essential commodities
have been held baCk by lack of transportation facilities.
directed to
openin~
flow to market.
Then our problem is
up the transportation facilities in order that these goods may·
This done, we will get some liquidation which ought to be
sufficient to offset the demands which will be mad.e U'!?on the banks for essential
purposes later on in the year.
But we have figures to show that the extravagant spirit has not yet been
checked.
There are some indications that the peak has been reached and that
people are coming to a more realizing sense of the situation and that they wUl
a
rP-crudescence
pursue /sounder and a saner course. There ought to be a
of our old
war-time spirit, •of doing something that is worth while, and \life should get down
· to work and solid business.
There should be a general spirit of cooperation on
the part of the Federal Reserve Banks, the member banks, the non-member banks and
the public to work out a policy which will result in greater production, lesa
unnecessary congwmption and greater economy; all unnecessary borrowings for the
pilrpose of pleasure and luxury should be restricted as far as nossible and the
liquidation of long-standing, non-essential loans shOUld proce'9d.
439
-8-
X-1933
We should be careful, however, not to overdo this matter of liquidation,
because too drastic a policy of deflation, which mi?ht result in crowding
to the wall and throwing into 'lankruptcy legitimate enterprises, however
unessential their operations may be, would have a tremendously bad effect
and would defeat the purpose of the very policy 'vhich •ve are trying to have
established.
A
There must always be a wise and discriminating judgment used ..
sensible and gradual liquidation will result in permanent imnrovement,
as we all know) but any attempt at radical or drastic deflation merely for the
s@~e
of deflation will
r~sult
in very serious consequences) and such a policy
should be avoided.
It
rrust
~e
will be
hel~ful
for us to discuss and to understand the parts
~hich
played by the Federal Reserve Board, the Federal Reserve Barks and the
member and the nonmember banks in solving the financial and economic problems
that confront us.
Our problems are inter-related, but they are distinctive.
The
Reserve Board is a governmental body, sitting here in Washington.
~ederal
It does
not come, except indirectly, in contact with the member banks, and it can not
be expected to have any intimate l:.nowledge of the details of your business.
And, it ought not to attempt to interfere with the details of your business.
The function of the Federal Reserve Board, is to deal with general conditions
and principles and to keep away from the mass of details which it is impossible
for any Board sitting here in Washington to digest.
The Federal Reserve Benks do come in direct relationShip
with their member banks.
and contact
They have an intimate lrnowledge of the credit :policy
and of the borrowings of the member banks; they are ke:pt fully informed from
day to· day of the change of position of the member banl:s. and through their
contact with the Federal Reserve Board, as the coordinating and
supervising
X-19;3
440
body, they ke.ep informed as to the Board's general :policy, and they transmit
to the Board such specific and general
in determining these policies.
~nformatibn
as may be of assistance
But the :Primary banking business of this
country is transacted by the member and the nomnember banks.
Those are the
banks which come in contact with the public; which are the cu~todians of the
funds of the
pu.blic~
put with them on deposit, and they are the
~redia
through urhich comnercial loans are made.
We have heard a gre""t deal about the necessity of discriminating
between an essential and a less-essential and a non-essential loan.
The
discount operations of the Federal Reserve Banks and their powers to
~e
investments are all clearly defined in Sections 13 anu.. 14 of the Federal
Reserve Act.
Those sections are permissive and not mandatory.
Reserve Bank is not required to ma1re any particular loan
1.~.or
A Federal
any particular
l
investment.
The Federal Reserve Board may define eligible paper, but all
rulings and regulations of the Board mu.st be in strict conformity with the
terms of the Feel!ral Reserve .Act.
. lative powers whatever.
The Federal Reserve Board has no legis-
It can merely interpret by regulation or rule,
the enactrr.ent of Congress.
Now, without discussing any power that the Federal Reserve Board
have to define essential and non-essential loans, I
Section
13 provides,
in a general
~~
,~ish
Ir.ay"
to point out that
that e.ny paper naturing within
the prescribed time, the proceeds of which have been used, or are to be
used, for commercial, industrial or agricultural purposes, is eligible.
There is no specific condition imposed as to whether or not. in the judgment
of any man or body of men, any particular loan is an essential loan, for
the well being of the community or the country at large.
The Board has reached the conclusion that there is no occasion now,
whatever may be necessa-ry later on, for it to attempt, by any general rule
44:1
-10of a CO'lmtry-wide application, to define essential and no'1-essential :naper.
You remember the difficulties that 'NerFJ experienced in making- such a cl.efin.ition durin£" the war, when ""e had the War Trade Beard, the
1~ar
Industries
Board, the Capi ta.l Issues Comrni ttee, and other temporary Boards he:re :oassing
upon all these matters.
At that Erne ·the problem wus simple!' tha.;. it would
be now, because there was a gene!'al un:ie·rlying principle that an;rtl:.J.:ng
essential must be something thst was necessary or contributory to the conduct
of the war.
and gone.
Now we have no vvar.
The temporary boards have all dissolved
The Federal Reserve Board is not a temporary board.
It is a
permanent organization and it mU.st conduct its business in strict accordance
with the terms of the Federal Reserv.e .Act.
Therefore, I think we are all
agre9d that there is no occasion at the present time, if ever, for the
Federal Reserve Board to attempt to define, by reg\:latio:r.~. of country--wide
application, what is an essential and
~~hat
is a non-essential loan.
A
Federal Reserve Baril·· is in much better :position to undertal:e this then is
the Federal Reserve Board.
But even here there are difficulties in the
way. . Some of -the Federal Reserve Districts cover very large areas.
.A rule
adopted by one Fedenal Reserve Bank may not be susceptible of adantation
in another Federal Reserve District, because what seems to be essential.
or necessary in one :place may not be in another.
While there is no
its
-narticular objection to a Federal Reserve Bank,
in the wisdom of
undertaking
Directors,
~ to make a general discrimination between
loans ~lainly unnecessary, plainly non-essential, and those which are less
essential or more essential, it se?ms to the Board that that whole question
of discrimination might very properly be left for solution at the source,
as a matter between the individual banker and his own
c~stomer.
because the
individual banker, particularly at times like the present, has a very close.
confidential relationship with a borrowing customer.
They can tart
ma~ters.
442
X-1933
-11-
over with the utmost frarurness.
position to give
advice.
The individual banker is in
He can accustom his customer to come to
him,· in advance of seeking a loan, or of making any comrr.dtment
involved, to discuss the situation with him before the
made.
commit~~nt
is
The individual banker in many cases - - of course this may
not be possible in the larger cities - - but the great mass of
banks all over the country that do mostly a
l~cal
business can very
largely anticipate the legitimate and necessary credit demands.
-12~.ihich
arc going: to 0e
volume
of
tho ir
r;~d.e
1.r_:.on them; they can ostim&te tho fluctl.Ption in the
de~Josi ts 1 2"ril. ti1oy
sd.vice to o. borro•.ring custo1,:er.
befc:re it is
i:~ace
443
X-1933
:.:re iJotter
They
0.:.::1.1
<"'<1 ifiod thc.n c:.n~r
c-_1.}..
else to give
Oi.1C
o fton J.."estr ict t;1e <::.r::ount of c: loLJJ.
2..'1.d co.n persusde a customer in very
i~:<:my
cases
t~1::1t ~1e reo.ll~r
dete:c:;1ine, not so uuch the esscmt ic.1 nature of c. lo2.:1 from. 2n elo;::entary stc..ml-
needed., but l1e cc.n dec ide better tl1c..n c:ny :me ol se Y.hether tl1e loc.n is esGcnti.:·l
or necessary fo1· t:1e )Ublic G;Ood in his
of :nooduc ins sOi:letllinG;
t~K~t
~x:rticul2.r
ousht to 1Je )l'Oduced,
locnlity, not only c.s c: 1.1e<:.ns
211{
'Jhicll is
~1eeded
for con-
sUD)tLn , 'Jut <:s a me2.ns of preservil1b the solvency of l1is cu.rnunity.
scre,,s on ti;ht 11 tl1ey could bring dise.ster to the co;·Jrmnity; 1h1ch mic,'ht s ;resd
Of ccursc, there
;.12.y
be c<:sos, <::ac~ tllGj,'G :1ave 1Jeon ce.ses, doubtless,
)ro'JC.1Jly in c:::.J.l of the c:istricts, uhere some of the
1JCJ.i.1~;:s ~1c:::.ve ovcn~done
the
;_;o.tter of c:::::tonC:inz cre(its, 'out the:;..~o is o;1e very encouraging· fe2-tu.re of the
:n~esc:n t
s itt<C/cion,
2n,c.~
th<!.t is sucl1 ce:.ses :.'.re
of ;::.11 t:1cJ : -,c;;1ber bcn::s in c::ch of tl1c
~~ec~ercl
com~Jnr:::.ti vely
::lcservc
Distl~
feu.
'.l'he ma.jor i ty
icts arc not
bo:c1'0' :ers fron tho Fcd.crz.l ::ieGeTve Dru1lc, w1c'. tl1e n1.c::1bcr of : 'C;Jbor b2.nlcs uhich
2.re bo:"T01.fing froB the Foc:crc.l ::lcserve Da1L:s in 2,n
c<".)i t2..l
stocl~
is :1ot lE.rc;c in
l::J.10'.·s, or he ou,:-;ht to
~~no·.:?
:no~~ortion
<-1~1otmt
e~:cecC'..:il'lg
to the total mer:1bershi:p.
own
their oP;e.
:~:very
'0£cn:::er
'i1c.t :-ce2..sonr:ble line of c::cedit he c2.n get from his
444
:~-1933
'to com:;,;mls ion in the r.)Stter of loans thct you •:r:i.U find a.J.zy'".Jllere in tho .Act
is that ::_1rov:i.sion vThich :;_:>en.1its .Jnd,.
u:~on
tho affirmr.tive vote· of fi7e
1~1e;:fuers
qf the Fecler~l Reserve Bon.rd, requires a. Feder<!.l Reserve i3L"tlllc to rec"'.~scount
for Ba1.o t:1er Federcl Reserve Ba~'i!. · ·itl1 this e:~ce:_)tidn there is no otl')3r
:11Cndetocy :;_1rovisi·on relating to loc.ns in tl10 Feder2.1. Reserve .~ct.
:·.11ile sect ions
"1.3 u.n:: 14 <11~e permissive, there is horJever, a strict injunction lt..id u:_Jon the
Directol'S of the L"cdercl !lcserve :lt..!L:::S in thc..t ?C-rt of se;c~ion 4 -·,~'lich r~_;quires
t~10 DirectOrs of a ~'eder<.l Sese1·ve B2.ni::, to Gf.minister its affairs -.:i.thout fc:vor
o1· C:.iscrimination foJ;' or c-sc..i:..1st CJJ.T'J ne.:aber ban:;:, and in rr..s..!cing loe..ns, c'.2.scounts
?2-Y clue reg<l;t"d to the v~ants .:nc1 req_l.'..irements of otl1.er nei:1ber banlcs •. Thus. the
Reserve
Directorn of Fco.oraJ. jBan.r.s are clee.rly ;·:itbin their ri(!;hts Y1~1.en: t:1.ey s~y to e-zq
~:-:e;.~~)er
you
banlc, '.'You l'lCve gone far enough; ue a:oe fc:nilie:.r ''i ~'1 you:r co:.1C!.ition;
~:-.eve
got nor€ then your
ca;,mot use
~10
~1.c.1~e,
c.11d yre ,..,.c.nt you to reduce; uc c;:;.r..not let ~rq~-:»
resources of t:.te ?ederal Y:Lse:;;·ve :Bc:::r.Ll:s :for it-s o·.m )rive. tc ,
if he ':L".nts to e~rx·~c:.
~10 l!lUS t d.o it r.1ore ::. nC. r:.tOr e out of his o...-n
- . his business
'
:;.,·eso-t1:i.'Ces ~-:.n(:..
;not le2-n
30 · hec.vily
u
)0~1
the
:t:'0der~:l
:J.ese:tve Bc.:n.?.c, W·lA:;n
h~
"L'!.l'lC'.er-
445
-14-
be depended uroon to use a
,~iser
X-1933
discretion in the matter of granting credit.
The· recent amendment to :paragreph (d), section 14, which
empowers. the Federal Reserve Bank, for itself, and without regard to
any other Federal
of credit
~on
Reser~e
Bank, to establish a normal or basic line
some principle api;>licable to all member banks in its
District alike, and to imnose a graduated or penalty tate upon excessive
borrcbwings, does not repeal, amend or modify in any pa:rticular the
provisions of section 4 or section 13, and a Federal Reserve BaHt is
still, even thOUgh it adopts the progressive or penalty rate, entirely
within its rights in declining to take und.esirable paper at any ·rate.
The nrogressive or penalty rate I 1111ill not riiscuss at this time,
because we will have an open discussion a little later on and we will
take it up then.
It may be argued that the volurre of credit must necessarily
be greater now than was the case a few years ago on account of the
hi~her
prices and
hi~er
wages Which are prevailing, so that any given
transaction requires a greater number of dollars to finance it than
was formerly the case.
That is true, but I believe that I can present
figures to you that'will convince you that if there could be a freer
flow of goods and credit• in other words, a greater velocity in the turn
over of credit, the resources of the oariks of this country are abundantly
446
-14 a X-1933
ample to finance all essential enterprises and a good many of the
non-essential as well.
The fundamental trouble with the situation
and corrrnodi ties
today is that there is a large volume of essential goods/ held back
from the markets and kept out of the channels of distribution,
either for speculative purposes, being held with the idea of getting
higher prices later on, or *here they are held back of necessity on
account of laCk of facilities to transport them to market.
In the
latter case, it is a wise and proper policy to ease the situation
along, to assist the people who are thus compelled to hold and not
throw any obstacles in their 1P.iay, provided there is a genuine and
sincere disposition to put'the stuff in process of distribution as
soon as transportation can be had.
But in the case of the hoarder,
who for selfish and profi tearing purposes wishes to hold back from
the mouths of hungry people essential articles of food, or from the
backs of the naked essential articles of clothing, every good banker
should exert every influence within his power to force people of that
kind to turn loose their hoards.
Here is an
o~portunity
for
1~ise
discrimination, and this discrimination can be exercised more intelligently and effectively by the individual banker himself than by any
Governmental board.
•
-15-
We find instances also which
~lways
occur when there is a
constantly advancing tendency in the tnarket, where mcrch:mts have
stocked up.
There are many cases Where mercantile loans are too
large and ought to 'be reduced.
There are rrerch~ts everywhere who
ought to be reasoned with "lnd who ought to be encoUraged to push
their stocks out .and get rid of the high priced stuff, because
some of these days, it mqy be sooner rather th"'ll later, the reign
of reason is going to be restored and the man in the str3et is no
long3r going to want to pay $25.00
to $30.00 for a silk shirt, or
and
$20.00 for a pair of shoes or $1.00 for four pounds of sug3I',/lower
prices will be demanded , and trade will fall off unless lower prices
prevail.
It seems to me, from the standpoint of good merchandizing
and good banking, that the merChants should be encouraged to reduce
their stocks and not . temp.t the passer-by by extravagant display
in the windows at high price.s, which under the abnormal state of
mind which has prevailed, may themselves help to sell the goods,
because you all know cases where a. custqmar would pass by with
contempt a two or three dollar article and turn his attention to
something at $25.00, althoui!h it ma.y not be one whit better suited
to his purposes.
'.
448
t
X-1903
-16-
In order to bring about a corract tendency and to lead to
a permanent cure of our present sitt:.l,;i on,
?
must be begun and continued.
there is no
Here,
ag~in,
.;ampaigl'l of education
~gency
so
well qualified as the banker • who receives on deposit the money of
the public
~nd
makes loans to the public, to give advice, so thus
there should be a concerted effort all over this country on the
part of the bankers to arouse in the public a spirit of cannon
Let us take oor· heads out of the clouds and get down to
sense.
business, and let us save, produce,
~d
lat each do his part in
a constructive and productive way for the community, to add to
the volutre of goods and facilit1-te distribution, thereby doing
something to cura the discrepancy, the bai relationship Which has
existed between the volume of goods and the
vo~ume
of credit and
money.
In any circumstances, you all know that the Federal Reserve
Banks
~d
the Federal Reserve Board will do their part to cooperate
with the sound, sensible and reasonable member banks..
we may accomplish
~y
In order that
real results and effect any permanent goud,
there must be cooperation on the
p~rt
of the public with the banks,
and on their p:1.rt 'vit:!:l. the Federal Reserve Banks and the Federal
Reserve
Bo~d.
~e
must all pull together for soun1, econQmic anl
financial principles.
do a .e;reat
We should do all in our power, and we can
deal to chefk the false ideas which have gained
circulation amd. inculcate in the minds of the people a sense of
the irrportance of steady, every-day production and distribution,
and to encourage the avoidance of waste and the elimination of
449
X-1933
-17extravagance.
I have here some charts ,which w·ill be distributed among you,
which show the movement of principal asset 3.n:i liability items of
each Federal Res~."rve Bank 3.ni of th'l S yst'lm, of the twelve) banks combined.
These figures ar3 taken from July 3, 1919, to April 30, J920.
They show the gold. resl9rves,
th~
total cash
r~se'!"ves,
the memher
bmks 1 reserve deposits, the Federal Reserve notes in circulation,
the acceptances bought, paper secured hy Go,rernment war obligati0ns,
divided into the
hea:iin~s
1
9:ecured
hy Liberty Bonds 1 secured by
Victory Notes, and secured by Treasury Certificates, an1 tee total
discounted paper on hand.
Then there is another table which shows
the volume of bankers• acceptances purchased from other Federal
Reserve Banks and the volume of bankers' acceptances suld to other
Federal Reserve Banks, figures at the. close vf business on each
Friday from July 3, 1919, to April 30, 1920.
Now, gentlemen, I declare the meeting open fvr general discussion.
@FedFRASER