Show lend farmers two billions governor harding says reserve banks increased instead of restricting loans FIGURES REFUTE CHARGES more than two and a half times as much paper was discounted in eleven months of 1920 as in the yar 1919 report to gronna wu hington more than two and one olle halt half times as much agricultural paper was re discounted by federal Ile reserve serve banks in the 11 months down to december 1 1920 as was redis counted during the entire year of 1019 according to estimates furnished by bi governor harding of the federal rei re nerve board to senator A J gronna chairman of the senate committee on the estimates furnished chow show that farm paper re discounted last year amounted to almost 2000 the estimates aret are 1020 1919 the farmers have been complaining that federal reserve banks discriminated against them and instead of making crests to the growers more elastic actually restricted loans treasury officials have consistently maintained that credits were not restricted strict ed but were greatly increased the farmers have insisted that they have been discriminated against and on tills this contention they have based their demand for a revival of the war finance corporation the bill reviving the corporation has been passed by congress more loans than are tabulated la in his letter to senator gronna governor harding intimates that while ills figures are merely estimates based on the product production loa and sales of farm products undoubtedly much more money than 1 Is tabulated was actually loaned to the farmers ile he writes in compliance with the request made in your letter of december 14 for Information regarding eg arding the amount of actual agricultural paper redis counted during the years 1919 1019 and 1920 to date based on agricultural production and sales of the respective years I 1 have the honor to submit herewith copy of a tabular statement compiled from telegraphic data received from all federal reserve banks section 13 of the alie federal reserve act provides that notes drafts and bills drawn or issued for agricultural purposes or based on alve stock mock having baying a maturity of not louger longer than six months are eligible for rediscount by a federal reserve bank the limit of maturity in all other cases bring being go 80 days the federal reserve banks rediscount largo large amounts of agricultural paper which has a maturity not exceeding 00 90 days but such paper is classified with other paper of like ma turley therefore agricultural and live stock paper as shown by the federal reserve banks applies only to paper having a maturity of lenger than 90 days the board receives tills this information from day to day and the amount of agricultural discount at each federal reserve bank that Is paper having a maturity of from ninety days to six months Is published each month in the federal reserve bulletin the special figures furnished by the federal resene banks in accordance with your request are ai e in all cases estimates no exact figures of the total volume of loans for agricultural purposes being available at the r federal reserve Ite gerve banks in tile the first place most of lit the birrou borrowings ing at federal reserve banks by member banks during the year 1019 and a con considerable considers sidera ble proportion of these borrowings during the current year have boon been in the form ol of i the borrowing bunks banks own notes fe f e cured by government obligations or by commercial industrial and agricultural paper it Is known that member banks bank in new york city nave have made large loans to their correspondent tanks banks throughout out tile the country and it y raut bribble to oppose se that part of the proceeds of such loans have been applied by the borrowing banks for agricultural purposes but it la Is impossible to state the amount I 1 conditions similar in other banks banka the same Is true with respect to ta loans made by member banks in chicago st louis minneapolis kansas city new orleans and other financial renters centers throughout the country nonmember state banks lend large sums in the aggregate for agricultural purposes but as they have no dealings with uie the federal reserve bunks banks their loans to farmers are not reflected in the figures furnished by the federal rescue banks although it Is a fact that all federal reserve banks have been lending a large amount to member banks which alch have in turn redis counted paper lor for nonmember bunks banks it should he be home borne in mind also that the total amount of farmers notes by federal reserve banks gives no indication of the amount advanced by the federal RP serve banks to finance the production and sale of farm farin products pro durtt since large amounts advanced to member banks in other districts on commercial and industrial paper are used by these banks tor for loans to agricultural interests only the federal reserve banks of richmond atlanta st louis and minneapolis have taken account of loans of this character by increasing proportionately the amounts formal formally Y classed as fa farmers mers paper in view of these facts it Is evident that the compilation transmitted herewith Is Talu valuable able merely as indicating the increased domount of agricultural paper by the federal reserve banks for m briber banks during the year 1020 over the year 1919 the board transmits also a table prepared from figures published in the federal reserve bulletin showing the holdings by each federal reserve bank on the last friday sn in each month during uie file years 1919 and 1020 1920 of paper classed by the federal reserve banks as agricultural and live stock paper this classification does not include anything but notes having a maturity of longer than 00 90 days it will be noted that there has been a steady increase in these holdings once the beginning of the present lear and that this increase has continued after october of the alie present year while in 1919 normal reductions from the high september figures are shown during the months of october november and december the increased holdings of agricultural paper by the federal reserve bank of boston borton during july and august of the present year represent in the greater part paper held under rediscount for other federal reserve banks the comment made regarding the incompleteness of the figures in the first table applies with equal force to the figures in the table showing the monthly holdings which fire are exclusive of the federal reserve bank holdings of nonagricultural paper the proceeds of may have been used by the member banks to finance production and sales of agricultural staples governor hardings estimate of the paper with the federal reserve banks based on the production and sale of farm products follows in each case the 1919 figures are given first and the 1920 figures second the figures as applied to the federal reserve basiks banks in each of 12 cities are here are the figures boston S A new york no data no data philadelphia 2971 1 cleveland richmond atlanta 91 noOT yO chicago 47 20 2 0 1 st bt louis ow of minneapolis 0 03 00 0 kansas city 4 3 0 M dallas san francisco total for or 11 banks the second table alluded to by governor harding showing the total amount of live stock and agricultural paper held by each federal reserve bank on the last friday of every month during the last two years reveals that the 12 banks began with of this paper in january 1919 going to in june of that year and decreasing to in december last year from 56 in january 1920 the amount rose steadily until no less than was in the banks in hei of last year |