AGRICULTURAL RELIEF

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Commission had even less power, as I think, when it was originally
conceived and established than this board, even if it were granted
only very modest ones. It was through the study and the experience
and the application of the powers gradually granted to the commis-
sion that we finally reached the point of the present efficient regulation
of rates and the present efficient flow of the commodities of commerce
through the channels of transportation.

It has been suggested I think by Governor Lowden that what
agriculture needs is something corresponding to the Federal reserve
system. I think that illustration is meritorious and, to an extent,
applicable. But we must remember in this connection that the
function of the Federal reserve system is to regulate the volume and
Aow of credit. Of course, that regulation has as an incidental effect
in the stabilization of prices. But the Federal reserve system would
not last long if its policies were predicated upon attempts to regulate
the price level of commodities. There are many people who believe
that in 1920 the Federal reserve system undertook the deflation of
prices, and particularly of agricultural prices. I do not so believe;
and I have some knowledge of what did happen. But if they did
attempt to deflate prices it was a devastating and disastrous
pXperiment.

Mr. FvumeEr. May I interrupt you one moment?

Mr. ANDERSON. Just a moment—and I should hate to see any-
thing done in the attempt to regulate agricultural prices which might
possibly result in an equally devastating and disastrous experience.

Mr. FurLmer. You do not believe, then, Mr. Anderson, that the
increase in the rediscount rate had anything to do with the decline
in the bond market some days ago?

Mr. AxpErsoN. I would not say that at all. What I said was,
the principle upon which the board functions, the basis upon which
it functions is the regulation of the volume and velocity of credit to
meet the needs of business, that that had an incidental effect naturally
apon the price level, and I was going to proceed from that to an
analogy in connection with the marketing of agricultural products.

Mr. Jones. Do you prefer to finish your statement before being
questioned?

Mr. AxpersoN. I would like to, although it does not bother me
at all. I would like to make this part of it connectedly, and turn
back to that in a moment.

I want to make this analogy—and it is very difficult to make,
because we are dealing with very close distinctions here, and it is
difficult, in the first place, to express these fine distinctions or close
distinctions in language which everybody will understand the same
way. What I am getting at is there is a vast difference between
attempting to regulate the volume and flow of a commodity through
the channels of commerce, so as to obtain a degree of stabilization in
the price during the year and over a period of years and attempting to
artificially and directly stimulate those prices through market
manipulations; in other words, it makes all the difference in the world
in considering what we are doing here, whether what you are seeking
to do is to bring about an orderly and continuous flow of these com-
modities into the channels of commerce and thus stabilize the price
during the crop year and over a period of years, or whether what we
are trying to do is artificially to stimulate and maintain a price or