a scarcity which speculative banks utilized. The Federal Reserve policy took the money out; New York banks borrowed the money thus taken out, and loaned it at tremendous rates—rates which people paid to stave off the ruin caused by the moneyless condition which the ill-measured deflation process brought on.
And all this time the Federal Reserve System was in the best financial condition of its whole career. In December, 1920, it had 45 per cent of its reserves, which was a higher reserve than it had in December, 1919. But at this writing (July, 1921) the reserve has reached 60 per cent.
The money is in New York. Go out through the agricultural states, and you will not find it. Go into the districts of silent factories and you will not find it. It is in New York. The Warburg Federal Reserve has deflated the country. A System that was intended to equalize the ups and downs of financial weather has been used “in an administrative” way to deplete the country of money.