The free lance. (Fredericksburg, Va.) 1885-1926, 1909-10-12
JUDGE WALLAcE'S VIEWS
On the Proposed Central Bank For the
United States.

On the Proposed Central Bank FOR the
United States.
The following are the views of Judge
A. w. Wallace as to Central Bank oil
the United States, as expressed IN an
| interview with representative OF THIS
paper.
What do YOU think of Central Bank
for the United States; it is rumored
that the Currency Commission are 60
inc TO recommend such a bank? was
asked of Judge Wallace. he SAID IN
response:
Well, do not suppose anyone out
side the committee and the president
know what is to be recommended; /, OF
course, cannot express an opinion on the
report. but if it is contemplated 10
create great United States Govern
ment Bank with branches IN every |
community am decidedly opposed 10
First Because it will destroy the
present system of independent Ma
tional Banks, which is almost perfect,
the loss to depositors under the pres
ent system being infnitesimal, recent
example of which we had in the sus-
pended National Banks in New York |
CITY during the panic Of 1907, when the
deposits amounted to more than one
hundred million of dollars and the loss
10 the depositors was not one cent.
think it absolutely impossible, unde
the present system Of National BanLs
il honestly administered, for depos-
itor to lose his money. .
Second. Because it will substitute
a system Of branch banks when VIII
monopolize all the banking business, as
did the old United States Bank. when |
Andrew jackson destroyed in 1896 by
removing the government deposits and
which, to use the words OF another'
SKINNED the cream from the smaller
cities and country TO enrich the eN-
chequers of the monopolists IN the great
centers." In Europe and Canada these
branch banks pay no taxes, there are
no local stockholders nor board OF di-
rectors; salaried manager ana clerks
generally sent to the community by the
head bank, constitute the entire en-
ployed force: there is no neighDorly /
sympathy between the lender and the /
borrower. but the whole local manage
ment is by cold blooded central or
panization. which in this country in all |
probability would be controlled by |
politicians. Under the present sys-
tenn Of independent banks things
are very different. The Bank /
of fredericksburg, of which | am
president, pays alone more than
two thousand dollars OF taxes, ana
altogether the city Of Frederlcks,
burg gets close to four thousand
dollars from its three banks annually.
Under the present system almost all
the profits of the banks are paid out to
home employees or to home owners OF
stock and expended or invested at
home. /
The Independent National an d
State banking systems are powerful
Instruments for local development; on
the contrary a colossal United States
Bank with branches saps the prosperity
of the country and smaller cities. The
argument that the individual stock
holder must give way to the general
welfare was the alleged justification
for the action of General jackson IN
1886, and from that day TO this the re-
establishment Of any such bank has not
been seriously considered, nor do
think it will now be.
If it is contemplated to have
great Central Bank as auxiliary
to the present National bank
ing system to stand in a measure IN the
place the United States Government
now occupies toward the banks, the
government to be permanent custo-
mer. such bank under proper reguia.
tons and non-political management OF
a board of directors might be for the
general welfare. 1t would take the
government out Of the banking ousl-
ness. il could be utilized TO act as fiscal
agent for the government and 1t could
be given exclusive right to issue cur
rency secured by gold and TO the
National Banks on the deposit OF United
States. State or city bonds with the
Treasurer of the United States; 1t could
assist in extinguishing the war issue OF
legal tender notes, and thereby release
for use one hundred and fifty million
dollars of gold now kept locked up IN the
u. S. Treasury, by paying to the gov
eminent in consideration of the exclu-
sive deposit Of government money,
without interest, proportion Oh us
earnings 10 De uSSu dS dbOFS oNBbS
The exclusion of the higher inter
est rate u. S. bonds from deposit Tor
currency would be necessary to keep up
the market value of the two per cents;
but such bonds might be given the
privilege Of funding into two per cents,
the government paying the holders a
fair bonus to be computed on the basis
of the excess Of interest Such bank
could be used as a sole reserve bank,
having no interest, the effect OF which
would be that the National Banks and
, States Banks would keep outside OF
their communities only enough money
for purposes of exchange, which would
stimulate conservative local enterprise
and safe investment Of an excess OF
money in the local banks, upon which
currency could be obtained, and in times
of stringency such bank could Away
furnish any amount Of secured currency
to local banks upon terms to be speci-
! fed by law and thereby prevent panicss
/, and the disasters to and depression OF
business for years that follows a panic.
!, AS YOU want to put these views IN
= the newspapers / have endeavored, as
q all are interested in the subject, 70
. make them plain and simple to your
! readers. who have had no experience
3 in the intricacies Of banking.