Evening star. [volume] (Washington, D.C.) 1854-1972, 1910-04-02
necessity Of central bank. kept clear Of

necessity OF a central bank, kept clear of
Wall street influences.
Leslie Shaw, ex-Secretary OF the
Treasury. has just given his opinion that
a central bank In the United States would
fall straight into the hands of the Stand
ard OIL people. l said. MIR. Shaw add
interests could afford to suffer all sorts of
losses and restrictions in Wall street, in
order to get control of such a bank of
issue"
The best plan ! have been able to
conceive said Mr.. Drummer lis that
such bank Of issue, instead of being
competitive banking institution. should
act only as central organization or the
whole banking system of the country
Its shares would be held pro rata, and
only pro rata. by all the banks; and
the board of directors would be selected
by the banks. with the approval Of the
government. The measure in which the
government should have control over the
operations of the central bank by rep
resentation in It's mana cement is ques-
ton for discussion. In my opinion, the
government should simply have super
vision. and not take part In the manage
ment.''
1T is very new ] said.
1T is adapted to American conditions,
because the greatest obstacle to cen
trail bank of issue ins the United States
has been fear of Capitalization in bad
hands-in the hands Of exactly those from
whom the public should be protected.
Would this system secure it, asked.
Yes said Mr.. Drummer. because each
state would have a representative on the
board from among its bankers. Only
bankers could OWL stock and only in pro-
portion to their own capital.
And the money trust could never get
control Of enough banks ] said.
Yet any Ave men who could get to-
could participate In electng their state
representative" said Mr.. Drummer. 1T
is a question whether only national banks
should be allowed to own the stock: but
The system would. undoubtedly give all
the advantages of both the French and
German banks, without Capitalization.
What ] mean by Capitalization is this:
II the United States should authorize the
creation of bank of issue and leave in
dviduals free to combine it as they are
free to combine for organizing any other
kind of bank. the fact that such a bank
of Issue would require a very large CAPT.
tal-say $500 O00, 600-would put it at once
in the hands Of the very rich: and In
few years, it would be centered in a few
hands,
LAS the Bank of France Isl?
1T is not. In Europe the tendency to
control things is not so highly developed
as in the United States. European fnan-
way. They do Ii in another way-but not
by trying to control majority stock in a
few hands.
Mr. Drummer meditated.
The congressional commission that
came to Europe" he said, had in view
the adoption of either the Bank of Eng
land, Bank OF France or German Imperial
Bank schemes. None of them are entirely
suitable Those of France and Germany
represent a system Of too intense central
ization and the Bank of England has
nothing to recommend it-and is ante
dated. If it works well In England, 1t is
because England is the greatest creditor
nation and because Englishmen are good
bankers. They manage the old concern
on old laws. but on up-to-date banking
principles. Even with these advantages
the Bank of England has been forced to
ask for assistance from the Bank of
France during every recent panic from
the Barring failure to the present day
What of the Imperial Bank of Ger
many / asked.
ut was completely copied from the
Bank of France after the Franco-Prus-
sian WARMTH the improvement of an
overissue of banknotes in times of
stringency. On such overissue it pays