Arizona republican., 1912-05-19
MANY BANKERS
 WANT REFORM
There Is a Growing Belief in Some Quarters That Power of Great Organiz- ations Is a Menace to Prosperity

VI
 RICHMOND, Va, May 17-"The duty of the hour is to protect nor mal business from the financial sharks. whether in New York or across the Mississippi" said J. Laur- ,ucc Laughhn of the University of Chicago. in an adress on The Money Trust and Banking Reform" before the Richmond Chamber of Commerce tonight
 There is. now, d tendency to cen tralization or credit; therefore abolish it, by decentralizing credit. There is tendency of idle funds to flow 10 Wall street; therefore. abolish it by q National Reserve association and the creation of discount market. There is a tendency of commercial capital to move into the hands of promoters: therefore, abolish it by discriminating against investment securities for loans by commercial htnks. There is d tendency for reserves thus wrongly floating to central reserve cities to D" suddenly called for on the slight esst alarm and causing pancs; there fore. abolish it by a cooperative or ganization like a. National Reserve association whith kotfld mobilize re- serves in the interest of all, big and little" f
 Professor Laughlin said that all bankers who were honestly in favor of a sound American banking system ought to welcome the congressional investigation of the Money Trust" If the investigation showed that gross evils resulted from the present cen tralizatiOn of credit, then congress would have to reform the banking laws so that this dangerous centrali- zation would be abolished He said:
 What is the Money Trust?' We may define il as n combination of large capitals for the purpose of con- trolling great credit operations The man who has a scheme to be fnanc- cd will find his desired loan rejected by every institution to whom he ap- plies. if he does not pay the big levy demanded by those in agreement. Tn fact loans from banking houses to float a large issue of railway bonds, municipal securities. stock of indus trial. congratulations on an enormous
 
 priscs. are taken. and amazingly big amounts of these securities are cNactcd by the lenders for success full promotions Some persons. or estates. have grown in wealth be- yond all expectations. and their par ticipaGon in loan operations is re garded as inspired by d selfish de sire for special gain, at the expense of the small. and legitimate bor- rover
 ITO maintain this control over the money market to give themselves special advantages in supporting their own enterprises. or those in which they are more or less interest cd. they are very likely to invest their vast wealth in bank shares. in railway companies industrial com panies and the like. By 'interlock- ing directorates.' so called, they may selfishly influence loans to their own enterprises; or, in time of stress, provide help to favored companies. while sacrificing tlosa pot taken into the agreement. This. in brief. may be regarded as a fair description of the Money Trust
 INel. NIldI IS tft IeldIlOn or banking reform to the Money Trust?' Whether this statement as to the methods and character of the Money Trust is extreme, it is ob- vious that the normal business of the country in buying and selling staple goods ought. to be protected from any sinister. Financial domina- tion by immediate and suitable leg islatiOn. Then. we ask, would d Ma tional Reserve association give this protection? The vast mass of local loans the country ovti" is based on the production& of staple goods and their distribution to the consumer. On the other hand, as things now go, our banking system encourages the flow of surplus funds to financial centers where they can be used in speculation, or in furtherng great promotions
 Which should be favored? There can be no doubt as to the answer. The essential purpose of the Nation al Reserve association is to separate these two kinds of operations, and to favor pre-eminently loans to those doing a strictly commercial business as opposed to speculation and pro- motions. As a basis for loans, there is a vast difference. as affecting the permanent prosperity of the country between commodities passing from the producer to the consumer. anC the investment securities in capitaIiz- cd form of the organizations produc- ing the commodities. Loans support ed by the former are short time and commercial: those supported by the latter are of a long time and invest ment character. The Money Trust is concerned with the latter, the Ma
 tiOuaI Reserve association with tn
 former. This is the cruX of tn
 whole matter The more it is dis
 closed that the loanable funds O
 the country are used to support in
 vestment loans, the more reasoi
 there is for the protection of com
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