New-York tribune., 1913-07-26

cured also by a general prior lien on al
assets Of the federal reserve bank whicf
issues them and supported by specif'
gold reserve carried by that particular
bank. incidentally only Is the government
a redemption agent for the bank, and fol-
this purpose il carries per cent re-
demptiOn fund deposited by the bank issu'
ing the notes.
"(3) The government being merely
euarantor and standing Gas II does in the
case OF existing national banknotes) mere
ly as redemption agent Of the bank OF
issue. il is not clear what good reason
exists for ? deception of the public by q
false 'purport on the face of the bank
notes
Suggestions for Operation.
I'm view OF these representations th'
following suggestion is respectfully Of
fered
"Why not have the federal reserve
board composed OF two coordinate
branches. working together. but acting In
within their respcctiv,
spheres. much as do separate committees
on ordinary boards OF directors?
"OD Tho supervisory or government
branch 20 consist. let us say. Of six mem
bcrs. all ex officio. and to be, respectively
the Secretary Of the Treasury, the Secre
tary OF Agriculture. the Controller OF the
Currency. the Treasurer Of the United
States and the respective chairmen OF th'
Committees on Banking and Currency OF
the Senate and the House OF Represent
atives. The duties and powers of this
branch should not be discretionary. The!
should be fixed by statute and be sur
fciently broad and ample 20 compel th'
conduct of the federal reserve banks &C
Cording 10 law.
"t2D The administrative OF business
branch 20 consist Of FIVE members, all tC
be experienced bankers elected by th'
boards Of directors Of the several resiona
banks. not more than one member TO o'
chosen from any district and from theii
numbers TO be selected the governor. th'
vice-governor and other officers Of the fed
ersl board Of control. The duties anc
rOwers OF this branch should be purely
and. broadly, should en-
brace all the discretionary and executive
movers now sought TO be placed in mex
perienced hands Certain general powers
such for example. as the appointment
Of federal reserve agents. the appoint
uents OF directors Of Glass c. Of fedora
reserve banks. questions relating 10 thu
establishment of branches. etc. mish
properly be made joint and rest in th'
whole board. Of which the Secretary o. th'
Treasury should he chairman.
This would seem TO leave the govern
ment in complete supervisory control OF
the banks. with ample power TO compe
observance Of the law. and at the same
time would place the business admins
tration Of the affairs OF the regional banks
in experienced hands. And. moreover
such an arrangement would take thI
banks entirely out Of politics.
Views Of II. r. Eldridee.
The views Of Vice-President II. r. FL
bridge are condensation OF the opinions
of the correspondent banks Of the Ma
tional City Bank In the smaller towns
and cities throughout the United states
gathered by personal interviews and cor
AS 20 their attitude toward
the new currency bill Mr.. Eldridge says
They disapprove the political features
Of the bill and unite in saying that IN
the relations between country
national banks and the proposed federal
banks account should he taken of the pc
-uIiar character of the services performed
generally by those banks for their clients.
THE facilities extended the public by
what are usually termed country banks
are for the most part seasonal, and usu-
ally consist Of loans, made 10 farmers.
maturing shortly after the estimated time
for harvesting their crops, and OF ad-
vances 10 cattlemen and livestock raisers
maturing at times when young stock
usually is sold or when fattened cattle
are sent to the markets, and OF loans
made 10 merchants and dealers who ordl q
narily extend mercantile credits 10 iarm-
ers. cattlemen and others.
debtors Of all these classes naturally
prefer that their obligations should be
made to mature at dates when their col
lections normally should be made In SUI
fcient amounts 10 enable them promptly
to retire their notes as they fall due.
This condition applies more particularly
TO the debtors of banks in the South.
West and Northwest Such
are the seasonal demands for funds IN
those regions that I'm the most prosper
Gus districts the local banks have on hand
,dle money only for a comparatively brief
season in each year.
Necessarily. these banks are not large
or frequent buyers OF what is termed
paper because they ma il
10 their interest 10 maintain, when they
have idle funds liberal balances with
CORE spondent banks in the larger cities
i'm order that they may create there a sub
stantial and dependable basis for credit
10 be available during four or five months
OF the year when il is necessary for the
Of their customers and
properly to serve their communities with
banking credits.
Country Banks Hampered.
Under the proposed law the reserve
would make II difficult foI
country national banks TO remain IN the
system and at the same time 10 main
tain sufficient balances with their re-
serve agents TO entitle them 10 receive
the advancement OF their customary Dor
rowing requirements against such paper
as they had If they did maintain such
balances. II woul1 necessarily reduce tc
a considerable degree the earning capac'
lty OF the country banks, because II
would necessitate a curtailment Of their
loans in order TO maintain such balances
This would be a source OF dissatlsfac-
ton 10 stockholders by reason of de-
creased earnings. and at the same time
il would be a disadvantage to the banks
.hnrnanlvea hecanse they Wnnld not be In