The Washington herald., 1913-09-08
BANKERS OPPOSE
CURRENCY BILL
Inability to Participate in
Control Of Reserve Board
Is Objectionable.
POLITICS CAUSES FEAR
Measure as II viii Be Reported Will
Not Meet Endorsement Of
Financiers.

There are two features of the adminis-
tration currency and banking reform bill
objected to by the bankers Of the coun-
try which are practically certain to re-
main in the bill when reported from the
Senate Banking and Currency Commit
tee. These are that the bankers shall
have nothing TO do with the selection Of
the Federal Reserve Board, and that
there will be no maximum limit set on
the number of regional reserve banks
wnIcn may De organized.
During the last week the Senate COM
mittee has listened TO the views of a
committee of bankers representing 1,40J
banks having an aggregate capitalization
of Sl5 900 100000. These bankers maintain
that it requires more caution to manage
5000 banks, the number it is estimated
will belong to the system proposed in the
bill, than it does to manage one single
institution.
, For this reason they claim that it is
absolutely essential to the success of the
system that there shall be experienced
bankers on the Federal Reserve Board.
They DO not desire that there shall be any
one on the board who has any connection
with any bank while serving on the
board.
Bankers Fear Politics.
The bankers repeatedly declared that
they want absolute government control
of the banking system of the country,
but they made il plain that they fear
that the bill as it now reads will permi;
political influences to affect the success
of the system.
In the words Of Sol Wexler, the New
Orleans banker, the bankers do not want
the government TO issue the notes
WHICH are to provide the emergency cur
rency or to be any part of the proposed
new system except to control 1t and
TO see that it is operated for the good
of everybody.
The bankers want a minority repre-
sentstion on the board of cont-ol-thaL
il, theS want to submit the names of
fifty or one hundred men expert in the
ba mixing business, from which the Presi-
dent shall select three members Of the
Federal Reserve Board.
1t was perhaps the realization that II
will be necessary for the bankers to pro-
pose suggested changes that Influenced
George NJ. Reynolds. the Chicago banker,
10 submit a plan whereby the Federal
Reserve Board will be organized as origi-
nally provided by the House bill but
which will at the same time remove two
of the most Objectionable features of that
bill. IN the opinion of the bankers.
Mr. Reynolds proposition is that each
meInDer DdIlh SIldll
ately TO the stock Of each Federal re-
serve bank. II there should be twelve
regional banks and the bill requires a
member bank to subscribe for stock 20
an amount equal TO 20 per cent OF the
member banks capitalization, under Mr..
Reynolds plan the member bank would
be required to subscribe to the stock Of
each of the regional banks TO the extent
oil the I2-3 per cent Of the capital
iZation of the member bank.
Mr. Reynolds does not insist that the
member bank shall have any part in the
selection of the directors of any of the
regional banks except the one located in
its district.
EqunI Financial Interest.
The result of his plan would be to give
each member bank an equal financial
interest in the success of each of the
regional banks and would automatically
remove the objections the bankers now
make to the provision of the bill which
makes it compulsory for one regional
bank TO rediscount the paper of another
regional bank.
The bankers and the committee agree
on one point; that it is impossible TO
have but one central reserve bank. Con-
sequently the bankers have proposed that
there tshould be not more than five re-
serve banks. The bill provides now
that there shall not 0e less than twelve.
The main objections offered by the
bankers to having any more regional
banks than is absolutely necessary in
order to get away from the impossible
ity of having one, are that the business
OF the country would be facilitated by
having as few as possible; that there is
danger of political power being used TO
establish more reserve banks than would
be wise and to have their locations de-
termined by political influences instead
of sound business judgment; and that 1t
is necessary in times of stress to avoid
publicity of the money stringency ex-
listing.
An illustration of the last named Objec-
tion was given by Chairman FOgran, of
the bankers committee, who said, ''lI
New York and Chicago were in the same
Federal Reserve District and there was
plenty of money in the New York banks
but the demand of commerce depleted
the funds in the Chicago banks, sufficient
currency to meet the demands in Chi
cago could be transferred to Chicago to
meet the emergency, and the statement
of the Regional Reserve Bank for that
district would not indicate that any unu-
sual stringency had existed in its district
and the public confidence would not have
been disturbed. But if New York and