The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1913-08-09
SATURDAY. AUGUST .. 1913.
CURRENCY BILL COMMENT.

CURRENCY BILL COMMENT. q
This nation, through its national
congress, is engaged in the highly inn
portant and ~far-reaching work of re-
vising its currency and banking sys-
tenn, and a large number of eminent
men ut all parties are working ear
nestly and patriotically to tind the
correct solution of one of the most
complicated problems that can be pre-
sented to legislators. y banking sys-
tenn which does not possess the ele-
ment of security is ahominable, for
it lends itself to the precipitation of
disastrous panics which carry down
to ruin thousands of splendid enter
prises and bring suffering to untold
numbers of people. If the system is
inelastic it might nearly us we'll he
unsafe, for no matter how great the
assets of the country are. inability
to use them promptly and effectively
as needed, is also provocative of panic.
The effort has been made in the franz
ing of the present bill to devise a sys-
tenn which shall at once be safe and
elastic. The task is a difficult one.
1t is not expected that any bill which
may be prepared will be perfect, or
nearly So. All thai can be hoped for
is that whatever bin is passed will
achieve most of what is hoped for,
without introducing any erroneous
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not readily be remedied. All though
full IN the subject, whether
from republicans, or democrats. farm
ers or bankers or others. should be
welcomed, to the end that the best
possible may be done. The New York
Times. which has discussed the bin
in an impartial nne has this COM
ment on the advisory board feature:
The labors of the house banking
and currency committee upon the
for great satisfaction. The progress
made is real. the amendments to the
bill are substantial, and nearly e
one of them, we think, has made the
bill better and sounder. Especially
gratifying is the fact that the COM
mittee turns a denying countenance
upon the impossible proposals of its
more radical and ignorant members.
The suggestion of a currency based
on farm produce has been rejected,
and the foolish prohibition against a
director of a national bank being a
member of the board of another bank
has met a similar fate. Some safe
guards have been thrown around the
exercise of the authority vested in
h federal board to require federal
reserve banks to rediscount the paper
of other reserve banks. the changes
being of a nature to make the power
less arbitrary, and to insure it's more
careful exercise. Nevertheless, the
federal board would have the power
to require such r~ediscounts. The
lowering o fthe reserve requirement
in reserve cities from twenty-five to
twenty per cent within sixty days aft
er the act gees into effect has an oh
vioua relation to the requirement that
national. banks shall provide the zap
ital for the district reserve banks.
This is not a very wise or safe way
to make the raising of the required
capital easier, but it is evidently the
expectation of the committee that a
twenty per ent reserve against de-
posts would be found adequate under
the new plan of a more centralized
control of reserves.
THE amendment creating a council
OF advisors to the federal board, made
up of n member from each reserve
district, is important and helpful. 1t
gives assurance at least that the mem
bers of the reserve board, all poll
tical appointees. would not be without
the advantage o fthe advice of prac-
teal bankers. But the amendment
as drawn defines the "poWers'' of this
advisory council. 1t would have no
powers. 1t would have the privilege
to meet and offer it's advice to the
federal reserve board on general bust
ness conditions, to make representa-
lions concerning any action taken or
proposed, AND it could call for in
formation. But the federal reserve
board is not required to accept it's ad-
vice or to be guided in any way by its
recommendations. The merit and
value Of the advisory council lies in
this, that the federal board would run
a grave risk and would incur public
censure II it should act contrary to
the substantially unanimous advice
of the representatives of the district
reserve banks. In some measu re-
spect for public opinion would doubt
less incline the federal board to pay
heed to the advice given. But there
would be no certainty about it, and
public opinion upon technical matters
Of banking is much less easily aroused
and interested than when questions Of
currency, particularly the volume
thereof. are under discussion.
I'VE are still entirely confident that
a better way would be to provide
that four members Of a board of
eleven should be appointed by the
president from a list of names SUBJ
mitted. by the reserve banks. Prac-
tical bankers would then take part in
the deliberations of the board, and
they would have votes. although the
actual control would still remain in
federal hands"