Atlanta Georgian. [volume] (Atlanta, Ga.) 1912-1939, 1913-10-09
CURRENCY BILL s
DANGERS TOLD
BY GRAVES
Senator Hitchcock Points Out
Peril in Arbitrary Powers
Given Federal Board.
By JOHN TEMPLE GRAVES.


ings before the Senate Banking and
Currency Committee have unques-
tionably been of much practical value
in pointing out the advantages and
defects Of the pending bill and they
have served also to assist members
of the committee in formulating
their views.
Senator Hitchcock. Of Nebraska,
who is one Of the members of the
committee, is one OF the able and
growing Senators from the West. He
has been outspoken and vigorous in
his protest against certain phases of
the bill, and his views will have much
force throughout the West. Among
many indefinite and uncertain Sena-
tors he was prompt in his answer
to my request for his views. This is
what he said
Would Limit Boards Power.
Taking the present bill as a basis,
the changes which, to my mind, are
necessary may be outlined as fol-
lows:
First. to strictly limit the powers
of the Federal Board by provisions
in the law. At present the powers
Of the Federal Board are entirely too
arbitrary. 1t would have a prac-
teal control over the volume of cur
rency, over the rate of interest, and
over the management of the Federal
reserve banks. 1t would have power
TO suspend all reserve provisions Of
the bill and power to dislocate the
business of the country by compelling
one reserve bank to lend money to
another
I'm fact, the powers of the Federal
Board are so great they would practi-
cally be running the banking system
of the United States. In my opinion,
these powers should be so reduced
that the Federal Board, Instead Of
running the banking system OF the
United States, would be restricted to
a supervision of the banks so as to
enforce the regulations of Congress
Second, the bill now permits the
directors of regional reserve bank
to have entire discretionary power in
discounting commercial paper OF
member banks. l think this discre-
ton should be strictly limited.
Favoritism a Danger.
10
now provided for in the bill opens the
door to the grossest favoritism. One
member bank might be able to re-
discount much more than 1t ought to
and another member bank with
equally good paper might not be per
mitted to have half that it is en-
titled to.
Third, | am against that provision
of the bill which provides for the re-
tirement of the $1,000, 100000 of our
bond secured currency. | am willing
to accept a reasonable amount of cur
rency based on commercial paper, but
am not willing to have all of our
currency based on commercial paper
as bond secured currency has proved
entirely safe and its only defect is a
lack of elasticity.
Bill Would Contract Credit.
Fourth, l think there should be
limit to the amount of additional or
elastic currency authorized in any
bill.
Fifth l think one Of the needs of
this country is an increase in bank
ing capital, but the bill porvides alb
solutely none. On the other hand.
1t transfers 10 per cent of the capital
of banks that go into the system
away from their control. and to that
extent embarrasses them and makes
them dependent more than they are
now.
Sixth, as drawn, the bill will in
evitably produce great contraction
of credit or loans while it is being
put into operation. l think this would
amount to several hundred million
dollars and would greatly embarrass
the business world and possibly pro-
duce serious distress. This would be
brought about by the efforts of banks
now holding deposits of country
banks to get ready to turn them
over to the reserve banks as the bill
provides.
Seventh, am strongly opposed to
retiring per cent Government
bonds now outstanding and putting
out per cent bonds in their place.
III general, luluh LUS Dill Is 100
destructive and too revolutionary,
and l believe 1t will tend to build up
a Capitalization tendency in the
banking world.
Seven Men in Control.
The monopoly would be controlled
by seven men. The seven men would
be appointed by the President. and I
think the result would be that the
banking interests in times past have
been thrown into politics.
You ask me what the radicals
upon the committee favor. l am not
sure that the radicals have fully
made up their minds as to what they
will favor any more than other
members of the committee have.
Roughly speaking, however l count
myself a radical and l favor such
legislation as will maintain the indi-
vidual independence OF the banks of
the United States and give to each
one in proposition to its capital, an
easy and workable method of secur-
Ing from the Treasury, as a matter
Of right, a limited amount of cur
rency at any time on the deposit of
adequate security.
Il am inclined to think this can be
done by maintaining fifty sub
treasures, including those already
established.
"Of course, the amount of currency
available for each bank would BE-
limited, but this facility or assistance
would be in addition to all those