The Barre daily times. (Barre, Vt.) 1897-1959, 1913-08-23
BANKERS
COOPERATION
In Pending Currency Legislation Now
Before Congress-A. Barton Hep
burn Spoke in Chicago
Yesterday.

ton by section, in the spirit of helpful
corporation, and see if we cannot aid
the government to accomplish wise and
wholesome legislation, that will place
our industries and our people on par
with other great commercial nations
This pledge of cooperation by A. Bar
ton Hepburn, in his speech as chairman,
was an evidence of the attitude the
bankers are to maintain in their consfd-
Grafton OF the pending currency measure.
Mr.. Hepburn gave high praise" to the
administration for its earnestness in taxi
ing up the subject. He commended many
features of the bill, but did not hesitate
to indicate that there were others which
IN his opinion needed revision.
The failure to fully develop the CEN
trail bank idea, which he said was rec
ognized in principle. and its consequent
effect on many provisions of the bill,
was the criticism of greatest emphasis.
The establishment of twelve banks
| instead of one for the purpose of bring
ing together the money reserves of the
country, had made it necessary in order
to make these reserves effective to pro-
vide central board with powers greater
than would be necessary for one central
bank to possess. However. the recogni-
ton Of the principle, Mr.. Hepburn said,
was reason to rejoice. He asked: "Why
then should not the principle, once rec
ognized, be correctly applied? Why
should not the law create one central
bank, which should have branches wher-
ever there is commercial need for them?
Such a plan would be simpler, less cum
bersome and more certain in operation,
and far more efficient. There would then
be no need to give the federal reserve
board authority to direct one section of
the country to loan money to another,
for the central authority would then
control all the deposits and all the loans,
and they would make loans to those
sections of the country where most
needed
"As matters stand to-day. whenever
stringeney in the money markets exists,
our $4,000 banks begin competing with
each other to strengthen their cash re-
serves. In doing so, they intensity the
stringency and aggrayate the trouble
The disposition of bank managers to
strengthen their individual institutions
is natural and inevitable. In viewing
the proposed legislation, one of the most
natural questions then is whether the
establishment of these regional reserve
banks will remedy or aggravate that
condition. VIII there not naturally and
inevitably be competition between the |
regional reserve banks, competition be-
tween the twelve sections of the eoun-
try, and may we not in the end have
competition for cash holdings, between
individual banks added to the COMPETE |
tion of section against section reserve |
bank against reserve bank? The franz
ers of the measure evidently recognize
that danger and seek to pailiate it by
giving to the federal reserve board the |
to force one reserve bank to |
loan to another. Under the conditions |
that would exist, would not the exercise /
OF that authority fail to accomplish the |
just division Of funds? rs there not
strong probability that in exercising /
that authority factors would be created
that would endanger the smooth work
ing and permanence of the whole plan7
with a single central reserve bank
with branches, reserve money of all the
banks deposited with that central insti-
tuition would count in the aggregate, no
matter with which bank it was depos-
tied, or through which branch it was
loaned. With such a single central bank,
the controlling board would place its
reserves in the section of the country
where most needed. This shifting of
funds would be accomplished without
and without notoriety,
if a federal board should re-
luire, as it might do, under this pro-
posed law, one federal reserve bank to
oan money to another federal reserve
bank, that could not be done without
attracting attention to the borrowing
locality in a way that would operate
10 the prejudice N xlat locality. On the
'ther hand, how simply, easily and nat
irally, this apportionment of funds
would be made to fill requirements of
lifferent localities through the opera
ion of one central bank with branches
Mr.. Hepburn pointed out at some length
what he believes TO be the danger of
having the credit of the government
allied in question at some future time
~ obligating il in the proposed note
ssues of the regional reserve banks.
The banks, he said, should be made
olely responsible for the notes. 1t was
lis opinion that these notes meant infla-
ion, though he disclaimed any offense
" the term. He pointed out that the
limits placed on the resources and bust
less of the reserve banks would tend
o the eurtailment of credit. 1t was
he said, to see the advantages
f the proposed system or the induce
nents to banks to 90 into it. Banks
hould not be compelled to go into Il
gainst their Judgment, he said, and
hen called attention to the monetary
commission plan, which permitted, but
id not compel banks to subscribe to
he central bank Mr. Hepburn doubt
d the wisdom of providing for land
,ans and savings departments in the
ystem.
The absence of public hearings on the
i'll and the imminence of its enactment, ,
e said, placed a responsibility on the
ankers of the country which they could
OF avoid sin justice to themselves, to
ne public whom they represent, and to
ne stockholders by whom they are en- $
loyed, to give at the present time pub
C expression to their Opinions in re- !
ard to the pending measure"
In reviewing the commendable proyi- ,
ons of the bill, he said: +,
1T creates a central bank, it estab- =.
shes branch banking, it recognizes bank
ssets in the form of commercial paper,
! the normal and proper basis for bank c
lrrency, it provides for keeping the
lrrent fnuds of the United States in d
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