The Grangeville globe. [volume] (Grangeville, Idaho) 1907-1922, 1913-11-06

ion is to leave the federal treasury
as bare as old Mother Hubbard's cup
board, and to take away from the gov
ernment any discretion with refer
ence to turning its moneys over to
this system of private banks. main
tain that such a provision is not only
unwse but unthinkable.
20. The bill provides for what is
practically an unlimited issuance of
asset currency. l say unlimited be-
cause the discretion Is vested in a
board Of seven men; and everybody
knows that such a board, being COM
posed of mere human beings, may at
any time proceed unwisely and pro-
duce initiation, with all its consequent
evils. l contend that a power of such
proportion should never be vested in
a single board, and that If it Is SO
vested, the confidence of the world
In our financial system will at once
disappear. l maintain that 1t Is the
duty OF congress to place limitations
upon the authority Of this board so
that it Is without power to plunge
the country into the wild dissipation O
an unlimited initiation.
"3. Our present banking and cur
rency system Is the outgrowth OF
more than fifty years of development
Broadly speaking, the banks have es-
tablished the following system, viz:
The small country banks deposit their
surplus with the banks of the larger
cities; and the banks of those larger
cities in turn deposit with the great
banks of Chicago, st. Louis and New
York. These arrangements are made
largely for business reasons, to-wit:
Each bank receives some interest up
on its deposits, and at the same time
has fund upon which it can immed
lately draw. In addition, ii is en-
abled to sell bills of exchange upon
the great financial centers and thus
to facilitate the transaction of the
business of it's customers. That the
system has many dangers Is beyond
question; but that it exists is a fact
that must be reckoned with.
witness this: The national banks
hold in their vaults approximately ST.
160, 0,365,65 which Is there deposited
by other banks. OF this vast sum
$5,S01 1928 represents the legal re-
serves SO deposited. The national
banks alone have an aggregate capi-
tai of 81 ,031 ,298. The state banks
and trust companies have an aggre-
gate capital of $964,235, ,780 40. Under
the bill as drawn the banks must pay
into the regional banks upon their
capital, if all enter at once, five per
cent of their capital or 500, 0,512, AIS;
within 60 days, another five per cent
or $100 ,512 AIS; and upon call of the
board of directors of the regional
banks the balance, ten per cent, or
$2O1 ,024,S36, making twenty per cen
in all.
"Now Where are the banks to
obtain this stupendous sum of money:
Manifestly country banks must with
draw from their correspondents in
] the small cities; those banks must
in turn withdraw funds from the larg
er cities; the banks of the larger cit
les must so inturn withdraw from st.
Louis, Chicago and New York, or
they must call in loans or cease to
make loans until they have accumu-
lated the necessary funds This would
Of course, during the transition period
compel AN immense contraction of
credits, temporary perhaps, but never
theless real contraction, The farm
/ er, the local merchant, as well as the
large borrower will be compelled to
pay their loans, and all at once in adj
sections of the country, there will be
demand for money from their bor-
rowers. The result will be a contrac-
ton of such gigantic proportions as
to give to our entire commercial and
business scheme wrench so violent
as to bring great distress. 1t must
therefore, be manifest that it is neces
sary to amend the bill so that these
bank contributions can be made grad
ually and the gathering of the neces-
sary funds spread over a longer period
OF time in order that the inaugura-
tion of a new system may not bring
incalculable distress.
81 have adverted to but three of
the main propositions. There are
many others of almost equal import
ance. No one of these problems per-
haps is impossible of solution, but
all require careful thought and con-
sideration. standpoint Review.