Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-09-05
Declares Reserve System Can
not Be Organized Under
GIasS-OWen Bill.
WOULD PREFER NO LAW
TO THE ONE PROPOSED
Asserts National Banks Would
Change Charters to Escape Com
pulsion Under Law.

Predictions that IL the administration
currency bill should pass without
change the government would fail to
organize the proposed federal reserve
system were renewed by bankers to-
day at the hearings before the Senate
banking committee.
III changes are not made" said Sol
Wexler OF New Orleans, II am con-
fident state banks will not come in. and
many national banks will reorganize
under state charters You will have a
legal shell, but you cannot organize
the banking system 1t contemplates."
Would you prefer no new law at all
rather than the bill now before the
House?" asked Senator Bristow.
Would Prefer No Law.
I'VE would decidedly prefer no law, we
do not believe the House bill offers a
sound or workable system of financial
reorganization" said Mr.. Wexler.
James B. Forgan Of Chicago said the
banks would object to being compelled
to accept the new plan, even II they were
given representation on the federal re-
serve board.
A lively debate between George NJ
Reynolds of Chicago and the commit
tee over the causes of the 1907 panic
marked the session. Senator Nelson be-
lieved blame for stock speculative activi-
ties lay at the doors OF the New York
banks.
'@The prime need" said Mr.. Reynolds
is a law that will enable the banker t.
exchange the various forms Of credit OF
the country into some other form OF
credit when 1t is needed"
No knowledge Of Coercion.
Mr.. Reynolds also believed many banks
would not come into the system IL the
bill were passed as at present. II
changed as the Chicago conference rec.
commended he believed most of the ma.
tional banks would be willing to join
He knew of no effort by large banks te
coerce small banks to oppose the ad
ministration bill.
Reynolds said 1t was true that the re-
serve bank system would withdraw mil
lions Of country bank deposits from the
large city banks.
Chairman Owen asked il the constr!c-
ton of credits in New York and the sus-
pension of payments there had not peen
at the basis Of the 1907 panic conditions,
and the suspension Of payments through
I'm Justice to New York banks" said
Reynolds, II must make this state
ment:
hid behind the excuse that they could
not get their money out of New York
Experience During Panic.
AT my own institution in Chicago.
however l know that after the first
four or five days we had difficulty to Sc
cure New York exchange enough to
meet the needs of our own customers.
We were unable to remit balances TO
New York because we were unable TO
buy exchange on New York.
.If our correspondents were asking us
tn send balances to New York 1t must
have been that they did not have enough
balance to meet their needs.
AS to the actual Inconvenience to nls
business through the reduction OF the
loans of banks. Mr. Reynolds said ne
thought the problem could be worked out
so that stable conditions could be main
tanned At the outset OF the new system
however, he believed the great borrowers
of money who draw huge amounts from
the large city banks would suffer ma
terially through the inability to get reaoy
cash.
His own bank, which carries country
bank deposits Of 10000 600. which would
go into a regional reserve bank under the
new system, would have to curtail us
|
were moved.
Objections by Country Banks.
During the hearing yesterday after
noon Robert F. Maddox. vice president
of the American National Bank of At
,anta. said country banks would oppose
the new plan vigorously unless the pro-
vision making all checks payable at
par" in the regional reserve banks was
stricken from the bill. George NJ Key
nolds and J. B. Forgan Of Chicago also
supported this idea.
* 600 to $4,000 Of their yearly income
from the exchange collected on out-of-
town checks" said Mr.. Maddox. II
the new law should make all cheeks
nayable at par in the reserve banks. II
would force all banks to stop charging
exchange.
Change Recommended.
The bankers recommended that only
checks drawn by member banks upon
one of the regional reserve banks, be &C
cepted at par by other banks. They said
the large banks of the country were now
irving to work out a general system of
mar collection of checks but that the
small institutions persistently refused to
give up their right to charge for col
lections.
Joseph Chapman, jr., vice president OF
the Northwestern National Bank OF
Minneapolis. presented the objections OF
the Chicago bankers conference to the
feature of the bill which would give the
federal reserve board power to compel
one regional reserve bank to discount