Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-12-11
BURTON CHAMPION
OF CENTRAL BANK
Ohio Senator Cites Defects of
Regional System in DEM
0cratic Bill.
SAYS PENDING MEASURES
WOULD BE IMPROVEMENT
But Thinks Lead of Other Nations
Should Be Followed in Finan-
cial Readjustment.

The advantages of central reserve
bank over the regional system proposed
in the democratic currency bill were
discussed by Senator Burton of Ohio
in the Senate today. After admitting
that the passage of either the demo-
cratic bill or the Hitchcock bill pend
ing before the Senate would be a benefit
to the country, and improve it's bank
ing facilities, Senator Burton went on
to point out that in every civilized
country of the world where banking
has been developed there is now a CEN
trail bank system.
He said. in part:
Generally speaking, We may say that
a central bank in this country would
De Ike an army modified at one point
its whole power is instantly available
for defense. 1t would secure immedi-
ate action without the delay or red tape
OF officialdom. as illustrated by the ac-
ton OF the proposed federal reserve
board. A bucket OF water instantly ap-
piled is more efficient in preventing a
confiagration than whole fire depart
ment in subduing it after the lapse of
a little time.
Balancing Of the Surplus.
Surplus funds received from one Sec
ton may be applied to loans whenever
sultant strain. In such a case a GEN.
trail bank would be only the irtermedi-
ary clearing house for one section Iav-
ing surplus to lend to another which
Was in need. Spreading over q vast
area In its operations. 1T permits this
balancing OF varying surplus and needs
The control Of foreign exchange and
greater power ID protect the gold sup
ply, the greater credit and prestige
ABROAD would enable a central bank not
only to better protect our commerce
but also to furnish more aid to our
government If occasion should arise
with a central bank the Inevitable pol
Icy Is one of cooperation between It and
all other institutions. With a great num-
ber of banks, or even with a dozen. the
tendency Is for each to save itself at the
expense of all the rest. No system of re-
g1onal tanks can prevent competition to
obtain gold and currency in time OF strain.
Admission Of Its Defects.
The Owen bill carries upon its face a
frank admission Of the fatal defects OF
the regional system. because It gives pow
er to q board Of central control to effect a
of reserves between regional
banks and to require enforced rediscounts
The very act on the part of the federal
board in enforcing such rediscOunts would
accentuate the rivalry between sections
Tor the accumulation Of reserves. 1t would
cause unlimited irritation and friction. No
regional bank could make calculations
for the care of its customers or the util-
ization of its resources, because any day
it might be called upon to transfer it's
funds elsewhere.
1t is idle to say that a central bank
is to any extent an incident of absO-
lutte government or kingly authority.
Nb<. ey<r -yvr -
public established a central bank before
the conflict with England at the close
of the last century. Switzerland, with
its well established system Of cantonal
and private banks. voted on this SUBJ
ject by a referendum. At first, on a vote
in 1897. it was rejected and afterward
adopted"
Reading Bill for Amendments.
The Senate began the reading of the
currency bill for amendment yesterday
evening, and one amendment, defining
the terms reserve board" district" and
reserve bank as used in the bill was
adopted without opposition. both sections
of the Senate committee having agreed
to this amendment. The readin., of the
bill for amendment did not proceed far,
because senators were found ready to
proceed with the general discussion Of the
measure.
Senator Sherman of Illinois criticised
the democratic drafts of the currency
bill as overcast with the shadow of a
free silver ghost" He said the House
bill provided for corporate death to a
national bank that did not become a mem
Der bank under the proposed reserve
system.
With the President and party leaders
insisting upon reserve banks controlled
and owned by the member banks, SEN
ator Weeks introduced into the discus
sion a quotation from the President
message of June % last declaring for
public control of the proposed new sys-
tenn. No senator attempted to explain
the apparent discrepancy.