The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1913-11-26

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in New York controls an aggregate of
| $70,000,000 of banking capital, and
that there are other banks approximat-
ing that power. and many that would
be larger than the regional banks if
twelve of them were established. 'The
creation of twelve regional banks, he
says, "will not tend to minimize, but
rather to emphasize, the power of large
institutions; great public institutions
that they are to be, they will repre-
sent less financial strength than indi
vidual institutions
Mr.. Vanderlip, however, finds an
even more serious objection to the re-
gional plan. He declares that the whole
theory of centralized bank reserves is
based on the idea that there shall be
consolidated in one reservoir the re-
sources Of banks operating under ad-
verse agricultural and industrial con-
ditions, meeting a borrowing demand
that is not general but special, so that
the plethora Of funds in one com
munity can be made available to meet
the lack of funds in another. 1t is his
opinion that should twelve regional
districts be established they would be SO
small that in several cases there would
be typically similar conditions prevail
ing throughout the entire region at the
same time. To illustrate his point, he
says:
Let US take for example a regional
trict In which that bank would operate
would comprise IL great cotton growing
section, Climatic and crop conditions
could be practically the same through
out the district 1t would follow. as eX-
perence clearly shows has been the case,
that practically all the banks In that
district would feel an identical pressure
at the same time, Thus none OF the. ad-
vantages Of centralized reserves from
banks operating under varying condi-
uons would be realized. The resources
because all the member banks would be
In need OF assistance OF the same char
acter at the same. time. There is an
Der Of regional banks. 1t is not a mat
ter to be settled by adherence to a po
ltical doctrine. 1t Is subject for in
settled correctly by merely a show Of
partisan strength
Mr., Vanderlip's plan for n central
bank has been little understood. His
critics seem TO have adopted the theory
that any financial plan coming out OF
Wall street must be looked upon with |
suspicion. Their argument has been,
Beware the Greeks bearing gifts -
The Vanderlip plan, however, calls for
moro serious consideration. Apparently |
it provides sufficient safeguards |
against domination by what many are
pleased to call the "Money Power" in
this country. 1T is best described in
Mr.. Vanderlip's own words A pampb-
lot just issued by this noted banker is
entitled, "A Plea for Intellectual Free
dom in Currency Lcgislatiopn Out
lining the plan which he proposes, he
writes:
This plan for a central bank contem-
plates the creation of an institution with |
SiOo, 100000 of capital. the stock Of which |
dividends. and be offered to the public |
believe IL would be eagerly taken by
The public and that it should be allotted !
to the smallest subscribers first This |
would create an institution. the capital
resting on a free public subscription,
rather than a compelled and unwilling
government
would have ali the earnings above the the
dividend requirement, and the surplus /
above the dividend requirements should |
devoted TO the retirement Of the gov
debt. ] would give TO this stock |
no power Of any sort, voting voice or
otherwise. except the power to receive
dividends. The mana agement OF the insti-
ion should be solely in the hands OF a
board appointed by the president but
that board should he as free from politl-
cal and partisan Influence as from prl
rate influence. ] would. therefore. have
board with, life, or at least long-tern,
appointments. ] have suggested a board
Of seven. with terms Of fourteen years.
two years This would make it posi-
BILE for president TO change the ma
iorlty OF a board only by the end OF his
second term. unless there. were other
a director for cause to be stated 10 the
senate, This central bank would have
as many branches as might he needed
to accommodate the business Of the
The principle which prohibits
numerous Independent regional banks
would in no wise operate against nu
cry city OF Importance could be provided
with n bra nch or a sub-branch Of such
an institution, while TO create as many
as twelve or indeed fewer than that num-
her OF Independent regional banks is such
a violation Of an economic principle that
nearly all the benefit OF the attempted
OF reserves will be lost I |
would have a bank note currency issued |
solely as the obliga ton OF. this central
bank AS the bank would be controlled |
by public officers from the governor to
bank would still be In perfect accord
with the political principle that the gov
ernment must control the volume and Is
sue of currency. but notes issued by such
q bank would be open 10 none or the
objections OF n flat Issue OF government
currency to be loaned to regional banks,