The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1913-10-26
SUCCESSFUL HEADS
| OF BANKS ARE NOT
| ALWAYS EXPERTS
Many Not Grounded in the
Fundamentals of Bank
ing and Currency
| MORAWETZ RECITES
OBJECTION TO BILL
Thinks Compulsory Feature Might
Bring About Contraction in Cur
rency Which Would Prove
Serious for Country
ny HOLLAND

by HOLLAND
New York. October 25.-(Specia1.)
Victor Morawetz. who is of Baltimore
| birth and early training, one of fam
| lily distinguished for intellectual achieve
ments. who was a student in one of the
great universities of Europe and was
graduated also from the law school of
Harvard, and who for some 80 years
has been engaged in important profess
sional practice in this ,city, was per-
haps in better position to say to the
Senate committee on banking and cur
rency what he did say a few days ago
than any banker could have been. Mr..
Morawetz dared to say that in certain
features of the pending currency bill
he saw grave dangers, and intimated
that If the bill in It's present form be-
came law it might result in panic. He
did not testify as banker. His knowl-
edge of banking and finance has been
acquired partly by study and partly by
long service as member of the execu-
tive and finance committees of the
Norfolk and Western Railroad COM
pany. No one could Justly accuse him
of having any other interest in the
measure than citizen If he has any
relation with the banks, it is that of a
customer or client, although it is pos
ments some shares of national bank
stock.
$3.50 Possible Contraction
Mr.. Morawetz pointed out several fea-
lures of the pending bill which he be-
lieves should be eliminated or modified.
He wants to prevent possible enormous
contraction of the currency; he went
so far as to say that the contraction
of the currency which would occur If as
many as one-third of the national banks
refused to come into the system would
certainly result in severe money strin-
gency and might bring on a disastrous
panic This was the reason why he
opposes the provision ofithe bill which
sets forth that any national bank which
fails to come in under the new plan
must be dissolved.
This compulsory clause, in Mr.. Mora
wetz's opinion. would be more likely to
affect the country at large than the
banks. For if money stringency comes
the greater trouble will be that which
the people will be compelled to face
There were other features of the bill
to which Mr.. Morawetz testified his
CbJtStioiiS tiiu thtSts lOT the uiOSI DdTL,
are the identical features which the
American bankers at. their annual con-
vention held in Boston recently and
also various business organizations in
Guiding the Chamber of Commerce of
New York, have especially criticised
On the other hand he seems to favor
the constitution of a federal reserve
board by membership of other than
bankers, although he regards as i'm
practicable the inclusion upon that
board of ex-officio members, as GER
tain cabinet officers would be.
Why Not Bank Presidents
Mr. Morawetz asserted that as a gen
arl thing the bank presidents of the
United States have been promoted from
humble employment in their youth in
the banks until at last they had become
high executive officers but they were
for this reason no more than very high
class clerks. They know the technique
of banking and its practical operations
perfectly, but. in his view, they are
not sufficiently grounded in the scien-
tiffc basis of banking and currency to
justify their selection for such impor-
tant service as will be imposed upon
members of the federal reserve board
Mr.. Morawetz probably had In mind
many of the bank presidents Of the Uni
ted States of whose career he has good
creative forces in American banking
were, with a few exceptions, men who
did not begin as messengers or clerks
in banks, from that position rising by
gradual promotion to the chief execu-
tive office. 1t is fact that many OF
the very successful bank presidents
successful because they have made their
institutions profitable and in many
cases, of great influence---are neverthe-
less somewhat technical. very keen Wis
Toned, but with a vision confined to a
limited range. On the other hand, many
of the great creative forces In American
banking began at the top. President
Frank A. Vanderliv. of the National
City bank, was. until Lyman ]. Gage
became secretary of the treasury,
writer for newspaper columns on finan-
clal topics. He had brief practical
training while serving as assistant sec
rotary of the treasury under Secretary
Gage, and later while serving as vice
president of the National City bank. His
testimony before the Senate committee
and his public addresses have revealed
him as master Of tho profounder and
even fundamental principles upon which
sound banking is based.
Some Other Examples
There is probably in the United States
no greater master of the fundamental
~>OiAoAAiS liiiAOoOPhy upon WHICH SOunQ
banking is based than A. Barton Hep
burn. But he never was minor en-
ploye in bank. He was for time at
the head of the state banking depart
ment OF New York and later national
bank examiner and then comptroller of
the currency at Washington
Master as he has revealed himself to
be of the technique. of banking he is
even greater master of the principles
upon which banking must be based if
it Is to be successful
Perhaps the most Impressive example
setting forth the accuracy of Mr.. Mora
wetz's view Is that furnished by the ca
reer of James Stillman. He was a cot
ton merchant, having taken up the vo-
cation of his father, when. In middle
life. he. was asked to accept the pres
idency of the National City bank. His
service in that institution opened a new
page for American bankers and he
showed them opportunities of which be-
fore they seemed never to have had
the slightest conception He also taup.ht