New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-21

A Faulty Plan Full of Bryanlte Fear
of Banks and Bankers.

Two evils which advocates Of currency and bank
ing reform have sought to avoid are control or the
banking and currency system by what is generaiiy
called .Wa Street" and control of il by politicians
The Democratic plan Just announced in washington
goes TO extraordinary lengths to avoid the FORMER
# seems deliberately 70 court the latter.
The Rrvanistic suspicion of banks and bankers
sticks ont all over it, The one thing which the
authors Of this bill have sought at all hazards to
excude from the deliberately centralized system
they propose is expert knowledge of banking All
sensible Secretaries of the Treasury have deplored
the fact that they have been compelled TO exercise
mowers under our present system which they have
no qualification to exercise Yet this plan proposes
that seven men Of the general type Of recent Sec
retaries of the Treasury shall exercise powers many
times as great as those of the present Secretary OF
the Treasury. They will be exposed TO the same
nolitical influences as he is. They will have TO use
their authority over discount rates and their power
10 initiate or reduce the currency when national
election is in sight aud the fate of the President
who appointed them or their partys candidate 10
succeed him is likely TO be determined by the feel
ing of sections of the country at large regarding
the supply of currency permitted TO be issued or the
discount rates fixed at Washington
This is dangerous power 10 be exercised under
the most dangerous conditions 1t should he eXer-
csed by men Of the greatest skill with an eye single
TO the welfare of industry and with the courage
and independence to be Indifferent 10 Wall Street
demands and to the interests of any national can
didate or party 1t is only thus that the great banks
of Europe exercise their salutary influence. III IS
only thus that the powers which the Democrats
propose TO give to this Federal Reserve Board can
be safely and wisely exercised.
And we do not feel that in creating a political
control of the federal banking mechanism the au-
thors Of the Democratic measure have avoided the
other extreme of manipulation by wall Street No
one is so likely TO listen readily to Wall Street
as a board of politicians conscious of their lgno
rance of banking and living in terror lest some trivial
and momentary disturbance in the stock market
should destroy the whole fabric of credit. An eX-
ample of how man who is not banker but
charged with both financial and political response
bilities behaves in the presence of crisis IN wan
Street was Secretary of the Treasury McAdoos an
nouncement the other day. following sharp decline
in the stock market that he had SjO0OOO.OOO OF
emergency notes ready.
As might be expected in plan characterized by
fear and dstrust Of banking and bankers, in which
everything is left to the wisdom and initiative Of
political board there is provision for that auto
matte adjustment 10 the needs of business which
should be a part Of every good banking and cur
rency system. There will be no real elasticity in
the currency if this bill is adopted In the first
place, the present banknOte currency is retained
1t is the worst possible currency bearing no rela-
ton to the needs Of business And the additional
currency provisions of the bill hardly improve upon
the existing situation with respect TO the expansion
of banknote circulation in emergencies.
1t is necessary to speak thus severely Of the bill
on account Of the disappointment that must'be felt
because after all the study and consideration that
the country has given to the subject imperfect
measure should be proposed The Democratic plan
has nevertheless certain merits. 1t is a step for
ward. The need of Capitalization is recognized
The weakness of our system of bank reserves is in
part corrected. But the bill should be very much
improved before it is permitted to become a law.