The Washington times., 1913-06-22
PREJUDICE VERSUS BUSINESS.

If there are to be twelve regional reserve asso
Citations under the Administration currency reform
bill, and if the banks tributary to each regional
association must keep their reserve in their own
reserve association, then will be accomplished the
purpose of keeping the country's money out of Wall
Street." There is no doubt that this is popular
project. The vast majority of people believe Wall
Street has snakish way Of charming the provincial
moneys into its lair there devour them The money
power as commonly understood is this strange mag
netc force that is supposed to exist and to draw the
cash to the financial center where the octopus
hourishes
1t would be worth while to determine whether
there is good business reason for the "country's
money" gravitating to Wall Street, If, in fact, the
country's money" can do more work for the country
in Wall Street than somewhere else, it ought to be
allowed to 60 there. What are the facts?
The Times has heretofore indicated its dissent
from the notion that there is something wicked about
the flow to the financial centers. The currency COM
mission of the American Bankers Association like
wise indicates conviction that the reason why money
goes to certain overshadowng ceners is that it is
needed there.
1t may be true that after it gets there some of
the money is used in undesirable ways. But it will
not do to wreck the nstrumenalities of legitimate
business in order to stop bad practices.
There are about 25O,0O0 miles Of railroad in this
country Every State has its share of them. But in
most States there is not single recognized ex-
change on which railroads are bought and sold. II
man in Minnesota wants to buy piece of railroad
he sends off to. New York to have it bought for
him. Broadly speaking, however, the Minnesota man
does not buy and sell railroads; that is, he does not
deal in their securities, which is the same thing.
The railroads run everywhere, but they are
financed in New York. New York must have the
money with which to finance them. One great diff
Guilty is that to great extent nobody owns" the
railroads. Instead of buying their shares paying for
them, and putting them away in safe deposit box
people speculate in these shares man puts up
$4,000 of cash. borrows $4,000 more, and buys
$4,000 of stock that he thinks is going up He
deposits the stock as collateral to the loan, with
bank
That makes it necessary for the banks where that
business is DONE to have money to loan to the people
who do it. 1t is we'll enough to say that this is not
the best way to have railroads financed: on borrowed
money that belongs to the millions of depositors
everywhere But it is the way we do it in this
country to too great an extent So long as Mime
sotas railroads are financed for Minnesota in that
way through people who operate in New York
minnesota must SenQ ABOUT us Snale VI We ioHey
to New York to do the business
Now if Congress provides that Minnesota banks
must keep their reserves either in their own vaults
or in the regional reserve association say at Mime
apolis, Minnesota will quit sending her share of
money to New York. to be pooled with the rest of the
countrys money, to carry on these operations. Or,
if Minnesota sends it to New York. she will not be
able to Count it as reserves and must keep other
reserves in the home regional reserve association
That amounts to locking up at home the money tina,
ought to be working for Minnesota in New York, and
then taking away from Mnnesotas business demands
an equal amount which must be sent to the grea,
financial ceners to do this nationwide business The
result will be either to cripple the business at home
or that which New York does for all the country.
There is need 10 avoid good deal of unthinking
prejudice against Wall Street," and to consider cur
rency and banking problems with very clear under
standing that wall Street performs very useful
function for the whole country. Keeping the money
out of Wall Street would simply be keeping the
money from working for the whole country at the
only point where there is any machinery provided
through which it may work. Ii is altogether desir.
able to have the broadest possible view of these
factors in the equation. Wall Street has its bad
points The railroads have theirs The trusts have
theirs. But it would not improve matters much to
destroy the exchanges of Wall Street and stop their
activities, to rip up the railroads. and to stop the
physical and commercial operations Of the trusts.