Ashland tidings. [volume] (Ashland, Or.) 1876-1919, 1913-09-22
THE NEW BANKING LAW.

There has been a great deal OF
argument pro and con over the new
federal banking law proposed by Sen
ator Owen. The arguments have been
confined, largely, to bankers and
financial writer's. The details of the
law and the effect of its operation
are a little hard for the layman not
familiar with banking operations to
understand.
The bill as it stands provides for
twelve regional banks, whose capital
is to be subscribed for by the ma
tional banks in the particular region
tributary to the regional bank. The
capital of each regional bank must
be S5,000,000 or more. A subscrip-
tion from each national bank in the
region is compulsory and is based on
the percentage of its capital Banks
that are stockholders in the regional
bank could then take commercial pa
per and discount it at the regional
bank, securing currency therefor.
The bill originally limited the dis
count to forty-five days, but this
may be extended to ninety days.
Some of the leading bankers OF
New York city and Chicago object to
regional banks. They desire the es-
tablishment of one central reserve
bank. Or, if regional banks are es-
tablished, they desire them limited
to not more than five. If only one
central bank were established il
would no doubt be located in New
York city, and the money center
would be fixed there indefinitely.
If two regional banks were estab-
lished, as has been proposed by some,
probably Chicago would be selected
for the second bank. If five regional
banks are established, New York city,
Chicago, New Orleans, San Francisco
and possibly Pittsburgh would be
most likely to be the successful can
didates for the location of the banks
Under the present banking system
New York city holds large per cent
of the money belonging to all the
states in the union. Practically
every bank in Oregon of any size is
obliged to carry a considerable part
of its cash on deposit in some New
York bank. A bank here that car
ried cash on hand of 100000 very
likely would have $4,000 or $15,,
900 on deposit in New York city
The credit a bank is allowed to eX.
tend depends on the amount Of
money on deposit, and this enables
the banks of New York city to ex
tend an enormous credit to their Gus.
toners in the city of New York, be-
cause they have not only the money
of New York city people but money
of central and western states as we'll
1t is likely that the establishment
of regional banks would alter tha
condition and be to the benefit o
other states than New York.
The new law, in whatever form i
passes, is intended to furnish a larg
er supply of money, or what is equiv
alent to money-banking credit A.
increase of money supply is sadl
needed.
The price of all commodities a
well as the quantity has PRACTICAL
doubled in the last decade or two
while the quantity of money to han
die commodities has increased in
far less proportion. Money at time
is so scarce that it is perfectly pos
sible for a man who has 100000 i
property TO fail and lose his proper
ty for the lack Of SIS, 900 or $4,000
in cash. Such a condition is absurd
ly wrong and it is to be hoped tina
the Owen-Glass banking bill will b
passed in such form as to great
relieve this condition.