The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1913-07-29
DAWES SCORES
CURRENCY BILL
Former Compholer Of Cur
reney Condemns Admins
tratien Program.
MAKES BANKS POLITICAL
Sees b Plan Distinct Separates #
Financial lns6tations from
Their 0wnership.
MAKES BANKS POLITICAL

Charles 8. Dawes. former Comptroller
Of the Currency. has analysed the ad-
mipistration bill. and In part says:
The administration currency bill "a
practically bill for the organisation
of pumber Of large central banks OF
great power. to be established in compe-
| tition with the present system OF inde-
pendent banks Of the country. Az dis
tinguished from the Aldrich. bill. this bill
Is departure from the present inde-
pendent banking system of the United
States and not q development of IT. II
tends to destroy and lesson the import
ance Of the present system OF indie
pendent. competing banks.
Let us analyze II:
Il. This bill proposes to compel the
national banks to furnish the capital for
number Of Federal reserve banks
under the ultimate control Of govern
ment fappointees, which reserve banks.
under the provisions of the law, become
competitors Of the national banks and
State banks. Section Is and Section 16
OF the bill. taken together. as distin-
guished from the Aldrich bill. allow the
Federal reserve banks to purchase In the
open market bills of exchange. into
which form commercial paper can usual.
ly be easily transformed.
- otsiocS tueir CAPITAL, II COmpelS
the national banks to turn over to these
competitors several hundrd millions of
reserve deposIts-in other words 10 con-
tribute to them both capital and bust
ness. As the Federal reserve banks pay
no interest on these forced reserve de-
posts. they will be no mean compcti-
tors in their use in open market opera
tions.
"a. No limit is put to the extent of
loss which the national banks may suffer
on their investment in Federal reserve
bank stock. but they are limited to a
per cent return as possible profits.
Places bank at DISADVANTAGES.
- The government. which has re-
ceived par for its per cent bonds. de-
posted by the national banks to secure
their circulation if this law is passed.
threatens with loss any national bank
which has outstanding circulation and
desires to retire from the system.
3. The above propositions concern
greatly the welfare of the public, as
well as the banks, for the reason that
they, with other provisions of the bill.
tend to make 1t Improbable for banks
to do business under the national laws
as compared with State laws.
Would Work to Confusion.
sc. Statutory laws, heretofore. when
they defied the underlying laws of eco
nomfcs. have proved failures. resulting in
the great confusion of business and loss
to our people. By driving into State sys-
TENS a large. IL not the greater. part of
the present national banking system. this
law, II passed, instead of unifying our
systems. would tend to scatter II
under diverse State laws. greatly differ
ing in their method Of regulation.
-. In normal times, the stockholding
banks which own, but do not control the
Federal reserve banks. will have no occa-
sion to use the Federal reserve bank cur
rency.
IS. This plan compelling the national
banks to furnish to competitors both cap
ltal and business, and divorcing owner
ship from control by putting these COM
petitors under the control of political
appointees. brings the banking system Of
this country into the situation again from
which emerged after Andrew jackson.
backed by the State banks on one hand
and the radical politicians on the other.
ruined the Second Bank of the United
States and plunged the country into the
and terrible panic Of 1851.
IF this bill Is passed our banking sys-
em is again projected into politics. II
me would know what this means to the
business and prosperity OF the nation. let
him read the financial history Of the
United States from 1880 to 1870
g. Upon no other one agency does the |
of our people more depend
han upon our banking system. No
greater calamity to their interests can |
,orne than from the passage of an ILL., |
advised measure of alleged reform which |
will cripple or largely destroy the great |
'ystem OF national hanks which Is now |
part Of the web and woof of business. |
There is nothing more delicate or danger |
,us to tamper with than the credits of a |
lation.'