New-York tribune., 1913-11-23

we accepted the regional bank plan as
the only hopeful outlook for action by
this Congress, but retained the amend
ment substituting four regional pahhs
for twelve. While the single govern
ment bank plan would produce the only
perfect mobilization of reserves, as mas
been demonstrated by the experience OF
other countries, the adoption OF lour
regional banks under single cohtrol
will, it is thought. approximate TINS re-
suit, and in a country so large as ours,
with so many banks, probably prove
efficient. Every addition TO this num-
Der Of reserve banks must inevitably
tend TO dissipate the reserves ana
weaken the system. The more reserve
banks the less perfect will be the use
of reserve funds, which means that as
set currency will be issued with greater
frequency and in larger volume"
The stock gambling proclivities Of
! Wall Street are accentuated as one OF
the objects of the reforms that will be
accomplished by the Democratic bill
Evils of Present Reserve System.
THE reserves of the banks of the
United States are now scattered with
out any system among over twenty
five thousand individual banks" the re-
port states. THE present law permits
the national banks in the country to
keep nine-fifteenths OF their reserves
in the banks Of reserve cities and per-
mits banks of the reserve cities to keep
one-half Of their reserves in the CEN
tral reserve cities, and permits the
banks in the central reserve cities to
keep only one-fourth Of these reserves
of the reserves Of the reserves in cash.
The effect Of this systematic neces-
sary effect Of this system-is to con-
| centrate in the hands of few banks in
I the central reserve cities (who have
diligently sought the reserves Of other
| banks) to such an extent that the ma
tons bank reserves are pyramided in a
dangerous fashion in the hands Of a
few banks in the three central reserve
| cities, and chiefly in certain banks in
New York City.
These central reserve city banks have
been accustomed 10 pay per cent on
the deposit of these bank reserves
placed with them and, having no place
TO which they themselves might so for
rediscount. they have fallen into the
habit OF placing very large sums out
Of these reserves, amounting to hum
dreds Of millions. upon call on the New
York Stock Exchange for the simple
reason that under the law Of the Stock
Exchange they can sell the stock col
lateral Immediately on any day when
money Is actually needed. II may be
ruinous TO the borrower; IL may wipe
out his margin. IT may cause him a
disastrous loss: it may upset the in
terest rates of the country, excite alarm
and result in final panic, but II does
furnish the money when needed.
I'VE are advised by representative
bankers in New York that the great
banks there would be glad TO improve
'
federal reserve banks strong enough 10
furnish money quickly on demand
against good commercial bills, and thus
! enable the New York banks 10 with
draw their funds from the Stock EN-
change (Which has become the most
gigantic gambling establishment In the
world) and place such funds in the
service Of legitimate industry and COM
merce. This will be one OF the great
| benefits OF the pending measure-that
| IS il will withdraw from gambling en-
| terprises on the stock Exchange the
| bank reserves of the country and en-
able such reserves to be used for the
commerce Of the nation"
Magnitude Of Proposed System.
The magnitude OF the proposed re-
serve bank system may be gathered
from the figures submitted by the Dem
| ocratic fpction in estimating the re-
sources.
THE capital stock OF %, 195 banks in
the United States. the Democratic re-
port continues, including savings
banks. amounts to $2OlO,0OO,O 900; sur
plus, 81 $50 100000. Six per cent Of
this sum would be something over
| $500, 100000. and the total liability
would make over $4O0.OOO,OOO. AS
suming that one-half of these concerns
enter the system, 1t would give a capt
tai Of S1O0,GOO,OoO, with over $4,000
900 paid in.
! The total reserves which would be
paid into the federal reserve banks by
1920 national banks. outside Of reserve
or central reserve cities, would be
| $16GO0O,OO0; from 80 reserve city
banks, $11OOOO,OO0, and from 30 cen
tral reserve city banks, $96,OO0.OO0,
which, including an estimated deposit
Of $1j0,O0OOOO from the government,
would make an amount equal TO $672,
100000.
IF the state banks and trust com
panies come IN. emitting the savings
banks, 1t would add $270OOO,OO0 Of re-
serves and S21 ,000OOO Of capital stock,
making a total of $972. 100000"
FOR CHOOSING SENATORS