The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1913-07-14
Reynolds Objects to
Federal Control of
the Banking Power

Special to The Journal, Duluth, July
14:-George M. Reynolds, president Of
the continental National bank of Chi
cago, spoke before the Minnesota
Bankers association here today on
The Administration Currency Bill, and
mad both praise and criticism for the
measure.
Mr.. Reynolds said that as a result of
personal interviews with President
Wilson and others at Washington,
charged with the responsibility of pre-
pairing a currency bill. he had been
impressed that it is the desire of all
concerned to devise the best plan
which it may be possible to enact into
law.
by way of suggestion for Improvement,
Mr.. Reynolds pointed out that the
seven members Of the proposed federal
reserve board would all be appointees
of the president to the exclusion from
the deliberations of the board of bank
ers and business men generally and
that this would be calculated "to
place our whole system of banking
under the domination n control OF a
purely political board" He said:
AS Il result of personal interviews
with President Wilson and his admin
tstration heads who have been charged
with the responsibility of preparing a
currency bill, I have been impressed
1T is the earnest desire of all con"
cerned to devise the best plan which
1T may be possible to enact into a law.
Therefore I believe they will welcome
constructive criticism of the bill,
The bill is intended to provide
for a system of banking and currency
IN the United States which, while it
will give a greater elasticity in our
credit and ~banknote issues, should also
protect our organization, of credit and
give stability to. our. business. It is
sought to bring this about through a
provision for the establishment of
twelve federal reserve hanks, n each
in twelve important commercial cities
SO geographically located as to be best
calculated to serve the needs Of all
sections of the country. E.&e
Smallest Capital $~5,o00,oeo.
TT Is proposed these federal reserve
banks shall be organized by means
Of having the banks, both national and
state, of any one district subscribe to
the stock Of the federal reserve bank
Of that district to the extent of 90 per
cent of the capital of the subscribing
bank, one-half, or 10 per cent, of which
is to be paid in cash, the balance to
stand as a liability against the sub
scrihing bank. The amount OF capital
of any federal reserve bank would,
therefore, depend upon the number OF
subscribing banks in any district and
the amount or their capital. 1t is
stipulated, however, that no reserve
bank shall start with paid4up CAPT.
tai Of less than $4,000, 900.
Thus it will be seen that to es-
tablish a federal reserve bank in any
region, the banks In that region sub
scribing to it's capital stock would nee
essarily have to have q capital aggre'-
eating $50, 900, 900: they might have
more, with the result that the federal
reserve bank would have as much
larger capital than $5,006000 as 10 per
cent OF the aggregate capital of all
member banks would exceed $50, 600, =
900. s
1T is provided that each of these
federal reserve banks shall have min
directors, three of whom shall be elect
ed by the member banks from BANK
ers in the district, and three by the
member banks from among the bust
ness men of the district who are not
bankers and who shall fairly represent
the agricultural, commercial and indus
trial interests of that section. Three
Traditional are to be selected by the
federal reserve. board at washington,
one of whom shall be designated by
that board as federal reserve agent
land who shall have an Sofiee in the
ipE6IHlSES VI ttlCa 5lCoCI u iG5VAsfOY p1AifNs
and be the chairman OF Its board of
directors. The board thus constituted
shall have the right to elect its own
officers and manage its W business,
subject to such supervision and con-
troll Of the federal reserve board as
has been provided.
Would Close Door TO Imitation.
$50 far as T Can see this is s~atisfac-
tory, except that I think the federal
reserve agent. who, it Is provided, will
represent the government on the board,
should not be It's chairman even
though, as I understand from the au-
thors of the bill, this is meantto be
only an honorary position and it is
not intended he should have anything
more to do with managing the bust
ness than his influence ais one director
would give to him.
THE provision made for allowing
member banks to discount commercial
paper is satisfactory also, except, that
the bill does not limit the amount Of
~rediscount to which any one bank
shall be entitled. 4 think this should
be modified to make the limit OF re-
discount for any member bank an
amount euaI tx Its capital. Otherwise
the door will soeS open for imitation.
believing that In the interest OF
the public welfare the government