Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1913-10-07
CURRENCY BILL TO
HIT SMALL BANKS
"Serious Blow" Says Former
Governor Stokes, Bewailing
Loss to the Poor Man.

TRENTON, Oct Former Gov.
ernor Edward c. Stokes is greatly
concerned for the welfare of indie.
pendent country banks when the ma
tional administration currency bill
now pending, becomes a law. He
fears 1t will be a serious blow for
them.
He says that the control of credit
will be centralized to a more dan
gerous degree under the proposed sys-
tenn than it would have been under
the Aldrich plan. The country banks
will be made tributaries to the money
centres and will be deprived of their
usefulness in stimulating local en-
terprises by lending money to mer-
chants, farmers and manufacturers
He says that the man who has built
up his credit on his reputation will
now have to put up collateral for
loans, and a poor man will have nc
standing with banks and will be de-
prived of a start to a successful bust
ness life He discussed the Wilson
bill entirely from the viewpoint of a
banker. The former goverpo lie
pesident of the Mechanics National
Bank this city. He said:
1.-THE national banking system has
been one of the sources of the ma
TONS prosperity. The $4,000 banks,
national and State, scattered over the
country in the different communities
have proved reservoirs of credit and
have turned the wheels of industry,
helped to pay the wages, enabled the
farmer to plant his harvests, the con-
tractor to build homes, the merchant
to stock his shelves with goods, and
in general have stimulated local en-
terprise. While there may have been
some concentration of banking capt
tai. the banks of the country have
been more free from this tendency
than any other phase of our business
life. and. as a rule, a great majority
of our country banks have been con-
trolled by local directors and have
been used for the benefit of the busi-
ness men, the farmers and the manu-
facturers in their respective neighbor-
hood.
ut is vital to the welfare of this
nation to maintain system of indie
pendent banks.
Hard for the Poor Man.
"Such institutions. under local con-
| troll, are willing to advocate credit
upon the character and integrity of
the local borrower, In this way many
a poor man has got his start in life
and laid the foundation of a success
full career. If these banks are con-
trolled by the great metropolitan CEN
tres, such a borrower, no matter how
good his character, would be given
no standing where he was not known
and would be obliged to put up col
| lateral. In this way the little men
/ would be forced to work for others
instead of starting out for themselves,
and the country would lose the benefit
of their ambition and enterprise sup
| ported by a little credit.
/ TT Is a function of the bank to be
helpful. Banks can only prosper by
| helping others to prosper. They are
| institutions that cannot thrive on the
downfall or misfortune of their neigh
bors. In 1907 the bank of which am
president borrowed during the panic
| 100000, paid 8 per cent. interest on
1t and loaned 1t at per cent, not for
| the purpose of making a profit, but
to take care of the credit needs of the
community. This institution in oues-
| ton did not make any of its borrow
| ers pay q single dollar of their loans
| except as they saw fit and this saved
| them from pressure. This Is vital
| function of the bank.
| This function country bank
cannot well perform unless it is> I'M
der local control and free from
| duress from political influences or
from the influence of the big money
centres. The great danger under the
| Aldrich bill was the power 1t gave
the money centres over the country
banks, making. them mere tributaries
| to the interests of the large cities.
The currency bill now pending in
| Washington, in my Judgment, in
tensif1es this danger in different
way in compelling the banks to in
vest in the so-called regional banks
under governmental control, these In
| turn being under the influence of q
political body at Washington. Such
q chain of influence will soon de-
stroy the independence Of the local
| banks The details of the proposed
| currency bill are so numerous that in
single interview I can only illus
trate its disadvantage by citing
| specific instances.
Difficulties with Interest.
ut is generally customary for
banks to pay interest on both their
active and inactive accounts. Most
banks pay 8 per cent. on the latter.
| This custom results in the payment
of vast sums of money to the deposit
ing public. Many banks pay more to
the reople in interest than they pey
dividends to Their stockholders. The
| new currency Dill VIII require the
banks to deposit large sums ofsmoney
in the regional banks without in
terest. This and other requirements
in the currency bill will hamper the
banks In their power to pay interest
to their depositors. The depositors
in turn will naturally change their
accounts to savings banks, and In
this way vast sums of money will be
| taken out of the channels of trade.
"One very serious feature of the
bill Is the savings bank provision
Under this provision the savings de-
partments of our commercial banks
will be required to invest their funds
In certain kinds of securities, which
will take this money out of the COM
mercial life of the community.
I'm Cumberland County, my home
county, there are seven national
banks, with SIS, 900 In deposits. OF
this amount $780, 900 consists Of saw
ings deposits. These banks have In
vested in the way of loans to mer-
| chants, farmers and other bushes.
men $4,000, 900. Under the new cur
rency law. If passed as proposed
$4,000, 900 of this would be required tc
be invested in certain municipal and
railroad bonds and other longtime
securities. Think of the effect of TAX
ing out of the working capital of that
county $3,600,000 and making the mer-
chants, farmers, manufacturers and
other business men pay their loans to
be forced into bankruptcy and the
g. IL