New-York tribune., 1913-07-26
OUTLINE OBJECTIONS TO
GLASS CURRENCY BILL
Officers of National City Bank
Find Much to CritlCiSe
in Measure.
ASK CONTROL BY BANKERS
President Vanderlip Calls Polit-
ical Board Inadequate-Vice-
President Talbert Thinks
Plan Vitally Unsound,


on June 2G Of the new currency bill the
officers Of the National City Bank were
asked 10 make public their criticisms Of
the measure. They declined TO do So on
the ground that it was still too early to
predict what changes might be made in
the way Of amendments before II was re-
portec from the committees. Privately they
expressed themselves strongly against GER
tain features Of the bill as affording no -e-
lief to conditions resulting from our pres
ent currency system. and yesterday they
made public. I'm the form Of communica-
tious TO Robert l.. Owen and Garter
Glass, respectively chairmen of the COM
mittees on Banking and Currency Of the
Senate and the House Of Representatives.
their criticism Of the bill as introduced.
Frank a. Vanderlip. president of the
National City Bank, admits that the pro-
posed bill would provide partially for the
effective mobilization of bank reserves. in
the creation of federal reserve banks de-
posts in which may be counted by mem
her banks as part OF their legal reserve.
Mr. Vanderlip also commends that feat
ure Of the bill which cOntemplates that
the rate OF discount shall vary in diner
ent sections Of the country at the same
time.
Objects to Character Of Control.
The fundamental objection 10 the plan
he points out is the character Of the con-
tro which is provided He says:
M The objection is not to the powers
lI granted. but 10 the hands in which they
y are placed Nor does that objection lie
solely against the fact that the proposed
federal reserve board is political in its
character. although obviously both finan-
cial and political history, as well as the
operation Of our present day commissions,
furnish ample illustration Of the danger,
the ineffectiveness, the inadequacy Of a
politically appointed board for respon-
sibility Of this sort.
1T seems 10 me that the only proper
method Of control must be through a
board composed OF experienced practical
bankers in direct touch with current busi-
ness who are selected for short terms
by the member banks and who are re-
spons;cle to those banks in the same way
that the executive officers Of national
bank are responsible TO the stock
holders.
There may well be a government
board whose sole function should be 10
see that ali statutes are obeyed by the
management. The board that has to eX-
ercise discretion in the management must
he responsible TO the stockholders. the
hoard that exercises supervision should
nc composed OF government officials, but
their sole function should be such super
vision as will insure the most scrupulous
observance Of the statutes. and those
statutes should be so specific that the
board charged with the management
knows clearly the lines within which It
may exercise discretion"
Opposes Treasury Notes.
Mr.. Vanderip dssenis decidedly from
that feature of the bill which provides
for the creation OF new Treasury notes
instead OF banknotes. While lie believes
that the idea OF such Treasury note is
sue is an economic error he is Of the
opinion that the banks can operate under
such a system if the people themselves
are left free 70 exercise their judgment
in regard to the volume.
Regarding the redemption of bonds now
held as a basis for banknote circulation
lieves that this is question Of national
honor,an fair play. but is not involved
in the essential economic principles that
underlie sound legislation. He favors the
immediate refunding of the government
, per cent bonds into the per cents al
lowing the circulation privilege 10 remain
with them as at present but TO add per
cent 10 the tax on circulation, when Sc
cured by the refunded bonds. An added
value which would tend TO maintain them
Al par would thus be given TO these new
% ss. which are not in the circulation ac-
count OF the banks
Joseph r. Talbert. vice president OF the
National City Bank and recognized au-
thority on banking affairs believes that
with certain notifications the bill can be
made practical and workable. In his
opinion, the bill is unsound in these vital
points:
Il a. The political character Of the
entire membership OF the board OF con-
troll.
90 The unlimited and uncontrolled
powers OF this board, in respect Of their
own discretionary acts, over the manage
= ment Of the federal reserve banks and OF
the conditions OF note issues
"CS) The dangerous nature Of certain OF
these powers.
40 The possible abuse and at times,
certainly unwise use of these powers
when placed in inexperienced hands or
when used by politicians under stress Of
party pressure or for party advantage.
Other Points of Objection.
II. O The character Of the orgsniza-
tion and management OF the federal re-
serve banks.
"C.) The domination by the federal re-
serve board OF the boards Of directors Of
federal reserve banks, (a) through their
appointments OF three members (Class c.
out of each board Of nine directors. one
Of which class in each case shall be
chairman of the board Of directors and be
designated as federal reserve agent The
salary Of this agent is fixed by the fed
eral reserve board. lie is their direct
representative and agent and is remov-
able at their pleasure without notice: (b)
through their power TO remove three
members elected by the banks (Class b
"(O The resulting minority representa-
ton OF stockholders on the boards OF fed
eral reserve banks. That is 10 say, the
federal reserve board has the appointing
power OF three members dncluding the
cheirrnan) OF the board OF each federal
reserve bank and the power 10 remove
three other members, thus giving the