Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1914-12-03
PANICS CAUSED BY
DOUBT IN BANKS
At END, HE SAYS
Federal Reserve Plan to Stop
Distrust of Financial Houses,
Hamlin Asserts.

NEW YORK. Dec. S.-Panic due
10 distrust of banks has been rele-
gated to the museum of antiquities
by the new reserve banking system,
in the opinion of c. S Hamlin, gov
ornor of the Federal Reserve Board
voiced this afternoon in a speech
before the New York Chamber of
Commerce.
"The Federal reserve system will
relegate to its proper place the mu-
scum of antiquities, the panic gen.
Grated by distrust in our banking
system leading to a struggle of self
preservation between bank and bank
'and individual and individual and
ultimate boarding by the people" Mr..
Hamlin asserted. Such boarding
usually follows boarding by the
banks and does not precede it, IL
boarding by banks should cease.
boarding by individuals would never
occur, and both, I believe, will be
relegated to obscurity under the
Federal reserve system"
Mr.. Hamlin did not think that all
panics would be done away with, of
necessity by the new system.
IF, in the future, business ex-
pands unduly under the spirit of
speculation the day of reckoning will
surely come in the future as it has
in the past" he said. Undue ex
pension will correct itself. just as the
air bubble will ultimately burst. l
believe, however, that the Federal
reserve banking system will material
ly check undue expansion.
at is a fact, however, that even
under the Federal reserve system the
banks still have it in their power to
permit, if not to encourage, undle
speculative activity; and If they DO
this, the inevitable result-commereial
stringency-must follow. When, how
ever, the State banks and trust conf
panies of the United States join the
Federal reserve system q hope in the
near future) even that possibility will
be greatly minimized.
Much speculation exists as to the
authorship of the Federal reserve act.
I can say, with confidence, that no
selfish interests assisted at its birth.
! can further say that beyond those
primarily responsible for its provi-
sions-Mr. Glass and others of the
House. Senator Owen and others of
the Senate, and the secretary of the
treasury-there looms up one figure
more entitled to the credit for its pro-
visions than any of the others, the
man primarily esponsible-President
Wilson,"
Samuel Rea, president Of the Penn
sylvania railroad, asserted that the
Eastern railroads earned less than
four per cent. during the last year
upon the money invested in them.
'This serious condition is not new,
but it is now acute" he said. I'VE
have been living on hope at least
since 1910, when the downward trend
was clearly indicated; how much
longer we can exist on that precari-
Gus asset, | will not venture to say,
except to suggest that it takes more
than hope, advice or enthusiasm, or
all combined, to pay wages and taxes,
provide satisfactory service, pay divi-
bends and retain a proper credit
basis to obtain capital for improve
ments and extensions.
Increased traffic will not cure the
railroad malady, for remember that
up to the present all their economies
and efficiency, obtained by increased
train loads-etc., have been offset by
increased costs, wages and taxes.
These companies therefore need not
merely the very moderate increase
in rates for which they petitioned
the Interstate Commerce Commission,
but also all the revenue that can be
secured by working out in practice
the various other means suggested
by the commission for increasing
revenue"