The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1914-11-30
PROSPERITY LUNCH
HELD At TIME WHEN
EVERYONEFELTG GOOD
Str0ng's Address at New
York Affair Heard With
Special Interest
GAVE HIS VIEWS ON
NEW RESERVE LAW
limitations Were That So Much
Power Was Given Few Men That
Much Would Be Expected
of Them
by HOLLAND

AT the very hour when the Merchants
Association of New York, a few DAVIS
ago, was with ceremonial luncheon
greeting the local federal reserve ex-
ecutfve committee, the hosts numbering
iooo In all, one of the great industrial
organizations was in consultation over
propositions which when perfected and
executed will bring between $4,000. 900
and $6,o0o.000 from one of the bellig-
erent countries to the treasury of that
organization. On tho same day, other
propositions were under consideration,
one item in each of them being agree
ments to pay large bonuses in cash in
consideration of a very early delivery
OF the commodities which the contracts
called for
Probably in other parts of the coun.
try negotiations of this kind were in
progress then as they have been for
sometime and are likely to be for
months. The peculiar feature of almost
all these transactions is that no credit
is asked. there being guarantee of i'm
mediate cash payments when the COM
modities are delivered to the repre-
sentatives of the belligerent and neu-
tral nations who have bought them.
Some of those who took part in the
luncheon given by the Merchants asso-
citation to the local federal reserve COM
mittee had knowledge of these nego-
tiations and, in fact. some of them had
taken part. They were, therefore, in
q condition of mind to speak with all
sincerity of this ceremony as a pros
perity luncheon" Yet upon this occa-
sion, excepting for informal and neigh
bor1y discussion. no reference was
made to the advent of the first symp-
toms of prosperity. nor to the fact that
the greater part of our exports are now
on cash basis. requiring, therefore.
no banking discount facilities The ad-
dresses, especially the one delivered by
Benjamin Strong, Jr, who is the gov
ernor of the federal reserve bank, es-
tablished in this district were ap-
parently so written as to be free from
any definite or positive assertion that
prosperity has already begun Mr..
Strong went so far as to say that the
new federal reserve system cannot Of
itself bring or make prosperity, but it
can aid In establishing that condition.
might have been amplified, for it GER
tainly was the cause of a good deal
of private comment among those who
took part in the ceremony Mr. Strong
said that the defects of the old national
banking system may have been" cor
rected by the new law, but we must
be sure that other defects have not
crept undetected into the law which
may cause unsound tendencies to de-
velop, thereby defeating the purpose
of Congress and creating other weak
nesses which will compel new legisla-
ton"
While the hope which has been en-
couraged by the establishment of the
new law has been strong and is now
stronger than ever, nevertheless it has
been observed that there Is OCCASION
ally some disposition TO refer in
friendly way to the old national bank
ing system. Whatever its defects, it
is now recognized that while it was
still in operation the leaders of finance
in the United States met a desperate
situation in August and, using the ia
cilities of the national banks as they
were under the old law, and the pow
erful resources of the clearing house
association, whose membership was
chiefly confined to the old national
banks, together with the cooperation
of the federal treasury department.
still administered under the old law,
were able to overcome the difficulties
so that ON the day that the new law
went into effect fairly comfortable
conditions prevailed and nationwide
return of confidence was established.
One of the Benefits
One of the benefits of the new national
banking reserve law which was not al
luded to by any of the speakers at the
luncheon is to be found in its ability to
concentrate resources, credit and funds
and so to use these factors as to meet
the reasonable demand of any or of al
the communities in the United States
This, however, was precisely what the
national monetary system which was au-
thorized by Congress shortly after the
panic of 1907 regarded as its chief re-
sponsibility and purpose. The new fed
eral reserve system Is in large measure
based upon the results of five years
study by the national monetary commits
sion and there was public acknowledge
ment of that fact in recent leading edi-
torial of the New York Times.
The panic of 1907 made it clear that the
chief defect in the old national banking
law was that 1t not merely permitted,
but actually compelled. the concentration
into few powerful hands of much of
the banking resources and negotiable
credit in the United States. There had
to be such concentration In fact the
possible beneficial use Of power of that
kind was strikingly illustrated Immediate
~ after the war in Europe caused unpre-
cedented and dangerous conditions of a
sudden to be established in the United
States. 1t was to great extent the abil-
'ty to concentrate resources, credit and
stilize the clearing house association
inch enabled the leaders to perfect plans
and to carry them into effect by means
OF which $500. 100000 in gold was secured,
a sum that was sufficient for the emer-
gency assistance of which there was des-
perate need.
New Concentration of Power
Much of the discussian at a luncheon
which was given by the Merchants asso-
citation centered upon some of the tech
meal methods in operation which will
now characterize the new national bank
ing system. especially the character Of