The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1914-12-09

system to panic staying power was
the theme~of Mr.. Hamlins informal re-
mark. He, too. has observed, as many
others have done, that an opinion COM
monty prevails that the new banking
system, to use his words, will reg
uIate panics to onscurity." In the sense
that the new banking system can make
money panics practically impossible.
that statement, Mr.. Hamlin asserted, Is
undoubtedly a correct one. But it is
impossible for any banking system
completely to control a disposition oil
business men as a whole hnduly to ex-
pand their business and to speculate,
using that word in the technical mean
ing which commonly appertains to it.
Probably if all banks, including
those operating under state charters,
were members of the federal reserve
system the American banks as a whole
would have 1t within their power to
check somewhat a disposition unwise-
ly to expand commercial undertakings.
There was a clear intimation in MI.
Hamlin's remark that this is one of
the reasons why the federal reserve
board believes that 1t will be of the
highest advantage to the country il
the state chartered institutions become
as rapidly as possible members of the
federal reserve district
One of the remarks made by Mr.
cussed with approval in the financial
district. He stated that there was one
kind of panic which he believes the new
federal reserve system will relegate TO
the museum which contains unhappy
traditions of the past. That is the
panic which formerly was forced by
the action of various national banks.
The managers of these banks began to
get nervous. They began to call loans
and then refused to extend loans or to
make new ones. They began to hoard
and in that way built up unreasonably
large reserves. Fierce competition be-
gan between bank and bank and the
public, which is quick to scent dis
position of that kind, took fright SO
that there began to be individual
hoardings which in the aggregate
reached a large sum. There died re-
Gently in a suburb of New York a mer-
chant of wealth and it was discovered
by the administrators of his estate That
he had been boarding an amount es-
timated to be at about one-half or the
aggregate value of his estate. lie mao
had an unpleasant experience with o
bank. He became suspicious and as
RAPIDLY as possible withdrew deposits
in various banks and placed the cash
in his safe deposit vault. Under the new
system this cannot happen. For there
can be speedy mobilization of reserves
and far reaching utilization of com
mercial paper so that liquid capital will
be provided wherever needed.
The comment which this statement OF
Mr. Hamlin has caused is this: There
could not be a better proof offered OF
the fact that in spirit and in operation
the federal reserve system is based
upon the principle of the central bank
although at present this central bank
is divided into IL branches, all under
the control of the federal reserve board
at Washington. There continues to
grow the impression that after a few
year'F experience with the new system
Congress will find it expedient to mod
ify or to amend the law SO as actually
to establish at Washington central
reserve bank.