The Birmingham age-herald., 1914-05-09
THIS IS BELIEVED TO BE PUR- POSE OF AMENDMENT WHICH HAS ALREADY BEEN PRO- POSED TO NEW BANK LAW.
By HOLLAND

New York, May S.-tSpecial. D-Behlnd
 the contemplated amendment of the na-
 tional banking act is undoubtedly pur-
 pose so to perfect the measure as to per
 suade the state-chartered banks and trust
 companies to apply for membership in the new organization. That there has been
 some disappointment because these state
 chartered institutions have with practical
 unanimity held off from association with
 the new national banking system is in- ferred from communicati which have
 come to this city from Washington. Only n state-ehartered institutions in the en-
 tire United States applied for member
 ship when the national banks were send
 ing in their applications.
 The question is often asked why have the ate-ohartered institutions failed to associate themselves with the new sys-
 tenn. When this question is put to state
 bankers in this city the answer almost in-
 variably is this: We are waiting to see
 how the new system will work out
 Perhaps by and by state banks may in
 considerable numbers mak applications for membership It is doubtful whether many of them will do that until the new system has been organized and there can
 be obtained fairly good judgment respect ing it's efficiency and adequacy.
 | Occasionally the reply to this question hos been The state bankers want to know who is going to be oyer them. = And this feeling is not confined to New York city, but prevails all over the coun- try.
 | There is, for instance, doubt about the authority which will be exercised ny the rt.R ie l. pointed under the new law. VIII ne pe- come the actual executive authority or the federal reserve bank in each dls- trict? If there could be at present good | understanding of what the relation or tue
 federal reserve agent in each of the re- serve districts to the federal reserve pahk is to be there might have been less re-
 Juetance on inc part of state te-chartered
 banks to make application for memper-
 ship in the new system
 One of the expert authorities Wno was in consultation with those who dralted
 the new banking and currency law IS
 Charles A. Conant of this city Ills ex- pert authority needs no defense lie es-
 tablished the fiscal system in the Philip-
 pines, in Mexico and in Nicaragua and
 he has represented the United States at
 some important conferences m Europe.
 Mir Conant, who is familiar With the new law and with every detail or It, is | of the opinion that federal reserve agents
 will not inevitably serve as the active executive authority of the federal re- serve banks although under the law he is to be chairman of the board of direc- tors The officers of these banks are to be chosen by the full board of directors for the law provides that each federal i reserve bank shall have power to a2- point by it's board of directors sucn of- | fcers and employees as are not~T.nerWlse | provided for under the lsp.
 The law therefore, in the opinion' of Mr Conant and 1ther experts, puts the executive responsibility and authority of
 the nsapss cement of the bank upon of fieers who are to be elected by majority of the beard of directors. But the fes- II eral reserve agent is not to be so elected.
 but is to be appointed by the federal reserve board at Washington Therefore he must be considered as the representa- tive of the federal reserve government. What has concerned state bank officers and directors is the possibility that there may be conflict of opinion and authority between the federal reserve agent and the officers of the reserve bank. If it be presumed that the federal reserve agent is a man of experience, of fixed convlc- tions, and that the president of the fed eral reserve bank in his district is man who possesses like qualification for his office then there might arise conrrct
 
 bank officers have put their fingers upon
 this provision of the law and not until
 there is perfect understanding of what the limitations of the authority of the
 federal reserve agents are to be will the state bank officers be disposed to apply for membership in the new system.
 | MT. Conant has no doubt about the limitations of authority of the federal re- serve agent He is convinced that they are set forth in the law. The federal reserve agent is to be the chairman of the board of directors of the federal re- serve bank and he will have an office In the building occupied by the bank. If the federal reserve agent were to be
 the supreme executive officer of this bank it would not be necessary for him to secure a local office in the bank build ing MT. Conant is persuaded that he | will stand in the relation of an auditor or comptroller and that he must make regu- lar reports to the federal reserve board. The Bank President
 In some parts of the country. particu- larly in the west, the officers of state banks are inclined to think that the federal reserve agents can also serve as presidents of reserve banks. That is not
 the opinion of the experts in this city or in Washington. It is true that the fed eral reserve banks may make applica- ton to the local federal reserve agents
 
 This collateral is to be placed in the custody of the federal reserve agent and it is inevitable that he possess a separate vault within which these se- curities can be kept. But if the federal reserve agent is also president of the bank he would be compelled to go through an absurd formula, as presi- dent, of applying to himself as fed eral reserve agent for notes and then again offering, as president, to hand over collateral which was acceptable to himself as federal reserve agent, MT. Conant speaks of this as a pooh bah operation. How absurd the prop osition is may be illustrated by the statement that if the president of the bank were also the federal reesrve agent he would get as president a re- ceipt for the collateral which he would then hand over to himself as federal reserve agent while on the other hand as federal agent he would demand for himself as president a release when he gave back the collateral.
 The president of the federal reserve bank must be chosen by the full board of directors. of whom six are selected by the bankers and three by the fed eral reserve board at Washington These directors may or may not under the law elect one of their number as president. For that reason there is un- likely to be any disturbing conflic, between the federal reserve agent and the president of the bank. since the directors who were chosen by the bankers Und who constitute a majority of the board are in complete authority unless the federal reserve board al