The evening herald. [volume] (Albuquerque, New Mexico) 1914-1922, 1914-10-14

THE federal reserve banks have no
way OF increasing the supply OF actual
money In existence. " they did. they
might reduce rates. Their most eff
cient help IN that connection may At
times result from raising rates TO
stabilize conditions.
1T ~ only necessary to cite the fact
that IN those countries which depend
upon central banks to maintain the
stability 90 conditions which In their
experience has prevented those pan
ics 90 which we have been subjected,
we find those central banks maintain
Ing a discount rate always higher
I than the commercial rate in Inc same
country.
The benefits Of the new system
VIII become apparent with the lapse
of time. The change will 1e gradual
and should be regarded as an evolu-
ton in the banking business. during
which the bankers themselves must
rely upon their own resources and
conservation should be the watch
word. Any effort 10 utilize The redis-
= counting privilege primarily for profit
shoGld be discouraged.
1t must always be kept in mind
that 10 realize the chief object which
! congress had in view the federal re-
7 serve banks must always be ready 60
4 extend help. they cannot maintain
! this position if the member banks
keep them drained of their resources
In ordinary times,
he saw a great advantage from
4 fh,. Nom ace ia th. nntutauanNa AZ "A
foreign exchange market. and thought
The fedaral reserve banxs shnuld jp-
vest in foreign oils. instead 81 sOieiy
In rediscounts to domestic banks. II
was this class OF business. he said.
that was sought by the bankers 81
Great britain and It's tamt1cption ex-
tending ali over The world aad hade
LONDON It's nnancia! eater
ifo said IL was a popular miseon-
coption that with the opening OF the
| federal reserve banks, government
funds would pe deposited in those
ban0s and the Independent .reaaury
system Of the United states and its
consequent expense To- the government
81 "a 90 the business Of the country,
would become "a thing 90 the past A
careful reading Of the law he said.
"discloses the fact that tie authors
had no such Intention, and hat 80
the government funds are deposited
In those banks 81 will be az the dis
erection 90 the secretary - the treas
uFy alone.
1T Is a just criticism ~ the meas
ure, he continued. TO say that u
does nor take the government out q
thc banking business. and that IL con-
fcrs upon one oil our government OIL
cials an extraordinary power and
discretion u-nwartanted b. the spirit
of our institutions and %repugnant Ia
Republican principles.
THE power conferred upon th'
secretary Of the treasury 20 controI
monrl and credit. II attempted by the
members az this association would
probably call for a special act Of con,
gress 10 curtall their activities.
lie referred to the failure or the
/ bankers 20 have their say In the mod
ihcation of be federal reserve act
n was e representation 60 which thei'
Interests clearly entitled them. ne ar.
gued. but he believed the advisory
council Of bankers which had beer
authorized, similar 90 the one ID
vogue ga Germany. should yield az
Influence upon the administration oi
the system that was denied them in
is management.
The experience in Germany. he
said, has been that the advice Of it'
council Ia the conduct Of the Reichs.
bank h. rarely refused and Eenerali,
followed. The fundamental feature
of the bil organizing the federal re-.
serve hanas are in the main sound
and the establishment ~ the edvis.
ory council may furnish the balance
without which the system might %
deficient
None more than the bankers have
Tor years been earnestly demandius
some change In oar former 81, stem
and Il may be confidently predicted
that their efforts 10 make q success
fui Will be az the command of those
iu chafse o. It's operations