The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-04-13
Making the Financial Gerrymandcr
Worse.

and defend its financial map the worse
the map looks. IL the committees
work had been done right 1t would
have needed no defence. Instead 1t has
aroused storm OF protest. not only
because of the sectional Jealousies
which the committee deliberately ex-
cited. but from every well Informed
person who realizes the danger Of tam
pering with the established tendencies
of banking.
II IL not too much to say that In
designating Federal reserve cities and
defining reserve districts the organiza-
ton committee has not only ignored
the permission of the law to exercise "A
wise discretion. but has deliberately
violated its express requirements. The
procedure laid down for the committee
was TO designate not less than eight
nor more than twelve Federal reserve
cities. Next II was to divide the coun-
try into corresponding number of re-
serve districts. In making the alror-
tonment of districts the law provided
that ii should he done with due re-
gard to the convenience and customary
course OF business and that their
boundaries should not necessarily be
coterminous with State boundaries.
What the committee clearly did was
first to divide the country into districts
in order to be able to locate Federal
reserve banks In certain cities. To Il
very large extent the districts follow
State lines and the convenience and
di sregarded. Every argument which
the committee has offered in the series
Of apologies which II is now issuing
shows that II should not have provided
According TO the committees latest
statement the purpose of the Federal
reserve system is ito remove artificial
ity" and promote normal relations"
ranged by the committee is artificial to
the last degree. The financial gerry
mander has made hash of the normal
relations of banking and business. Re
serve centres have been set up which
are to say the least grotesque, and in
order to support them the customary
economic communications between
large stretches of territory and estab-
lished financial centres have been cut
with view 10 compelling new COM
munications in other directions.
All the defence that the committee
presents for Itself resolves into two
contentious. one Of these is that
thirty. seven cities made claim for the
allotment of Federal reserve banks and
thyt the hest possible designations were
made under the circumstances when
only n maximum Of twelve was per-
mitted. The answer is that the committee
itself invited sectional claims, and in
doing so went absolutely counter 10 the
law, which recognizes only one claim
for the assignment of the Federal re
serve banks, the title constituted by the
actual facts of the convenience and Gus
tomary course OF business.
The other point of the committees
defence Is in substance that 1t makes
no difference where the reserve cities
are located If that is the case, what
was the object of the committees two
months tour of the country and all the
elaborate hearings which II held? IL
it makes no difference whore Federal
reserve banks are located. why should
New York, Chicago and st. Louis have
been recognized mt alli If the normal
currents Of banking business will not
be artlicially interfered with by the
designations made, why then were these
designations made? Why, If customary
relations will not be upset by the
gerrymandcr, was New York, for eX-
ample, not allowed to be the regional
banking centre of the whole territory
naturally tributary to it?
Such questions answer themselves.
More than that, they tend 10 answer
the larger question MS to whether or
not the Federal reserve act is going TO
be administered wisely for tbc good Of
the whole country. The committees at
titudc implies not only contempt for
popular intelligence but 1t implies also
confidence that its map will not be re-
vlsed by the Federal Reserve Board,
which will contain two members of the
organization committee. john SKELroN
WILLIAMS and WILLIAM q. MC\poo
The Admin rationS uuDolutm pnts IA
office from the Cabinet down have not
set up II presumption that III appoint
mcnts will be made to the Federal Re
serve Board. II the organization com
mlttee'S attitude means that WILLIAMS
and MC\poo will dominate the board
through u majority approved by them
the Federal reserve act has become n
menace