Evening journal., 1915-06-15

Because of the recent ahortive
campaign to break down State bank
ing systems in order TO admit ma
tional banks to the peculiar priw-
.leges of State charters, apprehension
was felt that the Federal Reserve
Board might lend itself to a disap-
pointing policy in respect TO the rela-
tions of the Federal Reserve system
tc state banking institutions. IL IS
true that statements we're issued by
the board few months ago which
tended 10 allay concern as TO us
intentions in encouraging national
banks to seek to obtain trustee pow
ers and the like Yet there was
large field OF important ruling stu
undeveloped by the board which would
be of greater consequence In demon
strating its policy.
The board has now taken a very
significant step ahead in defining its
views Of the relations between ma
tional and State banking institutions.
It's rulings for the admission Of State
hanks 10 membership in the Federal
Reserve system and their regulation
as members go far to justify the con-
fdence already encouraged by most
of the measures OF the board since
IFS Inauguration, that It's policy would
be characterized by a broad compre-
hension of conditions and an accom-
modating spirit
As Governor Hamlin points out IN
the statement accompanying the rules
framed for the admission Of state
banks TO membership in the Federal
Reserve system, the Federal Reserve
act was coercive over national banks
They had TO come into the system or
give up their charters. The coercive
purpose so dominated Congress in
framing the act that the statute was
not made sufficiently conciliatory In
it's references to State institutions
| However, it was left to the discretion
of the Federal Reserve Board TO eX'
tend the privileges OF the Federal Re
serve system to State banks, and th'
: present rulings constitute what Is
likely 10 be regarded by State bank
ers as an attractive invitation.
Probably it will not be regarded a'
desirable by competent observers .
financial and political affairs that TN
independence of State banking sys
TENS should he sacrificed TO Obtain
complete uuifcation OF the bankinl
business of the country. The Fedora
Reserve act is a powerful instrumen
for building up a governments
money trust, that is, money trus
under political control which woul'
be a monumental menace. Perhap
Congress contemplated something lik
a complete absorption or merger O
State banking systems in the Fedora
Reserve system. That much is inter
ential from illiberality Of explicit pro
visions Of the Federal Reserve act a
To State banks as members
What the Federal Reserve Boar
has now done has been TO turn Fec
eral Reserve policy in the directio
OF an effective alliance with Stat
banking systems. which is on all az
counts a contamination TO be wished
II Is 10 be noted that in eXplainin
its new regulations the board speak
of "co-ordinating' State institution
III the Federal Reserve system, an
a principle Of cooperation Is thus 81
up which is very different from ii
principle Of merger and conduces
the maintenance OF State banking II
dependence.
Various doubtful points which ha'
kept State bankers in an attitude
aloofness from the Federal Reser'
system have been resolved by Il
loard. There is TO he no fearful mu
z tiplicity Of examinations where q
State authorities do their work we
The board has also done somethil
more than meet half way other obie
tions raised by State bankers TO q
y feature Of the Federal Reserve act.
While the board has not clearly q
fined itself in all respects. as in Z
- retention OF certain privileges c
icved hy State banks, such as p
eninyed In New York in the matt
Of domestic acceptances, the nrinciT
4 ground Of objection 10 the entran
: OF state banks into Federal Reser