The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-03-25
Federal Bank Aggression.

mlttng national banks to exercise
trust company powers. The bills in.
troduced for the amendment Of the
State law to that end are part of n
campaign throughout the country
backed by the Federal Reserve or
~ganizdtion. Just now when public
opinion is favorably disposed toward
the Icy national banking system
there is less likelihood of opposition.
and therefore all the more danger
that Ill nsidered consent nav he
given to projects for Federal expan.
sion at the expense of State preroga.
tives.
The Federal Reserve Board has
Just adopted a resolution approving
efforts TO remove legislative obstacles
TO the admission of national banks to
the privileges conferred by State
banking charters. In almost So many
words the Federal Reserve Board
says that the object of the Federal
Reserve act 10 to bring the various
kinds of banks in the country undo.
It's provisions and that a necessary
measure to the realization Of this oh.
iect Is the ending of the distinction
drawn by state laws between trust
companies and other banks.
IL Is easy enough 10 get a bill In.
PRODUCED at Albany for any
sane or insane. but II is not obvious
why the Legislature should make a
facile surrender to the demand now
addressed TO 1t for the weakening of
State banking law in the interest OF
an extension of Federal authority. So
far as its W citizens are concerned
the State has amply provided by law
for the establishment Of trust com.
ranies. II has always jealousy
guarded the tduciary duties of trus-
tee institutions. II has distinguished
sharply between State banks aud
trust companies in this respect. hold
ing the trust companies to larger cap
ital requirements and limitations in
the investment Of their capital.
Last years admirable rewriting of
the State banking law only empha.
sized the %soundneSs of State policy
in this matter. Now the Federal Re.
serve Board comes along and prac.
tically demands that New York and
other States. whose statutes are i'm.
pediments to the invasion Of the State
banking field by national institutions.
relinQuish their control over corpo.
rate trustees and. what Is more, with.
draw from their own corporations the
protection which State laws afford
against Federal aggression.
No essential OF banking reform ls
contemplated by the clause in the
Federal Reserve act authorizing the
Federal Reserve Board to license M
tlonal banks TO do a trustee business.
If State laws do not conflict. 1t is u
power which was given TO the Fed.
eral Reserve Board in line with
many coercive features Of the act.
so that on occasion and opportunity
differences between national and
State bank charters could be elimina
ted and STATE banking corporations
could he subjected To processes OF
cOmIulsion IN enter the Federal Re
serve system
When the aim of the Federal Re.
serve Board is so apparent the Leg
iGlntnrn uf tthunr Shntt11 no all th.
more on guard against an overready
acquiescence, If the Federal Reserve
Board should declare its belief thai
there was no reason for the main.
tenance of State banking systems
apart from the Federal Reserve sys
tenn the State Legislature would in
fnlllhly tell the board to 90 about
Its business. Yet in very practicnl
fashion the Federal Reserve Board
has sanctioned u campaign designe!
ia render State banking charters rela.
lively worthless.
About the most astonishing php-
nomenon of politics in the past two
years has been the progress made by
the historic party Of State rights in
breaking them down. The Federal
Reserve Board and the Federal Re
sery" act have political aspects ex-
plicable only by reference to the
changed attitude Of the party which
confesSedly traces itself back to .Jrr.
FFRsoN. The Federal Reserve Board
furnishes a new illustration of Fen.
eral power seeking ACKNOWLEDGMENT,
and the Empire State could not do
better than call a halt In the at
temrs of Washington to destroy the
value OF State banking charters.