The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-04-05
Federal Reserve Board Policy.


litico- financial history of the country
it must be apparent that in the mat
ter OF licensing national banks to do
a trustee business the Federal Re.
serve Board has hastily outlined a
policy which carries the whole ex.
pertinent Of banking reform into peril
Gus ground 1t Is the same ground
on which the battle over the second
Bank Of the United States was fought
and lost by the bank With all re.
spect to PAUL NJ. WARBURo, his recent
statement explanatory Of the Federal
Reserve Boards position in regard
to the removal Of disabilities which
shut national banks out Of the State
banking field and keep state banking
institutions out Of the Federal Re
serve system does not meet the re-
Qulrements Of the situation which IL
developing.
Mr.. WARBuRo says that 1T 10 unfor-
tunate that any ono should suppose
that the Federal Reserve Board wishes
to interfere with the rights and ac-
ton Of the States" Undoubtedly
those members Of the board who look
at things from Mr.. wAssuRo's point
Of view do not wish to precipitate or
forward any controversy which may
threaten to interfere with the estab-
lishment Of the fundamentals Of bank.
ing reform comprised in the Federal
Reserve system. At the same time
there IL an element in the board which
Is in thorough sympathy with the use
Of Federal authority to compel the
destruction Of State prerosativeA
In the rejoinder which Q spokes
man for the New York State trust
/ companies makes to Mr.. WARBUR0 II
Ia asserted that the Federal Treasury,
which has excessive influence in the
Federal Reserve Board. is being rep
resented in efforts at Albany to push
the pending bills designed to admit
national banks to the privileges OF
State charters. If anything Of this
kind is being done 1t furnishes a
warning which should put thoughtful
citizens on their guard.
Undoubtedly Mr.. WARBuRG Ia aware
that the Federal Reserve act IS coer
Give through and through. Its coer-
cions began with the pressure put on
the national banks 10 Join the Federal
Reserve system As the results are
an accomplished fact there Is no point
in discussing them. but there remain
other features of the act which were
evidently intended TO give the Federal
Reserve Board discretionary power
to practise forms Of coercion on State
institutions.
II the Federal Reserve banks are
TO become clearing houses for the col
lection Of checks at par and the privi'
leges thus furnished are denied to
non.member banks the denial will
put a great deal Of coercive pressure
on State banks and trust companies
TO Join the Federal Reserve system.
Again. the very movement now on
foot in various States TO repeal stat
utes which conflict with the grant of
trustee privileges to national banks
must be coercive in It's effects, what
ever Its purpose.
Already II has been coercive enough
to cause the introduction OF a bill at
Albany to grant trustee powers TO
state banks if national banks are Ia
have them, and Federal initiative is
thus responsible for an attempt to
compel the state 10 alter its legisla-
tive policy in dealing with It's own
banking charters. The movement IL
Furthermore coercive in that whatever
tends TO break down the distinction be.
tween national and State banking in
situations tends to force State inst.
tutIons TO apply for membership in
the Federal Reserve system In order
to get the privileges which national
banks enjoy.
While Mr.. WARBURa's interpreta
ton Of the inciplent policy Of the Fed
J eral Reserve Board Is satisfactory,
he does not dispose Of the objection
WHICH lies dSdIuSl IL oh lhC cSoAU ~
the difference between effort and eff
feet. The effort Of the Federal Re.
serve Board may not be directed to-
, ward the Matchmaking Of State instl'
tutions, but II that 10 the effect Of Its
. effort the board will not be absolved
of the charge Of purpose. There Is
, no sounder maxim Of the law than
: that a man IL supposed to intend the
! consequences Of his acts.
The part OF wisdom would he to
seek an alliance between the Federal
and the State banking systems with
out breaking down the distinctions
between them. Preservation Of the
=. independence and integrity OF state
banking systems is essential to the
country's welfare.
, New YOrk's Little Theatres.