The Hawaiian gazette., 1915-05-07
Government By Theory
Disastrous

Disastrous
THE federal reserve system is on trial and as
President Edwin c. Merrill OF the Union
Trust Company of New York recently stated the
system has not yet demonstrated either perfec-
ton or infability" The Bankers Chronicle goes
further and asserts that at has not demonstrated
its success"
The ultimate success of the reserve system de-
ponds on the retention of the large national in
stitutons with their enormous deposit and credit
lines. Should the great national banks give up
their charters. withdraw from federal control and
reorganiZe under state laws private institutions
the Federal Reserve system would not be strong
enough to continue in operation The New York
Clearing House institutions alone now carry near
ly three times as much gold as all twelve national
reserve banks. II -
There has been much acrid criticisms of both
the Secretary OF the Treasury and the Comptroller
Of the Company in the recent Riggs Bank episode
The Bankers Chronicle, editoriay, gives expires
sion to the widely held opinion among fnanciers
that these officials have been unwise in the mea-
sures of compusion which they have attempted to
employ II says "it is undeniabe that the. trea-
snTy department under the present Administration
has gone farther in exercising powers of siSeil
lance the financial constitutions Under RS care
than has ever previously been attempted in the
bsomewhat over half century during which the
national banking system has been in existence"
The Chronicle blames, not the officials them
selves but the attitude OF the Administration and
tof this congress towards the country's large mon
eyed interests.
Throughout the main idea Of President Wilson
and his party has been that the continued exist
ence of Big Business" was menace to the 'coun-
try. The opinion has been freely advanced that
the ruling motive behind the federal reserve bank
system legislation was not to make national mon
etary resources more flexible more liquid, but
to put big Business" where its resources could
be controlled by federal board dominated by
government officials
The President has often referred to the money
interests as having played the game and every
member of the government, from highest to low
est, has entertained the notion that these money
interests have been guilty of desperately wicked
acts, in the past.
in an endeavOr to ferret out these acts of vii
lany," says the Chronicle "the treasury depart
ment has pried into the most ultimate and private
affairs of the banking institutions with the purpose
of laying bare supposed acts of sacality, the search
being conducted in the most relentless fashion,
no institution and no class of transactions being
immune from the process of inquisition.
Looked at in this way, the motives are seen
not to be open to question. This policy may be
carried 100 lnNlllS lnulTeCt dangers 1rauRm
with great peril to the new banking system created
for the express purpose Of holding the money pow
er in subsection"
The feeling is becoming general that the
Administration has wrongly interpreted the emo
tional wave on which it and the political party
now in power rode to victory.
+ There are political cycles at the end Of which
the popular tendency is to attack and pull down
and build anew once again from the beginning,
but the political party which accepts that popular
revulsion as evidence of permanent conversion to
new doctrines, is building hope and not on
conviction.
Big business cannot be put in class by itself
because there is no abrupt line of demarcation
between great enterprises and small ones. Legis-
lation directed against the money interests cannot
be attuned that it will only affect enterprises
of certain magnitude 1t is as though a blow
could be directed against the hand which would
not affect the little finger Inudcious surveil-
lance compulsiOn directed against one member
OF the civic organism must react through the
nerve centers Of finance and trade on the whole
body polite.
This Administration has proved itself out OF
tune with popular opinion and out of touch with
the needs OF the practical everyday necessities OF
the business world.