Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1915-06-18

ed such damage in the past. Until
this time each bank in the United
States has been an isolated and indie
pendent unit. I do not believe there
is a country in the world where
banks have aver rendered a better
service to business or where it has
been possible for business men, big
and little, to etablish credit and OBJ
tain proper accommodation. This
statement must be qualified. however,
by saying that il has applied only to
the periods which have been free
from panic, financial flurries or stress.
Our banking system has done admir-.
able work. but it has been q fair
weather system and it has had two
vital defects. 1t has not provided an
elastic currency that would maintain
a proper relation at all times to the
rise and fall of the volume Of bust
ness in the United States and it has
given the banks no place to so in
times of stress Of danger. --
In adopting a new baking system
we had, therefore, a problem with two
distinct sides. Upon the one hand
there was the necessity Of creating a
close cooperative relationship be.
tween banks for their mutual protec-
ton and safety. On the other hand,
it was im%peratively necessary to safe
guard the future OF this country by
enabling all banks to more freely and
more literally serve the business com
munity than in the past. Banking
safety and stability depended upon
the first phase Of this problem and
the growth and prosperity Of the
country depended upon the second.
II. do not think it Is a proper view
to consider that the establishment
of the federal reserve banks is a rev
dictionary measure, because it was
not the intention to injure banks or
in any way to contract or interfere
with their functions or the volume of
their business.
"ln Bringing the Banking system in
this country up to the best standards
Of the countries Of the Old World it
was impossible to escape a certain
amount Of REIMBURSEMENT or to avoid
changes in the banking methods OF
the past. The creation OF the nation
al banking system, Immediately after
the Civil war, Was an instance OF
this, and the law under which nation
al banks have operated SO long was
viewed with great disfavor by many
for a long period after its adoption,
1t is probable that the federal re-
serve system will go through the
same process Of adjustment to con
d%itions, but l am satisfied that those
who have had to do with the framing
Of it are anxious that it shall go into
operation with as little jar and fric'
ton as possible, and desire to avoid
unnecessary Interference with banks
and banking. l believe they are ami.
mated with a sincere desire to make
1t of real service to the whole coun.
try, and understand that to do so, il
must first be made of service to the
banks that are members Of it.
d '"Vice Governor Frederick A. Delano
of the Federal Reserve Eoard, ad.
dressed an Informal gathering Of bust
ness men and bankers in Minneapi
lis recently and took occasion to sa,
that It was the hope Of the Fedora
Reserve Board to make the Fedora
Reserve Act effective by mean o.
friendly and INTELLIGENT cooperation
rather than by the arbitrary exercise
Of authority. He indicated a desire to
avoid unnecessary interference with
banking, and to seek to make the new
system a success by making it help
full and valuable to its members.
even If banking capital and bank
ing deposits were equitably distrib.
uted, or scattered over this country
with some relation to the banking ser.
vice that is TO be performed, there
would still be serious defects which
would have to be cured before bust
ness could be sure of having the right
conditions at all times under which
to enjoy the health and prosperity
In the older countries the necessity
for harmony and cooperation among
banks has been clearly realized and
there is no European power that has
not long since placed its, banking ma
chinery on a sound and scientific
basis. Tanks have been linked to-
gether and have been given some
place to go in times of stress. Ma
chinery has been provided through
Which it is possible to prevent panic
by massing the banking resources of
the country and directing the great
power which they represent against
the danger points. :.
Unrelated Units.
Until last year the $1,000 banks Of
the United States were unrelated
units, representing O. greater banking
power than any other in the world.
but entirely lacking in the ability to
control or utilize this power in a
large way. To have changed this old
condition and to have given the Unit
ed States a sound, and effective bank
ing system is, it seems to me, Il Of
the greatest achievements Of the Am
erican people. 1t would be a mistake
to think that the old banking system
has been entirely done away with. On
the contrary, all of the good features
of the old system have been retained
and are still in force. The Federal
Reserve Act Grated a new banking
system, it is true, but it was a pro-
cess Of reconstruction and reorganiza-
ton rather than an attempt to begin
at the ground and build new. The
old system has been given the ele-
ments that it lacked and has beeh
completely modernized. The United
States has at this time a banking sys-
tenn that will compare %favorably with
THE purposes of the federal re-