Evening star. [volume] (Washington, D.C.) 1854-1972, 1915-10-31
BY I, A, FLEMING.

/ The question of abolishing the Office
of controller of the currency will prob
ably be considered In Congress during
the coming session. 1t has been talked
of among bankers and, SO rumor has It,
!, by some members of the federal re-
serve board.
the enactment Of the national banking
act, and it is held by many that 1t
should pass out of existence with the
law that enacted 1t having no reference
to the occupant Of the position at this
time.
| All banks in the federal reserve sys-
tenn are under the control of the fed
eral reserve board and of the controller
i of the currency, a dual system; al
though the reserve board has SO far
made no regulations other than as to
methods of doing business. Offering In
ira district clearing and collection ia
cilities and approving rates made by
the regional banks.
The controller has been the factor in
chief in conducting business with the
department and the member banks and
has had charge of the examiners.
The controller himself Is member
of the reserve board, but SO far as the
public is informed there is no review
by the board of his individual action In
connection with the member banks.
With the exception of five trust COM
panies and a number of state banks IN
the District of Columbia, every bank
now under the control Of the controller
of the currency Is a member OF the led
eral reserve system.
The Usury Circular.
Local bankers will offer not the
slightest objection to reading the usury
note sent out Thursday by the con-
troller of the currency, and furnishing
the names of all directors present and
absent from the meetings.
Washington bankers do not take the
criticisms contained in the note to
heart: they have not been guilty and
therefore feel that criticism Is In no
way directed to or at them.
Bankers in out of the way sections or
the country have, probably. taken ad-
vantage of high rates, while in some OF
the states the legal rate of interest is
higher than per cent.
Moreover, there are borrowers and
borrowers. Also collateral and col
lateral, some gilt edged and some de-
cidedly questionable.
Borrowers entitled to credit, with the
reputation of meeting obligations at
maturity, with the right kind OF col
lateral are always welcome at the go
ing market rates to any accommoda"
lions desired. The other kind, when
they get money must pay for 1t. and
frequently at the high rate.
Where paper perhaps a little on IS
peddled around seeking buyer, 10"
rates are difficult to obtain and con-
cessions are demanded and given. but
this kind of paper is not accepted but
by very few bankers
Some of the states in the south and
southwest have high legal rates Tor
L. IA 10 ma
for this. not the banks. Then. too,
there are shylocks in every trade and
calling.
Improving System.
There Is no question but that the
federal reserve board is making every
effort to popularize the federal reserve
system, already held In high repute
by bankers, an admitted panacea, SO
far as can be seen at this time. for
the evils of inelastic currency and
panics resulting therefrom.
Conditions as yet have not fully test
ed the workings of the law, although
there is little question but what it will
fill the bill when the emergency arises.
Just at present the enormous balance
Of trade in favor of the United states,
the lessening activities in general bust
ness and real estate. with the release
of hundreds of millions OF dollars by
the new reserve requirements OF the
act have made for a great abundance
of cash, millions more than can be
used to. advantage. and the full meas
ure of the act has not been taken.
The federal reserve board is reported
to have quite number OF amendments
to the law which 1t is understood they
will have presented to Congress. The
board has only one desire. to strength
en- the system and correct provisions
that did not work satisfactorily. 1t is
possible that the provision making 1t
necessary for the directors of re-
gional bank to suggest discount or
rather rediscount rate which must later
be approved by the board may be SO
changed as to give the board the direct
rate making clause. Naturally, the Of
know conditions in their territory. but
the changes and the needs are general
~ known by the federal reserve board
and the action should be independent
The matter Of the appointment of
joint agencies for a number of federal
reserve member banks in foreign coun-
tries will. in all probability. be consid-
cred. The matter of opening branch
banks has looked SO expensive and
hazardous that but few banks have
for. two or more joining issues, through
a joint agent, would be factor in en-
larging foreign trAde. through increas-
ing financial facilities.
be made and very important one has
to do with acceptances. one Of the i'm
portant factors in our foreign trade.
Acceptances, bills dated two or three
or four months ahead and agreement to
meet on maturity by some banking in
stitution. and readily discountable, may
now be made only in the import or ex-
port trade.
Domestic acceptances are likely to be
suggested by members of the reserve
board, which would stimulate inter-
| state business and intrastate business
as well, and make commercial paper
more plentiful.
There seems to be no limit to the
scope of the system; to its capabilities.
In further strengthening the system
section of the law relating to the de-
posit on the installment plan of the
| reserves to be carried in the federal re-
| serve regional bank may be changed
for an immediate payment OF the en-
| tire reserve requirements forthwith.
1t will not be a welcome amendment
| for the banks in the system. as they
receive no interest on the reserve car
| ried with the federal reserve regional
bank, and they do on reserves carried
| in central reserve cities.
The present law spreads the payment
| OF the reserves over a period of some
| thirty-six months.
| The banks of the country have ample
ment Of the reserves in bulk; and for
all business requirements.
Washington Securities.
The last week developed the fact tina,