Evening star., 1915-11-21
BY I. A. FLEMING.

year. The period is too short for a
test of the new system. the more SO
as it was planned and enacted as an
emergency measure; to do away with
the inelasticity of the national banking
act.
| There is but little question but what
the law. with some more or LESS i'm
portant amendments. will remain on
the statutes for many years to come.
] That is has the quality of elasticity.
beyond even the belief of it's sponsors.
| has been demonstrated. That its re-
serve provisions have released many
millions heretofore tied UP in reserve.
as a measure of safety, and permitted
their use in the channels of trade Is
also acknowledged.
| There being no rediscount bank
where bankers could liquidate their
assets to meet new contingencies. they
were necessarily compelled to carry
larger reserves than needed now when
such a rediscount bank is available to
every member institution.
| That the system would work we'll in
an emergency practically goes without
! the saying, for the power of issue be-
| longs to it and the capabilities for re-
discount are limitleSs.
| The federal resrve act was not enact
! ed, nor did its sponsors propose that
! it should bring into xistence, a bank
| ing system to compete in zny way with
| the member banks. even If the differ
| ent regionais did not make cent. The
law provided for the income needed to
pay expenses, charging this item to the
member banks
Many member banks object stren-
tutions competing either in invest
ments or in any other way with the
banks
Moreover, they resent the accumula-
ton of all reserves at once as recon-
mended by some officials of the sys-
TEN, instead of the periodical payments
as provided in the law. The conten-
ton is that the regional banks have no
use for more funds: that the member
banks are distinct losers by being re-
quired to keep siX-ffteenths of their
reserves in the regionals rather than
in central reserve cities where inter-
est is allowed on balances.
The advisory council. composed of
some of the most important bankers
In the country, has gone on record as
favoring the abolition of the position
of controller of the currency and the
complete control of the system by the
federal reserve board.
There is little apparent chance for
any such action at this time. as the
powers that be are believed to be back
of the incumbent of the Office very
reach Congress and be debated pro
and con.
The executive council of the Ameri-
can Bankers Association recommends
the same change, and practically all
financial papers are back of the move-
ment. or, rather, lend their approval
thereto.
Some of the friends of the reserve
act claim for it the quieting of the
panic developing on the declaration Of
FIIlrODa f0rOatfinG Ia
really the s3SO.OOO, 900 furnished by the
Aldrich-Vreeland currency law that
saved the situation months before the
reserve act came into force.
Chairman Bosworth of the Chicago
regional bank, in a recent address,
said:
ITO worry about the showing of
earnings of the federal reserve bank
senseless as for the people of this city
to get sore at it's fire department be-
cause it has been idle for the past
week.
A Protection When Needed.
If the officials of the regional banks
understood the matter as Mr.. Bosworth
does there would be less complaint of
competition, it is said.
A reduction of paid-in capital Is one
of the suggestions for amendments to
the act, which has brought out the
sentiment that it was wise for the re-
serve banks to be well fortified for
any emergency demanding Immediate
relief.
While member banks have little crit
icism on the protection offered by the
lection system. and many banks that
might otherwise come in are holoins
aloof for fear of the loss Of exchange
in the event of the enforcing OF this
on the member banks.
In one way the member banks want
the dividends to which they are en-
titled on their holdings in the fed
eral reserve banks. But they DO not
want competition in business, Whicn
creates a paradoxical situation. for the
only way the regional banks can make
money is to undertake some 1unctions
which are objected to.
The journal of the American Bankers
Association fears that "meddling poll
pleasant for non-dividend paying re-
gional banks. The reserve banks are
doing the best they can. In every case
there has been an earnest enort TO
pare down expenses to a minimum
Baltimore Will Be Heard.
Baltimore demands a shifting Of the
fifth district regional bank from Rich
mond to Baltimore.
The appeal to the federal reserve
board for the change is now before that
body and may soon be acted on.
B. Howard Haman has been retained
as counsel for the Merchants and
Manufacturers Association OF Balti-
more to press for the selection of the
Monumental city.
Marylands representatives in Con-
gress will protest the retention OF the
reserve bank at Richmond, and there
seems to be a prospect that the selec-
tion will be seriously questioned.
With Boston. New York and Phila-
delphia having regional banks. there
may be some objection to adding Bal
timore to the list, it being but two
hours from Philadelphia.
As compromise the suggestion is
offered that the National Capital, the
seat Of the governing board and the
controller of the currency as well as
of the government itself. be honored.
as being a more logical location and in
easy distance of the most distant point
Of the fifth district territory.
Steel Liquidation.
During the past week there have been
positive evidences of the attempt Of the
Anglo-French bond syndicate on this
side of the Atlantic to hold prices of
| securities at a high level during the
period Of marketing OF the bonds.
This has been seen more especially in
] Steel common. This stock was supposed
/ has for some time been more or less
| effective in shaping the current course
| Of prices, other than in war stocks.
| Large quantities Of steel have been
| lliQuidated during the week ended yes