The Bridgeport evening farmer., 1916-11-02

than all, the old system~with its in.
elastic currency and rigid limitations
J caused appalling panics with periodi-
cal regularity that Slapped the very
business life of the nation
Under the old Republican currency
and financial system the reserve
money of the banks Of the country
twas concentrated in a few great CEN
tiers. rincipally New York city The
law expressly provided for such con-
centration. It was a pernicious sys-
tenn, because the small banks through
out the country were unable to get
their money out of New York for
the use of their own customers when
trouble threatened or panics occur
red. There is no small banker or
business man in the land who has
not suffered because Of these panics,
the most notorious and disastrous of
which was the Roosevelt panic of
! 1907. 1t was necessary to break up
| this system. to organize and cOnsoli-
! date the credit resources of the coun-
try in such a way that disastrous pam
les could not recur and that mani
pu1ation and control of money by a
small and powerful group of men
should be forever destroyed
The old Republican financial sys-
tenn provided an inelastic currency of
fixed amount based upon government
bonds, which did not expand or con-
| tract with the varying needs of bust
ness. Consequently business could
not grow beyond the limits of the re-
stricted currency and credit of the
country. Whenever it exceeded these
! limits, business either had to stop
growing or a panic resulted. Stoppage
| of business growth or restriction of
natural development was always sig
| nalized by a panic or period of hard
! times and serious money stringency
Business enterprise and general de-
velopment in this country have always
proceeded in cycles, with wide and dis
| astrous fluctuations, and under such
uncertain conditions that prudent
men have always been afraid to make
the large commitments and engage
ments through which alone healthful
and wholesome development can pro-
coed with confidence and success.
There must at all times be a suffi-
cient supply of certain and reliable
credit at reasonable rates of inter-
est, completely and automatically re-
sponsive, to the genuine needs of bust
ness. With the assurance Of such
credit facilities, the genius of our
people operating upon our wonderful
resources has already established a
stable prosperity based upon sound
principles and a degree of wealth
never before dreamed Of in the
world.
We have overcome the faults of the
old Republican financial system
through the Federal Reserve act. We
have destroyed the concentration of
bank reserves in the great financial
centers and have distributed them
throughout the country by establishing
twelve Federal Reserve Districts in
each of which we have located a great
Federal Reserve bank. Into each of
these Federal Reserve banks we have
put the reserves Of the national banks
of each district. Each Federal Re
serve bank is under the control of
local boards of directors, chosen by
the banks of the district, and the
United States government. We have
provided for an elastic system of cur
rency and credit which will always
be sufficient for and automatically
responsive to the legitimate business
needs Of the country, because these
credits are now based upon notes re-
presenting actual commercial transac-
tons, or notes secured by live stock
or the staple commodities of the farm,
or upon agricultural transactions re-
presenting the actual production and
marketing of crops. AS the needs of
these genuinely beneficial enterprises
expand or contract currency or cred
it expands or contracts with them
What a wonderful transformation this
try! There is now enough credit for
legitimate business, big or little, as
we'll as for the farmer who wants to
fatten his cattle, produce his crop or
market his crop when it natures. IN
der the Federal Reserve System in
terest rates throughout the country
have been reduced and are becoming
more and more uniform, so that the
merchant or farmer in one part of
the country with a thoroughly we'll
secured note can negotiate it on al
most as reasonable terms as his COM
petitor or fellow worker in another
part of the country.
We have given our National and
Federal Reserve banks the right to
establish branches in foreign coun-
tries and to deal in acceptances based
upon exports and import trade. Am
erican banks are for the first time in
American history put in position to
compete with foreign banks and to
help American commerce throughout
the world. Already our banks and
bankers are doing great things for
American trade because Of these new
powers given them by the Democratic
Federal Reserve Banks now establish
stituted dollar exchange for dollar
diplomacy, which. is the true way to
secure and hold our share of the
worlds commerce. Dollar exchange
represents the conquest of foreign
markets through friendship and reci-
procally advantageous trade relations. !
Dollar diplomacy represents the at
tempt to secure foreign concessions
and trade by force-by the use Of
the army and navy of the United
States.
This wise policy has already made
dollar exchange known throughout !
the world and has largely displaced |
the pound sterling as the common
medium Of exchange for the worlds |
commerce.
These twelve Federal Reserve banks |
have given to the people of each of !
the twelve Federal Reserve Districts /
an Independent financial organization /
of their own, supervised by the Fed
era1 Reserve board, a responsible gov
eminent board at Washington, and as !
s11re to them control of heir own af- |