The daily telegram. [volume] (Clarksburg, W. Va.) 1901-1926, 1916-10-11
WILSON MONEY
LAW NOT WHAT
WAS PROMISED
Money Trust Still Exists and
Elastic Currency is Far
from Reality.

WASHINGTON, Oct. IA IA.
vorite claim Of the Wilson adminis-
tratIon Is that the federal reserve
banking system destroyed the money
trust and freed American business
from the domination OF Wall atreet.
Unfortunately the claim Is not
borne out by the records OF the op-
Grafton oil the federal reserve System.
The control Of credit by allied
banking interests and Its abuses were
the result Of opportunities that were
presented by the national bank act
and, so far as the federal reserve
system Ia concerned. the oppnrtunl-
ties for these abuses still exist Pub
licity. however has put decided
gimp in the money trust.
Money Conferred In New York.
The national bank act provided for
the redepositing OF bank reserves in
correspondent banks In reserve and
central reserve cities. This caused
an inflow Of money 10 New York be-
cause II was in New York against So
curltics dealt In on the stock OK
change that banks could find employ
ment for their idle funds. Loaned
on call. such funds. In ordinary times
werG reasonably liquid.
rs there was no other demand loan
market OF consequence, the money
was centered In New York and
utilized In this manner. Ii was the
result of the system that had been
developed through fifty years OF ex-
handing activity and tho abusa OF It
must he attributed to tho great prl-
vate banking houses which are not
affected one way or another by the
federal reserve system.
The manner in which this system
was to be smashed was by the with
drawal OF funds from the New York
Rational banks and placing them in
The federal reserve banks. For this
transition three years were allotted,
ending November 1G. 1917. on which
date all the reserves of all the ma
tional banks will be either in theirI
own vaults or in the vaults OF the
federal reserve banks.
Loan Funds Not I.eSscned.
At this time the withdrawal of re-
serve funds for deposit in the federal
reserve banks aggregate $500, 0O0.-
900. II the plan had been effective
the amount available for stock ex-
change loans in New York would be
less by about this amount. Despite
the payments OF roaerve funds into
the reserve banks the amount OF de-
positls which New York banks carry
for other banks is greater now than
ever before.
II the money trust was to be
smashed by the withdrawal of rede.
posted reserves from the New York
banks the smashing process has been
q complete failure.
If the money trust existed because
OF the concentration of The funds or
business, industry and agriculture IN
New York, the money trust has
available and at its command today
more funds than II ever had before
In the history of banking In the
United States
First Purpose Changed
The federal reserve act, as II was
conceived by its authors. is radically
different from the federal reserve act
as a practical banking system. The
purpose was TO establish number OF
reserve banks as going institutions
which would have daily transactions
with member banks and be an lnhu-
ence in the financial market. The
reserve banks in reality. so far as
their stabilizing influence is concern
ed. are emergency institutions mark
ing time against the advent OF an OK.
pected panic or emergency demands
for currency.
" was assumed that the banks OF
the country would do large amount
Of rediscounting with the federal re-
serve banks and that there would be
4 constant flow Of currency outward
\ from them to meet the demands or
business and n constant flow Of cur
rency inward TO them for redemption,
the ebb and flow OF the currency
marking with exactness the rising
and falling Of demands oil business
for accommodation.
Practically there has been no flow
Of currency to speak OF because OF
the remarkably small amount Of re-
discountng accommodation, due TO
the prediction Of Congress for large
quantities Of paper money"
ot secondary or permissive invest
mems there are.
United States bonds. S54,959, 900,
bills bought in open market, s5I.-
10000; and nj unlcipal warrants.
$39,15A,000, This leaves unen-
gagged and unearning seventy-one
and one-third per cent of tho total
resources, or $42S,379, 900.
The National City Bank Of New
York does more business than all the
twelve reserve banks combined, and
any one OF dozen other banks IN
the country does almost as much.
The total net earnings of the banks
up to July ! last were S4,O7S.Sll,
or one-siXth per cent of tho capital
investment.
Currency Not Elastic.
4 The first purpose of the federal re-
serve act, as announced in It's pream-
BILE, is to furnish an elastic cur