New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-12-17

larger.
Banking Position
Basically Sound
In totalling up the gains of these
twenty years in legislation, we can,
even while criticising a good deal
that has been unsound and harmful,
gladly admit that there has been
much that has been good. AS
bankers. we can look on two acts
Of legislation of profoundly bene-
fetal influence. The more impor-
tant, of course, is the estab-
lishment of our monetary system
firmly upon a gold basis; but only
second 10 that was the recognition
Of the true principles that should
govern a reform Of our banking
laws, and while those principles were
not ideally applied in constructing
the Federal Reserve act, that act
did, on the whole, make great step
forward toward giving this. country
a basically sound banking position.
Another class of legislation through
which government in a measure en-
tiers business is typihed by the Fed
cral Farm Loan act. In some quar-
ters there is objection to the prin-
ciple involved when governmentalre-
lations are injected into business in
this way. Does not the fault here
lie quite as much with bankers as
with legislators? Will we not al
ways find the people cropping to do
through governmental agencies those
things that are left undone or are
badly done by individual initiative?
Must we not safeguard the future
from an unwise participation Of gov
eminent in business by seeing to 1t
that business is so well conducted, so
fairly administered, so completely
responsive to legitimate needs that
there will be no sound reason for the
government coming into participa-
ton in any field because it is already
adequately and fairly served?
Among the more recent pieces Of
legislation that are prominent in a
catalogue Of enactments affecting
business in this period is the Federal
Trade Commission act There would
undoubtedly be a lack Of agreement
as 70 the need or effectiveness Of that
measure, but | believe it is at least
fair 70 say that a distinct service
has been rendered industry by the
acute analysis which a Chicagoan at
the head Of the commission has made
Of the method, or the lack of method,
Of computing costs in industrial es-
adjustments. Mr., Hurley has pretty
well established the fact that many
industrial organizations have been
going by rule OF thumb in deter
mining costs Of production, and he
has rendered real service in awak-
cning industrial managers to the
necessity for a more accurate under
standing Of their business.
wonder if something of the same
sort might not be possible in an an
alysis Of the banking business! Have
we not all been going on, governed
too much by precedent, which has
led us, under all circumstances Of
high money or low money, TO pay the
same level rate for deposits? Have
we not frequently permitted a desire
fer large totals TO lead US into paying
rates that were obviously unwar-
ranted by the ruling rate for money,
a practice which in turn leads 70 the
making Of unsound loans, because we
feel forced TO make profitable those
deposits which are costing US too
much. / wonder sometimes II there
is not too little fexibility Of mind
among bankers, The fixed rate Of
interest on deposits is only one ex-
ample Of that. 1t seems TO me duty
to understand truly the needs Of our
customers, and TO do that means a
inuch more intimate knowledge Of
their business; it means making a