Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1916-08-11

vor of one central bank with severai
branches all under the control Of one ex-
pressly non-partisan board But, pefore
the bill could be acted upon the HOUSE
became Democratic and 1t went over.
The Democratic party in its platform Oh
1912 specifically declared against sucn an
institution, but being unable to devise
anything to take its place they incorpor-
ated most of the desirable features OF
the Aldrich plan into what they termed
the Federal Reserve Act, but instead OF
making one bank with several branches
all under one non-partisan board, tnes
made several interdependent banks all
under one partisan board, clothing these
several banks with powers and functions
as provided in the Aldrich plan There
is not q provision in the Federal Reserve
Act for which its friends claim credit
that was not taken almost bodily from
the Aldrich bill.
BY its terms the Aldrich-vreeland Act
under which the secretary actually issued
over one-third Of billion Of emergency
currency, expired on June 80, 1914, but the
Democratic Congress and Democratic
President recognizing that the Federal
Reserve banks would probably fail to
meet such exigencies as might arise, ex-
pressly extended its life for one year.
They are entitled to great credit for SUI
ficient craftsmanship to extend tho Aid
rich-Vreeland bill rather than to rely
upon the Federal Reserve banks, for it
actually averted the panic while the Fed
eral Reserve banks might have failed.
No man can do more than express an
opinion as to the results of an untried ex-
credit for something else Of equal wisdom,
but nothing occurs to me now. My
judgment Is that if they had extended
the Aldrich-Vreeland act indefinitely and
had clothed the national banks with
powers and functions similar to those
given Federal Reserve banks and had
laid all other provisions of the Federal
Reserve act on the table, the country
would be better off. Had the President
reversed his custom and examined his
facts before drawing his conclusions he
certainly would have refrained from say
ing that Federal Reserve banks had saved
us from a ruinous panic
I have always opposed centralized finan-
/
apprehension both upon the Aldrich com.
mission plan and the Federal Reserve
act. But the latter was passed and il
now becomes the duty of all to make il
succeed if possible. The desire to make
1t succeed invites some reference to pos
sible dangers in the hope that they may
be cured or at least avoided.
Many years ago we had a central bank
which drifted into political machine
and the veto of the bill renewing It's char
ter was the one act that made an admin
istration popular and the name Of Andrew
Jackson revered for three-quarters of g
century. The Aldrich bill sought to avoid
the weakness of the old United States
Bank by expressly providing that i,
should be under the control of non.
partisan board. One can readily under.
stand how an ambitious President
through more than $4,000 banks on whic.
| the business of every community is de
| pendent, supervised and controlled as
they are intended to be by a board con
sisting of seven men including the secre
tary of the treasury and comptroller o,
the currency all Of the same polit
, ical faith as the President. all ap
pointed and removable by him, car
exercise greater political influence thar
was ever before welded by mortal man
I doubt if President Diaz. in his palmies
! DAYS in Mexico, was ever in position t.
so completely dominate the politics of hi:
country. 1t does not follow that an,
President will resort to these influences
but / have always opposed subiectins
ourselves to such possibility. In my
! opposition I have frequently quoted one
of Josh Billings New Years resolutions
Resolved, THAT if man tells me mule
won't kick, I'll believe him, but I won
go near the mule"
! But political power is not the only ar
bitrary power vested by this act in sever
men. The board can. If it chooses. ruiz
| any bank in the United States, in sis
months any firm, corporation. or fnsti
tuition which regularly requires extensive
credit If 1t chooses this same board car
! prevent the establishment Of any large
| competing manufacturing or producing
plant in competition with existing con
Germs While the law forbids Federal Re
serve banks from showing Partially il
discounting commercial paper. absolute
and unqualified discretion remains unim
paired. Any one will readily understand
how easy 1t would be to resolve this dis
erection one way when note is presented
by a friendly bank and to exercise it the
other way when presented by an IN
/ friendly institution. 1t would he an easy
matter to reject all paper coming from
any big wholesale house or other concern
! or from a newly established packing
house, oil company, implement manufac-
| turer. automobile concern or anything
else having the temerity to undertake tc
establish itself in competition with any
Of the great so-called trusts. T do not
say that any Of these mules will kick but