New-York tribune., 1920-12-11
Representative McFadden
Asserts He Will Introduce
Bill to Make the Two
Separate Institutions
Scores Credit Initiation
Says War Paper Should Have
Been Taken From Banks
and Given to Investors

of clients of the George Batten Com
psny, advertising agents, at the Hotel
Biltmore yesterday announced that he
will soon introduce bill in Congress
to divorce the Federal Reserve Board
from the Treasury Department and to
eliminate the Secretary of the Treas
ury and the Comptroller of the Cur
reney from membership in the board.
Mr.. McFadden, who is president Of
the First National Bank of Canton,
Pa, declared that at present the Fed
eral Reserve Board Is "little more than
q bureau OF the Treasury" He said
he would ask that members of the
board be increased from five to seven
and their terms decreased from ten to
seven years. Under the proposed bill
three of the seven members, he said.
would be "eXperienced in banking and
financing"
"The present plan" said Mr.. Nc
Fsdden, "is fraught with many dangers,
and ! believe that the proposed bill,
which will be passed, will correct these
dangers" He added that the business
institutions of the country are now in
death struggle as result of eco
noulic and financial conditions.
Purpose of, Bill
Explaining the purpose of his bill,
Mr.. McFadden said: "At the present
,me the board is composed of seven
members. five of whom are appointed
by the President with the advice and
consent of the Senate. The remaining
two members are the Secretary of the
Treasury and the Comptroller of the
M hor ftc;C
While, therefore. the board is a sep
arate and independent establishment
of the government and not bureau of
the Treasury Department, it is partly
subject to the control, or influence of
the Treasury Department because of
the fact that two of its members are
Treasury officials. Indeed, the board
has become little more than a bureau
Of the Treasury.
"Much of the criticism that has been
directed from time to time against the
organization and action of the board
is based upon the fact that it is not
completely Independent of the Treas
ury influence.
II am proposing, therefore, by the
bill to eliminate the Secretary Of the
Treasury and the Comptroller Of the
Currency from membership in the
board and to increase the number of
H..
Criticism of the Treasury Depart
ment for creating "an extraordinary
credit and currency imitation" since the
armistlce was voiced by Mr.. McFadden.
He declared that mistakes made by
the Treasury Department have created
one of the gravest problems in the ma
tons finance, which Congress will have
to solve.
Reason for Initiation
THE reason for the imitation is due
primarily to the mistake Of the de-
partment in adopting this infationary
var" said Mr.. McFadden. 'TThe plan
once adopted could not easily be dis
continued, which probably explains the
heavy amount of war paper. which is
still being carried by the Federal Re-
serve and banking systems Of the coun-
try. The war paper should have been
removed from the banking system and
placed in the hands of investors in
stead of being allowed to consume
such large part of the resources of
the nation.
that could not be accomplished except
at the price of imitation with all its
attendant evils and at the price of
subsequent loss to original holders of
bonds when later the prices of their
bonds should sink to their natural mar
ket level, and this was done to suit the
convenience OF the Treasury"
Executives of prominent manufac-
turing firms from all over the country
attended the meeting. Other speaker RS
we're Francis II. Sisson, vice -presi-
DR.. Jacob II. Hollander, of Johns Hop
kins University, and Senator James E.
Watson. of Indiana, acting chairman Of
the Senate Finance Committee. Sena-
Tor Watson's address was not made
public.
Answering charges that the banks
we're responsible for present financial
situation. Mr.. Sisson said: "The banks
have gone to the very limit Of their
credit extending power to meet busi-
ness needs. If they had gone any
not only their own existence. but the
solidarity and future Of all American
business"
Thomas ". Lamont, OF j. P. Morgan
4 Co., sent letter to the convention
in which re suggested a code of ethics
for business interests. He said:
who can resolve not 20 be frighten-
ed into panic by the wolf that may not
cone.
Who can meet our contracts to the
utmost limit Of our resources.
we can take our losses like good
sportsmen.
we can be unfailingly fair TO our
clients and customers.
We can adhere just as rigidly as
ever 70 good ethics and fair business
practices.
I'VE must be just to our fellow
workers and employees and consider
'aeir welfare as an integral part OF
our own.
Fundamentally, in the way Of busi-
meas, there Is not very much wrong
Nth America. Americans are fre-
quent'y inpulsive and over confident
and they do not always profit by ex-
per'ence. But, as the world goes, they
ere young and these are the Sins oi
glorious youth. We Americans have
N the worlds greatest domain. re
sources that defy computation. We
rave the Intelligence and capacity anc
h'gn pprpoSe 10 conserve and deycloI
me amazing heritage that is ours.
We are strong in numbers and ir
1a'th. II u tnat faith we add the de.
examination 10 play our fair part in
me affairs Of the world and 10 make
America hrst--.not In attention TO heI
"wn concerns alone---but in the coungel
ana friendship which she extends u
nsf fellow nations, then who can doubi
mat ne soon shall be marching for