The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1921-01-23
Standeven Says 1t Has
Accomplished Purpose
for Which Created
ANCHOR IN A STORM
There May BE Amendments
Needed, but He Finds No
Skeleton in Closet

h The belief OF II. l.. standevcn.
vlco president Of the Exchange
Trust company who voiced his sen
timents in an address before the
Dklahoma-k Kansas conference OF the
National Retail Credit Mems RSEo-
citation held In the municipal audi
torium.
HIS subject was. ~ study of the
federal reserve system during and
following the war period. the rclh-
tion OF tho system to the nation =
credit requirements aud the lessons
that have been learned from the op-
Grafton OF the system In meeting the
credit needs Of the peculiar condi-
tlons OF this period"
This IN "A very big subject and re-
uuircs n study Of the entire federal
reserve banking system Of the coun
try today" Standcvcu explained. ut
also requires an intimate knowledge
OF tho credit conditions of tho coun-
try before, during and amer the
war.
THE federal reserve act was ap-
proved December ~, 1913, and has
been In operation little over six
years. The act has been amended
on five different occasions. ana I'm
the Judgment OF the vast ma ajortty of
The people of the country was one
OF the most constructive pieces of
financial legislation that has ever
been enacted In this or hny other
country In the world. The purposes
OF the act were generally defined
In its title, as follows;
ITO provide for tho establishment
Of federal reserve banks; To fur-
nish an elastic currency; to afford
- rAIfNuAt.ntasa ~ IA
paper; TO cstablish "A more effective
supervision OF banking In the United
States, and for other purposes.
1T must he admitted that the
purpose of the act aH defined In It's
title have been literally fulfilled, In
that II has established IL federal
reserve banks. Il has furnished 10
the country an elastic currency In
the form of federal reserve notes; II
has afforded a means To the mem
her banks OF TedlacountinR CONNER
clal paper 10 an extent undrenmcd
OF before the enactment of the law;
and II has established n more effec-
tive Supervision OF banking In the
United states. ~ VIII he admitted by
any officer of member hank.
you gentlemen are more con.
oerncd in the functions of the fed
cral reserve banking syatom In It's
relation To credits OF the nation.
Let's Rnolyzc for q moment the term
Of credits. In political economy this
term indicates broadly the confi-
dcnco which IN reposed In tho abil-
ity and purpose OF men To meet flu
turc obligations. II IL defined by an
eminent economist as permission to
use another's capital II rests upon
confidence or trust In human nature.
and the term embraces many opera
Cions In which the human element
plays "a part Credit is made possi.
hlo by thrift. and Il has been said
that credit is tbo channel for trans
fcrring capitalN Banks play an Inn
portant part in the extension OF
credit: In fact banks may bc called
the reservoirs ~ credit and the fed
cral reserve banks may he called the
reservoirs FOR the reserves OF credit.
Unemployed wealth IN 'conceu-
trated into the banks OF the country
aud through them this wealth is di-
rected by loans or credits into chan
nels of trade and commerce, II is
brought together In large and small
quantities from all classes OF people
who do not immediately need Il, and
without the assistance OF the banks.
trade and commerce would be car
Credit liz not capital. Credit does
not produce wealth, Credit draws
out wealth from its hiding places
and harnesses II and puts II into
channels of usefulness, hence the
country In which credit ~ highly
organized viii have higher pro-
duCtivc capacity than ono that ls
not highly organized.
"Thc initiation Of credit is danger
cus An automobile driven AT the
rate OF 60 or 20 miles an hour IL
more likely to have an accident than
lumber wagon rambling along ut
the rate ot four or five miles an
hour. But should we, because OF
the possibility OF this accident, re-
fuse TO progress and use the auto
mobile. or should We return To the
old time horsecart and chaise' The
proper method would he 90 use the
wisdom Of man In directing credit
into the right channels aud 20 pre-
vent the disasters that reckless driV-
ing or the rockicsB handling of credit
win surely bring to tho country.
"Thc trainers OF the federal re-
serve act realized that I'm order to
develop this wonderful country ol
ours moro intensely u was necessary
to have law that would meet IA.
growing conditions or me country
and yet TO place within that law and
within control of the managers ol
the system established by that Law
and within control of the managers
81 the system established by that
law sufficient authority and power
to put on tho brakes and To call q
halt whenever tho credits ~ the
country were being inflated ali,
normally or TO such extent that dis
astcr would result unless credits
were Curta,lrd.
considerable criticism has beer
directed against the federal rescrv,
.hOurd and the federal reserve bank,
recently claiming that they have un,
necessarily Curtailcd the credits oi
the country and have raised the dis
count rate to such an extent that 4
was impossible for member hank
TO ro-discount paper at the fedora
reserve banks To a person who ha'
not taken the time To- investigate IN,
actual conditions this criticism may
seem proper and Just and before
started TO investigate this subject
myself thought the federal reserv,
hoard. or rather the federal rcsery,
banks with the approval OF m,
board, were curtailinE credits (,
such an extent that they were hurt
ing the general business Of the coun
try, and that they had unneccssaril,
raised the discount rate to poiu
that almost DESTROYED tho usefulness,