The Washington herald., 1921-09-12
HEARINGS ON RURAL CREDIT
BILL SETFOR NEXT MONTH
McFadden Measure Patterned After Laws
Governing Bank of France.

freedom was initiated in 1900. when
Napoleon created the Bapk oh
France by special charter. docu-
ment which contains neither social
ism nor paternalism. The bank Is
the sole depositsry for government
funds. yet the government, exercises
no supervisory or regulatory pow"
er over il. ~
Bank Parliament In Control.
The four essential features of
that charter which were dwelt
upon lin considerable detail at the
hearings were, FIRST the fact that the
bank was given ample power, to do
a banking business; second, the
creation of a bank parliament
composed of responsible merchants
to legislate for 1t; third, giving the
bank a twenty-year legislative re-
spite. during which period the gov
ernnent parliament could not legis-
late for it, and fourth. providing
system of self-inspection for 1t.
1t was shown Napoleon centended
that as. the real purpose of the head
of the credit system was to serve
commerce, the best way to accom-
plish such purpose was to place
pnly responsible commercial men in
control, with ample power to do
banking business and legislate to
that end. So the charter provides
that only the banks 200 great mer-
chant stockholders shall vote to
elect its fifteen directors and three
censors. The bank has $4,000 stock
holders who have no voice in con-
troll. 1t was contended that had the
bank been a stockholders control,
then dividends to stockholders
would have been the thing Of first
consideration; but under the plan
provided. service to commerce Is
the thing of primary: consideration.
dividends being secondary. =. g.
Not Handicapped by Laws.
Probably the most astounding
fact brought out at the hearings
was that from 1857 to 1897, not a
law, was enacted by the French par
lament for that institution. Yet
that was an eventful period during
which France changed from a
monarchy to a republic and expe.
rienced a disastrous war in which
she lost two of her fairest provinces.
The legislative experience of that
Institution was contrasted with the
legislative experience of our Fed
eral Reserve system, which has been
in operation less than seven years.
I yet the amendments to that act
I exceed in volume the original act
and sixty-six bills and resolutions
were introduced in the last Congress
! to amend the law. The reason for
this contrast, it was contended, was
due to the two different methods OF
| Ilegislating. one being based on con-
| fidence and trust and the other on
distrust.
1t was sixty-three years after
Napoleon incorporated his phi
losophy of trust in the Bank of
Frances charter before the French
parliament applied it to all the
credit institutions of the country. 1t
has been applied to the rural
credit system all over Europe. not
enc Of which is government in
spected.
Principles of McFadden Bill.
The McFadden bill provides for
the essential principles contained
in the charter of the Bank Of
France. Ample authority is given
to do a general banking business
and a bank parliament" composed
OF responsible policy holders is ere
ated to legislate for II.
1t was said by one of the experts
at the hearings, The time will
pever come when clerks will take
the came interest in any business
that proprietors do. More than half
a century's experience in Europe
with rural credit has shown those
farmers were safer and more con-
servative legislators than our gov
ernment legislators have been" 1t
was claimed that, by trusting our
farmers with reason, as provided
by this bill. they would eventually
bring freedom to all our credit in
stitutions.