Evening star., 1921-03-13
BY I. A. FLEMING.

BY l. A. FLEMING.
David A. Forgan. president of the
National City Bank of Chicago. de-
clared the other day that "but for
the existence OF the federal reserve
system. we would now be in the
midst of a panic"
1t is an interesting proposition.
Just what woud have happened il
athis great act had not been written
on the statute books?
We, never could have loaned our
allies and others over Hine billions
of money; we could not have sold
seventeen billions of liberty ponds
very largely on the installment plan
BY the same reasoning we could
not have advanced two billions and
over to the railroad companies.
In the days OF old a billion-dollar
Congress was looked upon as wildly
extrayagant and was given a proper
dose of public opprobrium.
Today We issue hundreds of mil
lions on millions of dollars worth OF
Treasury certificates every month.
that the government may continue
functioning: banks aid the general
public buying these certificates free
1y to tide over the government be-
tween tax payment periods and when
the expenses are greater than the
receipts.
We think. apparently. nowadays in
billions rather than plain hundreds
and occasional millions.
1t would have been a serious mat
ter, the financing of the war without
. the reserve system. 1t was not in
existence until November. 1914. and
late in the month at that, while the
war started in August. 1914. but We
had the Aldrich- Vreeland act on the
books. and that served its purpose
excellently.
The Aldrich -vreeland act had a de-.
cided snap in it-a defiation power
all it's own. with the provision for
increased taxation-the longer
banking institution used the emer-
gency currency the higher the tax
thereon.
ure. but it permitted the use OF high.
grade collateral at q percentage OF
face and actual value to obtain cur
Tency.
The liberty loans were put over
through united and persistent effort:
through patriotism and the work OF
patriotic workers. the banks stand
ing ready to accept 10 per cent pay
ments monthly on subscriptions.
They were enabled to go far in doing
this by the rediscounting privileges
of the federal reserve system. We
might have gone some distance with
the national bank act and the Al
drich-Vreeland combined, but we
never could have gone seventeen bill
lions.
Less Generous.
To a certainty, II We did not have
the billions we could not have been
SO generous with our nghting allies
and some who fought not.
In that event our allies, fighting
and otherwise. could not have made
overtime with their orders for war
material and sustenance. for which
we paid.
The wonderful period OF prosperity
that developed after six months OF
the war. and before this nation
materialized. and the era of high
wages, high cost Of existence and
wild extravagance might have been
avoided.
Patriotism of the American people
would have found way to sell an
enormous quantity of United States
bonds to have financed our owR part
of the war, but the chances are there
would have been many stringencies
and some serious panics during the
period Of the war and since then, but
nothing more strenuous than at this
time, unless much of the imitation and
extravaganza had been avoided.
The government could never have
afforded to advance two billions to
railroads. nor would the railroads
have needed the money. as the Adam
son act would not have been enacted.
If it had not been for the federal
reserve act. the forces OF Germany
might have found a foothold on the
sacred soil of the CSited States, but
It 10 beyond the imagination that
hay made nrORfegS
in the line OF United States invasion,
despite their up-to-the- minute readi-
ness, their war inventions, humane
and inhumane.
That they would have attempted IL
IN admitted in we'll informed circles.
that they would have failed is an
American belief.
We have had our era Of wild ex-
trav2Gance: we have seen our FAC
tories working overtime for foreign
consumers paid for with our own
billions: we have seen imitation In
fiated. and we have seen the process
of defation working out-slowly. but
nevertheless working out to our re-
habilitation.
Germany has not made the desperate
attempt: there has been no panic: we
have forgotten the era Of extrava-
gance In the economy OF today. and
the federal reserve act still functions
in first-class manner for the gond
OF the merchant. manufacturer. cattle
grower and agriculturist.
After all. bankers are glad It is on
the statute books.
Babson to Speak.
Roger w. Babson. statistician and
one ot the best posted men on great
corporations. Of Babsons Statistical
Organization. Wellesley Hills, Mass
will be the chief speaker at the noon
meeting in the Lenten services at
Keith's Theater Wednesday, March
I6.
The COlumbia Graphophone showing.
Internationally many shareholders
in this corporation who received the
pamphlet report for the year 1920.
yesterday. found the figures therein
more or less puzzling.
Thus. in the item common stock
authorized, no par value. the figures
show very plainly as follows: 3,000,-
100000 shares. One has to look close
ly 10 distinguish the period after g.
100000 differentiating from the COM