Vernon Parish Democrat. (Leesville, La.) 1917-193?, 1921-12-15
Encouragement of the
Federal Reserve System


1t the officers OF the Federal Re-
serve Bank Of New York granted these
huge accommodations knowing the use
to which certain of these institutions
were putting the funds under their
command, their officers were culpa-
bic for aiding and abetting in a misuse
of Federal Reserve money. If they
made these enormous oand exceptional
loans without being informed as to the
use which was being made of the mon
ey. and without an independent exam
nation of the borrower, after the re-
peated warnings which the Comptrol-
Ter of the Currency had given to the
Federal Reserve Board that such exam
lnatiop ought to be made, they, are
guilty of gross negligence. There is
no escape from these conclusions.
System Run Extravaagantly
The records also show, believe,
most indisputably, that the Federal
Reserve Bank of New York has been
and is being run on an extravagant
basis. The newspapers recently re-
ported plans submitted by the New
York Reserve Bank for the construc-
ton of a new End sumptuous bank
building, estimated to cost $4,000
OOO-probably more than the total
cost of the White House at Washing
ton, the Treasury Building and half
dozen of our State Capitols. AS an
indication of the extravaganza with
which the Federal Reserve Bank of
New York is being run, | showed that
the salaries paid to its "officers" alone
exclusive of other employees were IN
creased from $93, 900 in 1916 to over
100000 in 1920. The salary roll of
the New York Reserve Bank from 1919
to 1920 actually increased $773, 900
despite the ''defIation" in business.
It appears that the salaries paid by
the New York Reserve Bank to two
dozen of its Officers" (includins its
high-priced publicity" officers ag-
gregate about 100000 or more than
the aggregate salaries paid by the
Government to fifty-two United States
Senators from all States east of the
Mississippi River. have been told
that a large majority of these "offi-
GERS never got over $500 to ST.
GOO nutil they came to the. Reserve
Bank, and their salaries have been
raised rapidly from 100 to 500 percent
out of public monies.
To make a further comparison. the
aggregate salaries now being paid to
twelve, or say one-half Of these doz-
en- officials. exceed the total salaries
of the President of the United States,
the Vice-President of the United
States, the Chief Justice of the SUI
preme Court, all ten members of the
Cabinet. and seven United States Sem
ators-all combined!
Left to Run Itself
Governor Strong, who appeared be-
fore the Congressional Committee as
an expositor of the policies followed
by the Federal Reserve Board and the
New York Bank during 1920 was
abroad nearly the whole of that fate
full year. He left in March or April,
1920, and did not return until jan
uaFy, 1921. His statements as to what
was happening in his bank during that
period must, therefore. be second
hand, as he could have had no person.
al knowledge of the practices follow
ed.
He promised the Congressional Com
mittee, nevertheless, to dispose of the
charges finally and conclusively" and
| am content to have discerning pub
lie decide how far he has succeeded
in reconciling the clearly established
facts with a sound. impartial and sa-
gacious policy.
In connection with the mismanag-
ment of certain banking institutions,
and the operations of their officers,
which it became my duty as Comp
troller of the Currency and member of
the Federal Reserve Board to criticise
and endeavor to correct. beg to quote
here the following extract from my re-
cent address at Augusta. Ca:
have no hesitation in telling you that as
far as | am able to see. the decent and con
sentative banking element in New York CITY,
as everywhere else, regards just as do and
as | know you do, the operation and methods
of certain big Spectators. all the more dan
gerOus because of the prestige given them by
their official positions. who have made play-
things of the funds of other people, and the
performances of accidents, and sons of some
body who have used the wealth and power
intrusted to them to defy the moraIities and
decencies. When the stockholders understand
how their confidence has been ahusAd ,hava