Evening star., 1921-06-27
PROTEST CHANGES
IN RESERVE ACT
Two Amendments Proposed
Would Hamper Boards
Action.
BY I. A. FLEMING.

Time and again bankers have warn
ed against tampeTng with the federal
reserve act. 1t has served its purpose
better than even it's creators had an
ticipated, so well, Indeed. that the
banking fraternity. other than a
small part of it opposed to par col
! changes.
There is a measure in the House at
this time to prevent a regional bank
from charging more than per cent
for loans. under any circumstances.
This action would recreate the very
4 conditions that brought the efforts at
deflation and bring a money panic. the
very thing the act was passed to pre-
vent.
Likewise it is proposed to amend
the act to restrict the authority of the
Federal Reserve Board itself.
The Federal Reserve Board Shall
have no power or authority TO restrict
the amount or class of eligible paper
member bank may rediscount. SO
long as it complies with the law that
applies to member banks, except by
order adopted by two birds of the
members of the Federal Rcesrve
Board, copy of which shall be mailed
10 all banks affected thereby. said
resolution shall not take effect until
thirty days. after its receipt by MEM
| ber banks.
in commenting on the second amend
ment: such arbitrary regulation
would be fraught with possibilities
for mischief and worse. The advance
notice of forthcoming restriction
upon eligible paper. under conditions
which this proposed amendmen u
would create, would induce a rush of
demands upon member banks for ac-
commodations. before the restriction
! should become effective.
irrespective borrowers would wish
to obtain accommodation before the
restrictive regulations were placed
IN force. Instead of aiding in sta
hilizing of credit conditions. the effect
Of such an amendment would be to
weaken the federal reserve system as
q preventive of financial panicS.
Whatever its shortcomings. the
federal reserve act has proved proHl-
Dental for the United States. 1t pro-
vided banking system strong
enough to withstand the greatest
credit strain experienced in this
country, and not only successfully
functioned during the period of dan
gerous imitation. but also met the
acid test of defiation with equal sue
cess. 1t cannot continue to function
so creditably if every detail of power
for the Federal Reserve Board to
regulate credit is minutely pre-
ScrlDeQ ny id"
|. Credit Semi-Annunl Dividend.
Member banks of the fifth regional
district, federal reserve system. re-
ceived notice this morning that the
semi-annual dividend of ) per cent
on their invested capital in the stock
of the Richmond regional bank would
be credited to their accounts July l.
| All the federal reserve regional
banks have made gains in the last
six months but their money was not
as largely employed as it was last
| year and the earnings will show some
|. falling off but they will be able to
maintain their per cent rates on
their stock. Each member bank IS
| required to contribute to the capital
stock OF the regional bank of which
it is a member and the returns there
on are limited to per cent.
Personal Mention.
Charles c. Glover. chairman of the
rional Bank. will leave tomorrow
morning for York Harbor Tor the
summer.
Local Securities.
Moderately good business was trans
acted in local bonds today at the ses-
| sion of the local Stock Exchange. but
the business in shares ] was greatly re- re-
stricted, while prices showed an ca
Sier trend.
Chesapeake and Potomac Telephone
- were active at 80. Gas IS eased
from II to !61a Traction 5s brought
s1h and the Gas -. notes sold at
1o3
Capital Traction shares sold from
S4,k to S5. Gas sold at 42%. to AZ.
| Other shares were entirely nominal
| and without material change.
Forms Are Ready.
| Local banks have received THEM
forms from the controllers Office for
ha call They lgrepablv
surprised to find that the controller
was not seeking new information.
The call will probably be for June
30, the end of the fiscal year.