The Farmington times. (Farmington, St. Francois County, Mo.) 1905-1926, 1922-07-21
A MoNEY-BRoKER TRICK

In discussing the Federal Reserve
Bank System there is an impression,
encouraged by the Money
Trust, that it's opponents are attack
ing all banks. This is unwarranted.
There is no fight against legitimate
banking. In fact, If the indictment Of
the Reserve System is sustained,
banking in general, including member
ship in the system, will be benefited.
Starting from the fact that at this
time less than a fourth in number of
the banking institutions in the United
States are members of the system,
and bearing in mind that of the mem-
bership at least four-fifths in number
are members through compulsion, it
will readily be seen that any criticism
of the system must be confined to =
very small part of the banking busi-
ness, even if it included all the mem
bership, which it does not.
The struggle for financial freedom
is a battle for the small bank and for
independent financial institutions, as
we'll as for the people at large. Out
side Of the national banks, by law
compelled to subscribe to theg capital
stock OF the Federal Reserve banks or
surrender their charters, the number
of institutions electing to membership
in the system at the close of 1921 was
but 1921, making the total member
ship less than 10000.
That the Federal Reserve System
has not been satisfactory,to these out
side members is evidenced by the IL
quotation of some, and the withdrawal
of others. That it is not guaranty
to banking prosperity, but rather an
encouragement to monopoly, is shown
in the failure Of many member banks
and the practical bankruptcy of others
saved from actual liquidation by alb
sorption by rival institutions; for the
mergers so frequently noted in large
cities are really but style of fore
closure on the properties.
The extent Of the dissatisfaction of
the national bank membership with
the system cannot, of course, be gaug-
ed. That some exists is apparent from
the growing interest in the subject
manifested in all parts of the country.
Many inquiries come from sources
which surprise, since information is
sought by bankers who might be sup
posed to know all there is to know of
the matter. The fact that the men,
ber bank is no longer master of its
local situation seems the one great
fault found with the system. Under
the National Bank Act the local bank
of issue dealt directly with the gov
ernment and the volume of its circu-
lation was limited only by the aggre-
gate that could find profitable invest
ment. The currency issue, too, was
based on long-term security, so that
commercial business could be carried
on without regard to frequency of Ii
quidation. Under the Federal Reserve
System, the member banks judgment
is subordinated to that of the Federal
Reserve Bank, which can act only on
the advice of the Federal Reserve
Agent, and the permission of the Fed
eral Reserve Board.
Instead of the independent national
bank circulation, unless some early
legislation provides another, the basis
will have disappeared in 1880, anC
the Federal Bank note must be sub.
stituted for it.
Enough has been pointed out in this
connection to convince the banking in.
terests, those threatened with disas-
ter, at any rate, that the cry that op-
ponents of the Federal Reserve Sys.
TEN are hostile to legitimate banking
is absolutely unwarranted. To the
contrary, such opposition is founded
in desire to eliminate every wastefu
element in our currency system, anC
extend the circulation privilege to tht
full need of the business of the coun
try, retaining the only bases Of Sc.
curity ever known to money, the faitf
and credit of the people. Faith ant
credit maintain the equilibrium in thu
bulky plan now operating and without
faith and credit the business Of thu
country would sustain disaster tn,
like Of which the world has never
seen.--Dearborn Independent.