The Washington times., 1922-05-16
RESERVE BANK
SYSTEM IS D. L.,
SAYS NJ ADAMS
A. 3. A. Tells Missouri Finan-
ciers X Saved U. S.
From Panics.

StOt - SoNSS ~ ~
From Panics.
EXCELSIOR SPRINGS. Mo-.
May 16.-The United States was
saved from a panic by the Federal
reserve system not only once. but
several times since the outbreak Of
the war, Thomas b. McAdams,
president of the American Bankers
Association, declared here today,
speaking In an address before the
convention Of the Missouri State
Bankers Association. McAdams
charged a part of present criticism
aimed at the Federal reserve sys'
tenn to "demagogues who are at.
tempting to popularize themselves
by appearing to sympathize with
those who suffered financial losses
during the period Of business re-
action largely on account of their
own lack Of business foresight"
We would have had a panic at
the sinking Of the Lusitania but
for the Federal reserve system,
asserted McAdams. 1--WE would
have had a panic when President
Wilson told Congress that the time
had come for us to enter the war
had It not been for the system. We
would have had q panic In 1920
when the great business reaction
set in as a result OF over-expan:
sion and credit initiation that had
been created despite the warning
advice and foresight Of the Fed
eral Reserve Board.
Disregsrded Warning.
I'VE did not take the warning
when they gave it. The merchant
filled up his shelves and continued
his policy Of reckless buying at
high prices and the result was
that in 1920 he had dumped on him
three times the volume OF goods
he could normally use and found
himself in the fall with his shelves
loaded TO the breaking point and
confronted with collapsing prices
and demoralized markets.
The consequent losses that many
cause Of the Federal reserve sys.
tenn, and they would have been
greater had It not been for
the system. We could with
equal propriety blame the doctor
for hurting US in amputating a leg
which had been mangled as a re.
suit of our failure to read the signs
and Of our persistence in travelling
around q dangerous curve at sixty
miles an hour. The doctor was not
TO blame for the accident. We
must assume responsibility for that
ourselves and thank the doctor for
saving our life.
Many Exaggerations.
There have been many exagger.
ated statements as to the expenses,
and Misrepresentation as to the
policies of the Federal reserve sys.
tenn. II Is also an unfortunate fact
that during the reaction many
bankers themselves, when they
found II necessary TO deny credit
to some customers in the interest
OF the safety OF their own banks
avoided getting themselves In
wrong with their customers by sug
gesting that the Federal Reserve
Bank would not permit such loan
These and similar statements have
done infinite harm, creating in the
minds OF the general business pub
lie the belief that the Federal re
serve system was exercising auto
cratic control over individual az
fairs and forcing many to liquidate
their unsound positions at a loss
As q matter OF fact, no Fedora
Reserve Bank in the country and
no officer OF any Federal Reserve
Bank or any part Of the system
has any authority to direct what
loans a banker shall or shall not
make to his customers any more
than the banker himself dictate.
to a merchant what people he shall
or shall not sell goods TO.
There Is Grave Danger"
Unless bankers give careful con
sideration to the present situation
confronting the Federal reserve sys
tenn there is grave danger that we
will again have our financial sys
tenn 80 enmeshed in self-servine
politics that we will go through the
same experiences as in 1911 and
1885, when the first and second
banks Of the United States were
legislated out Of existence through
the ignorance Of the people of the
United States as to the real facts
weighing good against bad ir
the Federal reserve system. which
after all Is only a piece OF human
machinery, we find that its serv
ices in maintaining the stability
and integrity Of the nations finan
cial system were far greater thar
any mistakes that were made
Criticise the system II you will. but
let II be in the nature Of con
structive suggestions so that 1t will
function with the maximum Of ben
eft to American business in main
tanning the nations prosperity"
| McAdams emphasized the duty o.
the State bankers associations o.
the country and Of the American
Bankers Association to rally to tn,
support Of the Federal reserve sys
tenn. The American Bankers As
sociation he pointed out, repre-
sents about twenty-three Thousand
banks of all classes scattered
throughout the country and con
tains within its organization some
Of the most powerful influences foi
good in the country today, because
he said, the average banker ID
| ,ono onn,truntiua and raadv N ron