The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1922-02-04
SENATOR GLASS EXPLAINS FED
ERAL RESERVE OPERATIONS.

Senator Carter Glass of Virginia
rendered distinct service to his party
and to the country by correcting many
widespread errors concerning the fed
eral reserve board, the federal reserve
banks and the federal reserve banking
system in a speech on the floor of the
senate, remarkable for its clarity and
directness and digested statistical
facts.
Senator Glass is pre- eminent1y fitted
for the task of correcting and contro-
verting the prevalent errors concern
ing our great banking and currency
system. AS chairman OF the finance
committee of the house he presented
the measure and had charge of its
passage. AS secretary of the treasury
under President Wilson he admins
tered 1t in a manner above criticism.
He is now recognized authority here
and throughout the world on finance
and banking and as the principal au-
thor of the soundest and most scien-
tific banking and currency system in
the world
Without enumerating the many mis-
representations and misconceptions
concerning the federal reserve, the
following paragraphs from Senator
GLASS; speech, not only set forth the
main facts with reference to the OPP
Grafton Of this system but refute and
contreyert the misstatements that
have been made:
The twelve regional federal reserve
banks are not owned by the govern
ment of the United States, but by their
stoclhoidinns member hanks
The government of the United States
never contributed a dollar to their
capital; the taxpayers are not assessed
a penny for their maintenance-on the
contrary these banks pay the govern
ment s60,oOo,oO0 annually in franchise
fees.
They do not loan. cannot loan a dol
lar to any individual, concern or cor
poration in the United States, but only
to stockholding banks. They are banks
Of banks.
The federal reserve board. which has
supervision, is not central bank. It
cannot loan a penny to anybody, con-
Germ or corporation. 1t cannot compel
q reserve bank to discount or to refuse
to discount. 1t cannot establish a
credit with any individual hank at any
other reserve bank; it cannot issue
currency to any regional bank except
upon application OF the regional bank;
It cannot withdraw or cancel federal
reserve bank notes with a view 10 con-
tracing the currency or with any
other purpose.
Instead of debating bank credits or
diminishing federal reserve currency
during the period of falling prices. the
federal reserve banks were supplying
largely increased credit facilities and
issuing a constantly increasing volume
of federal reserve notes. (The exact
statistics presented by Senator Glass
showed an expansion of credits from
January /, 1920, to January 1, 1921, of
S472 .0Ss, 800, with currency expansion
of 1925, 900 for the same period)
Failing prices caused the deflation
of credits and currency, such as we
have witnessed since January of last
year. and not deflation OF credits the
fall in prices.
The Federal Reserve Bank building
in New York Is 70 cost entire (when
buntl SIS, 0o0. coo. not sci, 1000. eco II Isl
to be built our OF q surplus fund. au :
thorized BY law. which belongs 10 the
Federal Reserve bank. which is owned |
by the srockh0ldlng banks Of New
YORK The money does not oelong to |
the people In the sense that il is coma |
mon property, The new building win
house 5000 people, not 500 as has been
frequently published.
The salaries paid officials OF the
bank are not above. but below those
paid by other banking institutions. |
The governor OF the New York Federal |