The Mankato free press., 1922-01-20
Memorial Is Against The
Smith Measure
SENT TO THE PRESIDENT
Consider This Bill As Class Leg
isIation and Is Wrong In
Principle
Associated Press pispateh.l

Federal Reserve System represent
ing all the districts in the United
states today presented to President
Harding at the White House mem
orial which II had unanimously adopt
ed opposing the Smith bill compel
ing the president TO appoint farm
er to the federal reserve board as OBJ
jectionable class legislation and as a
measure sure to precipttate the fed
eral reserve system into politics. The
council points out that the precedent
proposed to be established would un-
doubtedly lead to similar represen-
tation by organized labor, cotton in
terests. merchants anc manufactur-
ers, or any other special interest or
group, and that it's objection is not
the proposal to put farmer on the
board but to the principle or giving
any special class representation. The
council endorses the Kellogg bill as
unobjectionable. The Kellogg bill
does not make il mandatory upon the
president to appoint Il farmer, but
directs that in making appointments
TO the federal reserve board, the
president shall give due considera-
ton to the agricultural interests OF
the country. In its memorial the
council says:
as to oblige you to put farmer on
the board, one might ask in that case
why should not labor insist that 1t as
a class should also be represented,
and why should not similar claims
be made by merchants, manufactur-.
ers, exporters or any other special
interest or group. Indeed two other
bills of this nature have already been
introduced. That is mis- g or might
not be desirable to put farmer on the
board is not the Question,-the wrong
is in requiring, as matter OF law,
that one special interest shall always
be represented on the board.
Tampering Is Costly.
No tamper with the natural laws
OF demand and supply has proven a
costly and sometimes fatal expert
ment for many. a government which
attempted to "valoTiZe' its staples.
II congress wished the country to
indulge in such a scheme 1t should
have taken the responsibility of en-
a-ting legislation to that erect by
70 stretch OF Imagination, hoWeVer
I'D the Federal Reserve Banks be
Md TO have been created to ex-
.. functions OF this character.
.le world is not suffering today
of high money rates. but be-
..- OF the crippling OF its power
:asumptlon. It is because hun
Of millions of people, individ
nd collectively, have lost their
= purchasing ter that the
2. diti IS cannot find their mar
Te' ter markets for Our products
So De found, and the lowered stan
) of Ii-ing abroad will cease to
'r'e American standards when
world over, Wastely government
enditures for armau ents are cut
TO n, budgets. balanced and practical
methods found TO establish economic
reace and order in Europe. In that
direction you, Mr.. President, have
in.ugurated most ausr;cious move
ment for which the world will ever
\ owe you deep debt of gratitude. 1t
is by adding your noble efforts to-
wards that end that congress will
bring genuine relief to Americas S
agriculture. rather than by putting a
farmer on the federal reserve board.
''It is most unfortunate that ap-
parently the public does not under;
stand even today, after the Federal
Reserve System has been in eXis
tence for more than seven years,
that the Federal Reserve Board, as
such, does not make any loans, and
has no money to lend; that all eXten-
sions Of federal reserve credit are
carried out exclusively by the federal
reserve banks, and that they, in turn,
are restricted to transt ctions with
their own member banks and have
no power whatsoever to direct mem
ber banks as to what individual GUS
toners they should make loans to.
State Banks and Trust Companies.
There are about twenty thousand
state banks and trust companies,
of the banks of the country, which
through their unwillingness. or
through inability because of their in
sufficient capital. are not members
of the federal reserve system. Un-
fortunately the agricultural sections
are largely served by the small mem
Der banks whose operating power is
quickly exhausted and by nonmember
state banks. The resources of the
system, through no fault of its own,
are, therefore not as directly or read
lily available to agriculture as they
might be, since these many nonmem-
Der banks in the agricultural sections
through the other members banks.
There are scores Of agricultural coun
ties in which there is not a single
member bank 1t may, therefore, be
desirable to devise ways and means
sy which the vast assistance to the
arge number of small state banks
now nonmembers of the system.
"The appointment Of farmer to
he federal reserve board by special
act of congress would not. as we
lave shown, improve or add to pres
mt agricultural credit facilities. 1t
Tould, however, be a fateful notice
o the entire country that the fed
.ral reserve system had come under
he domination Of powerful politi-
al group designed to secure special
,rivileges for a single class. of which
he approximately thirty bills already
introduced into congress serve as a
iuffirient and significant illustration.
"The menace of the inclusion Of po-
itics in banking system of the vast
powers of the federal reserve system,
which reaches into the remotert cor
iers OF the country, liz so obvious
hat the council does not believe it
necessary further to elaborate this
POINT; the more so as it feels certain
hat these views are fully shared
~ you, Mr. President. Indeed, they
ire in entire accord with the 1920
platform of the republican party which
provided that "the federal reserve
ystem should be free from political
influence, which is quite as imnor-
ant as its independence Of domina-
ion by financial combinations"
TWO Principles.
The council, therefore, finally
fishes to stress with all the empha-