Albuquerque morning journal., 1922-10-15

Finance corporation were non
member state banks clearly indi-
Gates that the members of the
federal reserve system have had
an advantage of the situation. 1t
indicates also that in times of stress
the non-member banks are in
greatest need of a central reser-
Voir of credit. Perhaps it would
! be advisable to reduce temporarily
the minimum capital necessary to
render a bank eligible for member
snip In the system, provided salts
factory assurance is received from
the bank and its directors that it's
capital will be increased, say with
IN two or three years, to the mini
mum at present required. There
is some difference of opinion as to
whether this action should be
taken, but, in any event, it seems
to be generally agreed that some
basis of understanding should be
reached which would make it
clear TO the $500 eligible non
member banks that 1t is to their
interest and advantage to join the
federal reserve system.
Livestock Problem.
1.-The livestock problem interests
the people of New Mexico above all
others, and it is the. one problem
that seems to require some new
machinery. The reason is that the
industry involves a long turnover
and 1t has never been properly
financed. We have been studying
this problem with the view of de-
termining the soundest and the
most effective way of meeting tho
| financial needs of the industry. At
one time thought 1t might be nee
essary to have the cooperation,
and perhaps the assistance, of the
government somewhat in the way
that the joint stock land banks are
organized, but, upon considering 1t
further, | believe there is a better
way. In the first place, the live
stock Industry must put itself in a
better position to seek and obtain
the credit it needs. There is a
wide variance in the laws Of the
different states for the protection
of titles to livestock under mort
gage. There is a wide variance in
the laws and practices in connec-
ton with the supervision of brands
and shipments, and furthermore,
there is a wide variance in the in
spection that necessarily goes with
livestock loans. | believe that 1t
would be possible, through the
American National Livestock asso-
ciation, working perhaps through
the state livestock associations, to
put the industry on better basis
to seek--in fact, to communicative
credit that it requires. l addressed
the semi-annual meeting of the di-
rectors of the National Livestock
association in Denver, during the
latter part of August, and pointed
out to them some of the things
which, 1t seems to me, the industry
could and should do to put itself
in position to get adequate capt.
tai at reasonable rates. IT the as
sociation, using state agencies If
that seems best, would organize a
corps of competent inspectors
whose reports could be relied upon,
tho inspection problem could be
easily and satisfactorily met. The
question OF the protection of titles
being considered by the association
and / understand it is endeavoring
to draft model uniform law on the
subject.
IF those things are done which
will put the livestock industry on
a sound basis, then I believe it will
be able to obtain the financial as
sistance it needs through a series.
or group, of livestock loan COM
panies organized in the various
states under state or federal char
ter and relying upon the United
states government only for the
necessary supervision and regula-
ton. With the industry itself upon
a sound basis, with an amendment
to the national banking act author
1zing banks to subscribe TO the |
capital of such loan companies, and
with the Federal Reserve board.
or the comptroller of the curren-
cy, supervising the operations of |
the companies thus organized, / !
believe that all the capital required
can be obtained at reasonable rates |
without the use of government |
funds. It would be natural and
proper, it seems to me, to make the
paper of such companies, organized |
in the manner suggested, redis-
countable at the Federal Reserve |
banks, when its maturity does not
exceed six months. That class of
paper is now rediscountable if it |
comes from a member bank. But | |
believe that the one and two year
paper of the loan companies, whose
operations are supervised by the
Federal Reserve board or by the |
comptroller of the currency, and |
whose capital is kept available in
liquid FORM would command a
broader market in the eastern
financial centers.
Talked to Bankers.
Il have talked to a. number of |
eastern bankers about the livestock |
industry, and l believe that, with
the establishment OF the proper |
safeguards by the industry itself, |
with the right kind of inspection,
with adequate provision for pro-
tecting brands and titles to stock |
under mortgage, and with the crea-
ton OF new loan companies along |
the lines suggested, the industry |
will be able to command supply |
or capital. at reasonable rates, |
equal to all legitimate demands.
Next winter when congress
meets these problems are going to
be considered. A number of bills
involving many different points of
view have been introduced. Some
OF them propose the elimination
OF the War Finance corporation un-
der another name, and with certain |
added powers. While 1 think we
may say that we have succeeded
measurably in our work, have no
idea what kind of Organization is
suited to our permanent banking
structure. 1t is centralized bank
ing in its highest form. For an
emergency such Capitalization of
power and resources is ideal. For
the permanent business of the
country / believe it to be thorough
ly impracticable and unnecessary.
II we have succeeded in our eff
forts, 1t is because we have been
able to enlist locally the services
of some of the best bankers work.
ing in the public interest and in a
hnN T..