The Big Sandy news. [volume] (Louisa, Ky.) 1885-1929, 1922-01-27

silver movement dressed up in mod
| ern clothes to At modern conditions
As yet IL can hardly be called move
ment, for II is In that newborn state
| which is characterized mainly by con-
vulsive movements of the arms and
| legs and a lusty exercise of the lungs.
But 1t looks TO me as though efforts
were afoot to nurse it into an organ
lied, aggressive state. Its object, bald
ly stated, is to have the Government
turn out fiat money in the refined,
modern form of bank credits.
| There Is an institution, created by
act of Congress, which issues large
part of the money in circulation. Prob
i ably you will find its name on the first
bank note you take out OF your pock-
ct. Moreover It Is vested by law with
some power over bank credits. Under
certain conditions II can considerably
increase or decrease the total volume
| of such credits. AS a rough and ready
and not very accurate-hgure OF
speech you might liken It to a gate in
dam. Shut the gate and the water
is impounded until 1t rises high enough
| to flow over the top. Open the gate
and you have a food--while the water
lasts. At present the gate is operated
by trained engineers. Looks to me as
though a movement were shaping to
throw out the engineers and put poll
ticians in charge. with large, cheer
full sign: Come on, everybody; the
waters fine!"
Costly Log Rolling.
The object of politics is to get votes.
1t must be obvious even to a child that
the more benefits you can promise a
man or a community the more likely
he or 1t is to vote for you. For example
everybody knows how politics has
managed river improvements and pub
lie buildings-promisin to benefit this
community with public building and
that one by dredging creek. and then
pooling the promises in one OF our IA
nous log-rolled river-improvement and
public building bills. But Awhile, re-
joicing In its new post office, is pay
ing Federal taxes to dredge Bville's
creek; and Bville. having Its own
creek dredged, is paying for Cvtlle's
useless navy yard. Assuredly the pub
lie will likewise foot the bill for all
political control of money and credit
The popular name for the institu-
ton am talking about is the Federal
Reserve System, and for the sake Of
getting clearly in mind what 1t is and
does hope you will endure brief
recital OF dry facts:
The banking business of the United
States, as shown by the latest report
of the Comptroller of the Currency, is
done by 30,139 banks, national. state
and private, having, at the date of the
report, ,O00,0e0,000 of resources,
With very few and negligible excep-
lions each one of these banks is an
independent local concern, owned and
managed by local men. If you want
to borrow money, whether you are
steel corporation in quest of million
or a shoemaker in quest of fifty. 1t Is
to one of these banks that you must
go to get it. Every bank loan in the
country is made by one of them. The
Federal Reserve Banks lend to no
man and no corporation except mem
Der bank.
Only a third, roughly, OF these banks
are members of the Federal Reserve
System. The other two-thirds have
nothing to do with that system and
that system has nothing to do with
them. And as to the third. roughly,
which are members the Federal Re-
serve System cannot stop them from
making any loan they choose to make
or compel them to make any loan they
do not choose to make. Primarily the
control of bank credit is completely in
the hands of these thirty thousand in
dependent local banks. As to any pro-
posed bank loan, the decision whether
it shall or shall not be made rests
with them. Any OF these thirty thou
sand banks, doing commercial bank
ing business, may become member
Of the reserve system by complying
with the requirements of the law.
When a local bank becomes mem
Der of the reserve system the Federal
Reserve Bank of its region does. chief
ly, two things for it. In the first place
1t holds the banks legal reserve. The
local bank accepts money on deposit
and makes loans. The bulk Of its de-
posits are payable on demand-that is,
they may be Withdrawn at any time.
The local bank must therefore keep in
hand a sufficient stock of cash or its
equivalent to meet the probable de-
mands of its dcpositors. That stock
Of cash is called its reserve. If it be-
longs to the reserve system its reserve
or at least a specified portion of it,
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