Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1922-05-13

- 10 uioA HeellHS OF the water
vile Rotary club was held at the
Elmwood hotel Friday evening with
hne program. Addresses were made
by f. +. Noyes, Fred J. Arnold,
george &. Averill. who have just re-
turned from California and Florida.
Mr.. Arnold told his fellow Rotarians
that the weather in Florida the past
winter was great deal similar to the
weather Friday in Waterville.
Clair r. Marston reported on the
institution of the Skowhegan Rotary
club which occurred last Wednesday
night with delegation from Water
Vile present. Seward j. Marsh of
the National City company of Port
land and Harold f. Gilbert of Blod-
gett & Company of Portland. both
bond statesmen were guests of
George X. Boutelle and Ralph A.
Bramhall cashier of the City Ma
tional bank of Belfast was the guest
of DR.. Arthur ]. Roberts. president
OF Colby college. The principal ad-
dress of the evening was delivered
by Prof. Julian d. Taylor Of Colby
college. vice president of the Ticonic
National bank of this city on 1.-THE
Federal Reserve Banking System"
In opening he reviewed the history
| OF banking in the United States to
1913 the year the Federal Reserve
Bank act came into force. This was
a vast improvement on the old sys-
tenn of state banks. But it had two
serious defects,-it did not give an
elastic currency. nor did it furnish a
safeguard against financial crises.
The amount of currency as deter
| mined by the system and by the gov
eminent green back was constant,
the same from the beginning to the
end of the year. But in this country
the volume of currency required by
| the demands of business varies
greatly with the seasons. In the au-
tumn when the grain crop in the
west is being moved. a vast sum of
| money is needed for the purpose,
and western banks call in from the
eastern banks their balances de-
! posted with them during the slack
season. The eastern banks thus de-
/ pleted, have to curtail their loans at
home and rise in the rate of inter-
est follows. Speculation is checked.
the bears seize their opportunity. il
other circumstances favor and the
| lambs are shorn. Later on, the crop
! movement over. idle funds pile up in
the western banks and are sent to the
eastern cities again to find employ
ment in the call market. This makes
cheap money. an opportunity for the
bulls, and. other circumstances fav-
oring. rise in stocks when the sap
starts in the trees in the spring. Not
altogether a wholesome condition of
l things. A currency that would auto
7 matically expand and contract with
the demand for it is the scientific de-
! Sideratum.
! The second and more serious
| drawback of the old national bank
system had to do with its reserve.
! Every national bank stood on its own
| bottom. 1t had its reserveSfund in
it's vaults for itself and itself only. If
there was run upon it's .neighbor
across the street it could not go to
the rescue by lending that neighbor
a part of it's reserve, for the crowd
might be found standing before its
own door tomorrow. Nor could the
distressed bank. though it might
have an ample supply Of gilt-edged
| bonds and securities. turn them into
cash; no other bank would buy or
| lend. A panic was in the air.
I The experience Of 1907 gave a new
stimulus to the movement that had
been long under discussion. looking to-
ward a reform in our banking system.
A committee to investigate and to re-
| port on the subject was appointed by
F., Congress with Senator Nelson Aldrich
at it's head. This committee aided by
a staff of experts made an exhaustive
| investigation of the whole banking
| question, and also visited Europe to
study the working of the various ma
! tional bank in London, Brussels.
Paris, Vienna, Rome. Berlin and other
capitals Before report was made it
was understood that the committee
| were in favor of the establishment OF
| a single national bank to be located
| either in New York or Washington,
| which should hold the entire reSel We
of all the subordinate national banks
! in the country. A strong opposition
at once developed against this plan.
mainly on two grounds: First. that
an institution with such vast re-
sources under the control of a gov
| eminent placed in power by one of
the political parties would be dam
! ger and a menace, a powerful engine
that might be used to perpetuate the
power of the party that for the time
being had control. The old L. s. Bank
of the EOS and Nicholas Biddle and
Andrew Jackson were not forgotten.
The second, and most strongly urged.
objection arose from the dread of Wall
Street-a fear Of the possibility that
I somehow the great financiers and spec
ulators of the country, and of New
York especially. would be able to exert
sinister influence upon the policy of
the great bank and for the further
auce Of their own ends. Those who
urged this were not able to explain in
Just what way this could be done but
! tbey were distruStful