Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-08
BANK-FARM TRADE
AT CAPITOL Barred
Federal Reserve PreServa-
ton Revealed as Basis for
Relief Bill Support.
nv FREDERIC WILLIAM VILE.


Farm relief, if enacted on McNary'
JIaugen lines, is destined to become
known as the savior of the Federai
Reserve System. That is depicted by
Capitol Hill insiders as the under
lying and not generally realized rea'
sons why those widely divergent ele-
ments-the agricultural bloc ana the
banking group-have come together.
The banking interests are concern
ed with the Pepper -McFadden DIN not
so much because Of the new adVah-
tages it will bestow upon natlonal
banks. but because the bill proVldes
for indeterminate extension of the
Federal Reserve System. The latter
expires by law in 1888. The financial
world which recognizes the tederai
Reserve as the Gibraltar of the Amer
Jean economic structure, believes that
the time to legislate for it's perpetu-
ity is now. rather than later. me
next Senate will be considerably less
conservative in it's makeup than the
present body. In delay, therefore,
danger was seen.
Senator Carter Glass, Democrat of
Virginia, one of the acknowledged ia
theirs oS the Federal Reserve System,
was prime mover in the bank-farm
trade" which insures the legislative
right of way for both the Pepper
McFadden and McNary Haugen bills.
Strategy by Glass Revealed.
The attachment to the branch bank
measure of a rider indefinitely pro-
longing the existence of the Federal
Reserve was an afterthought con-
ceived in a spirit of high political
strategy. Senator Glass is given
principal credit for it. He was ably
supported in the project by Senator
George p. Mclean, Republican, of
Connecticut. chairman of the Senate
committee on banking and currency.
Both Glass and Mclean are ardent
believers in the Federal Reserve
scheme.
The plan to incorporate extension of
the national finance organization in
the branch bank bill was submitted in
advance to Secretary Mellon. Senator
Glass is understood to have repre-
scented to the chief of the Treasury
Department that an ideal opportunity
was at hand in connection with the
Pepper McFadden proposition.
Senator Glass proposal was also
laid before Benjamin Strong, governor
of the Federal Reserve Bank of New
York. The head of the principal unit
in the Federal Reserve system ac-
corded it his hearty approval. Secre-
tary Mellon. as reported to Capitol
Hill, was likewise in agreement. al
though he rather conveyed the inn
preston that the extension idea might
perhaps be more usefully incorporated
in separate act of Congress.
Alliance Is Formed
Thereupon ensued the undercover
negotiations which resulted in a treaty
of alliance between proponents of
oY.r11 Tpifnf 1corir1a nd Of lav nj
legislation. Conservatives, like Sena-
TORS Glass and Mclean, are bitterly
opposed to agricultural measures of
the McNary-Haugen hue. Their sane
ton of the deal whereby both bills are
to be brouoht to a vote at the present
session did not bind them. or other
Senators belonging to their school of
economic thought, to support the farm
proposition.
But they allowed 1t to be understood
that If the Federal Reserve system
could be maintained only at the cost
of far-reaching farm aid, it would not
be too high a price to pay for such
boon. The Federal Reserve group was
actuated no less by the fear that ex-
tension of the system, if not enacted at
once. might be impossible later on.
The banking system, which came
into existence under a Democratic
Congress during the Wilson admins
tration is under more or less incessant
fire. It's leading critics are to be
found among the spokesman of West
ern agriculture, both in and out of
Congress. Senator Henrik Shipstead
Farmer-Labor, of Minnesota. is one
of the most effective antagonists and
takes the field against the system in
the Senate periodically.
Auo,4nd coxo.ol r,.snon
Even the banking interests of the
country contain opponents of the Fed
eral reserve. But there is fair agree
inent that the system has become the
bedrock and sure shield of the whole
American economic fabric. More than
once sinNe it's foundation the United
States has averted financial and COM
mercial crises because of the nation
wide control of the money situation
that is lodged in the hands of the
Federal Reserve organization.
Panics of the disastrous sort with
which the country was familiar on re-
curing occasions no longer occur. It
is claimed by the supporters of the
Federal Reserve system that panics
practically cannot take place because
of its wide powers and resources.
It's for all these reasons that men
like Carter Glass decided to take adj
vantage of the congressional situation.
which suddenly came to pass this
month and Strike while the iron is
hot for the institution which they re.
gard indispensable to the economic
security of the country.
Copyright 1927