Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-18
TRAYLOR OPPOSED
TO CHAIN BANKING
Chicago Financier Disagrees
With Young on Federal
Reserve Expansion.
BY JOHN F. SINCLAIR.
CHI to The Star.

NEW YORK, February 18.-MelVm
Alvah Traylor, So, the Kentucky-born
chairman of the board of the First Ma
tional Bank of Chicago, is Jefferson.
ian-Democrat He views with alarm
the growing concentration both In gov
eminent and in business.
This Chicago banker is one OF the
most remarkable men in America.
School teacher. lawyer and banker, ne
has all the courtesy of Southern gen.
tleman, plus an iron will that makes
him both popular and efficient.
The average banker is VIGOROUSLY
poor speaker. But not Melvin Traylor
Few men in America are so gifted with
the ability to express their thoughts
more concisely and clearly.
He disagrees with his old friend.
Owen D. Young, the New York Demo-
crat. that every bank-large or small
should be forced into the Federal Re
serve System. Nor does he believe that
the 5000 bank closings during the last
10 years have been the result of inner
ent weakness in the supervision, man
agement or structure of the banking
system He thinks the question goes
much deeper than that. 1t was not
incompetency. lack of ability, or lack
of judgment but complete collapse
of economic values, on which the credlt
of the small banks was baSed-live
stock, farm products and farm lands
Mr.. Traylor opposes chain banking
group banking and national branch
banking But he does favor branch
banking CT Statewide character-that
is, he tavors a test for five years. In
principle, though. he is opposed to the
growing centralized control of banking.
Mr.. Traylor was a member of the Or
ganization Committee of the Bank OF
International Settlements.
Disagrees With Mellon.
George E. Towle, Twin City invest
ment banker, does not agree with
many bankers that the cash bonus
threatens the financial integrity Of the
United States He says it might cause
slight initiation, but that's exactly
what we need today as check TO the
rapid def1ation now going on In all
commodity values"
I'VE ended the miserable war ex-
perience with strictly war debt rep
resented in our Government bonds OF
something less than $4,000, 000,0 00,"
says Mr.. Towle. Mr.. Mellon was OBJ
sessed with the idea that this should
be all paid off by Saturday night. The
result was excessively heavy income
taxes, almost amounting to confisca-
ton, all of which. in the natural order
of things, was passed on TO the con-
Stunning mass.
Would it not have been the wiser
thing to have carried this bond debt
and retired it a little at time. even
if it did net disappear III so years?
Was it not practically owned by our
own people and the interest return on
it used to buy the family groceries?"
This Northwestern banker says our
national structure is simply and wholly
the adding together of our unit life.
He explains it this way.
IF the Nations bonded debt is owned
by the units of the Nation and the
income therefrom goes right back into
the business turnover of the Nation,
is it a real debt? l owe my wife
81 .0OO I pay her annual interest on
check and pays the family grocery bill.
Is this a real debt resting on me?"
InstalIment Paper.
Do not allow the Federal Reserve
banks TO rediscount installment paper,
Rome c. Stephenson, president of the
American Bankers Association, told the
Glass Committee this week.
"Installment paper represents con-
sumner credit" added Mr.. Stephenson.
1T is not based on productive transact
ton, but is wholly dependent upon eX-
traneous factors for its liquidation, such
as the ability of the purchaser of the
goods involved to hold his JOB and make
his payments out of wages
The value of the underlying goods
thus rapidly disappears to consumer
use of depreciation. This is in distinct
contrast to the notes covered by the
present rules of eligibility, which repre-
sent producers, and not consumer credit,
and are strictly self-liquidatin2 out of
the increased value produced by the I'M
DERIVING commodities and transactions. I"
During the last five years there's been
growing demand that installment
paper be made eligible for rcdiscount
at the Federal Reserve banks But if
the opinion expressed by the president
Of the American Bankers Association
Is indicative of American bankers gen.
orally, there does not seem to be much
chance that such provision will be in
corporated in the Federal reserve act.
Legge'S Service.
The retirement of Alexander Legge
chairman Of the Federal Farm Board
since its beginning in June, 1929, is
announced at the same time that the
Bureau of Agricultural Economics of the
Department of Agriculture publishes the
fact that farm prices reached the low
est point in 18 years on January Is.
On that date the index for farm
prices at "a was about points below
January of last year
Chairman Legge must be discouraged
He has put millions of Government
money into the market to bolster up
the prices of wheat and cotton Yet
they are at very low levels tcday-dis-
couragingly low
What's the answer? What has Chair
man Legge accomplished? Has it been
worth the money spent?
70 fol L,ai
cue from big business" and organize
in order to control more effectively
their products under the comprehensive
plans Of the Federal Farm Board, the
millions will have been we'll spent.
II they do not, and still try to meet
the world competition individually, the
whole effort of the Farm Board will
have been in vain.
Mr.. Legge, big business man that he
was before he entered the Government
service, will leave it with the we'll de-
served support of every intelligent
farmer in the Nation. His loss to the
governmental service is a real one.
Einstein's Warning.
Dr. Albert Einstein. the German
scientist, warns civilization that it must
be more alert and wise to make sensible
use of the great inventions of science, If
living is to be made easier and happier.
Today quite the reverse is true. Man
has not learned yet to make sensible
use of applied science. So the learned
uoctor lnfers that science is hurting and
not helping humanity.
Here's his statement:
In war it tscienceD serves that we
may poison and mutilate each other. In
peace it has made our lives hurried and
uncertain. Instead Of freeing us in
great measure from spiritually exhaust
ing labor il has made men into slaves
of machinery. who for the most part
complete their mcnotonouS long days
work with disgust and must continually
tremble for their poor rations.
Has Stuart Chase been having lunch