Evening star., 1933-03-26

On the other side were ranged, generally
speaking, the two original continuous
members Of the board, Mr.. Miller and
Mr.. Hamln; the controller of the cur
rency (also ex-ofici0 member of the
boardy, J. W. Pole. the "dirt farmer"
member of the board, Edward H. Cum
ningham, and George r. James, hailing
from Memphis, Tenn.
The demagogic theory Of the omnip-
otence Of Mr. Mellon in Washington, at
least in this instance, was manifestly
crushingly overborne.
As for the efficacy Of the policy Of
direct pressure" at that time there were
naturally varying voices raised. Critics
Of it sometimes thought it not only fan
ciful and futile, but dangerous. Charles
e. Mitchell Of the National City Bank
denounced It and went beyond denounc-
ing it. He directly defied it. On the
other hand, Mr.. Hamlin statistically
demonstrated TO the Senate Committee
on Banking and Currency in 1891 that
direct pressure" in 1929 seems tre-
mendously to have diminished the "se-
curity loans"-the loans of potential
speculative intent-by the member banks
Of the Federal Reserve System as a
whole.
In any case, the direct pressure" idea
survived the crisis of 1929. It survived
into the national presidential campaign
of 1882 It found its way most particu-
larly into the counsels Of the Demo-
cratic elements supporting the candi-
aA n. al Rwf
Franklin d. Roosevelt. 1t appeared I'm
substantial effect-in the Democratic
1882 national platform.
The platform committed the Demo-
cratic party to "a more rigid supervi-
sion of national banks for the preven-
ton of the use Of their moneys in specu-
lation to the detriment of-local credits"
1t also committed the party to further
restriction of Federal Reserve Banks in
permitting the use of Federal Reserve
facilities for speculative purposes"
In the envisagement of such problems
it can be suspected that Mr.. Miller, the
administrator, and Senator Glass, our
most influential banking legislator, often
see eye to eye. With Senator Glass pre-
siding over a Senate subcommittee, the
following exchange of thought took place
year before last between the subcommit-
tees special counsel, H. P. Willis, as ques-
toner, and Mr.. Miller, as answerer:
Mr. WillisLCan the Reserve System
control the use to which its credit is
put?
Mr. Mller-Yes, sir. I think so-with-
in broad categories of credit
Mr.. Willis Without qualification?
Mr.. Mller-Yes, sir: without qualifi-
cation.
That, then. is point three in Mr..
Miller's banking program. Point one puts
all our commercial banks, IS well as our
Reserve Banks, into one solar system.
Point two provides central sun-a Ma
tonal Banking Board-which directs its
rays Of regulation upon all banks com
prehensively. Point three asserts that
those rays, as they shine upon the Re-
serve Banks, could and should cause
speculative credit to Shrivel and COM
mercial credit to flourish as accommoda-
tions are extended by the Reserve Banks
to the commercial banks
IN furtherance of point three Mr..
Miller has three subpoints.
A. The commercial banks shall pa
ternally-no, not paternally, fraternally
-familiarize themselves with the uses
to which loans are put by their bor-
rowers; and the Federal Reserve Banks
shall similarly fraternally and intimately
familiarize themselves with the specu-
lative consequences of the activities of
the commercial banks.
B. Investment banks, since they are
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