Evening star., 1933-03-26

MAJ N0AAcI-A1 We 11du 1lsau IlO TSUcIa1
Reserve System, Senator, do not think
we would have had as bad a speculative
situation as we have, in fact, had.
Mr.. Glasgow will admit, however,
that we have had ruinous speculative
situations when we had no Federal Re-
serve System?
Mr.. Miller-Yes, we have had them
eral Reserve System we would have had
as bad one as developed from 1927 to
1929.
Mr., Glass-Of course not. You have
made that clear You have made it clear
that the Federal Reserve System pro-
vided terrific credit expansion by these
Open-market transactions.
In that colloquy, then, we have the
spectacle of Mr.. Glass, one of the funda-
mental authors of the Federal Reserve
act, and of Mr.. Miller, one of the con-
tinuous Though often demonstrating
operators of it. agreeing on the extreme
ly unsettling proposition that the Federal
Reserve act, as operated, as applied, has
given us actually an accentuation of our
economic woes.
4 AUST we, thereupon, list Mr.. Miller
W. among those-aM too. prevalent
among us-who cry havoc" and then
cry nothing else? The answer-as they
say in the question hour in the House
of Commons-is in the negative.
Mr.. Miller expects economic recovery
and he expects-or, at any rate, with
out encouragement promotes better
banking system capable of better credit
practices. He has remarked:
Il may be the last optimist that is
left in the United States today. I was
the first pessimist in 1925, 1926, 1927,
1928 and 1929. I think we can operate
our machinery with results that will be
much better than the old system. In
fact, I think that our machinery, if
properly renovated and if competently
handled, can avoid both excessive booms
and later disastrous breakdowns."
To those words Mr. Miller added an
observation which is the ultimate defini-
ton of his aim as banking reformer.
He said:
THE prevention of excessive booms
and of later disastrous breakdowns is the
primary function of the Reserve System.
It stands q failure unless it can meet
that test"
We, accordingly, so far have seen that
Mr.. Miller is skeptical of the Reserve
System as is and confident of it as it
might be made to be. Let us proceed,
then, point by point, to remake it-for
mental experiments sake-on the Miller
model. (There are numerous other
models for experimental erection in
other articles.) ..-
Point one. All commercial banks
should be brought within the Federal
Reserve System. The thousands Of
commercial banks now outside that SyS-
tenn, if they will not enter it voluntarily,
should be coerced into it. There should
be in the United States just one set of
banking practices and just one set-up
of administrative scrutinizers and regu-
lators of those practices. Our banking
system must at last become genuinely
a national system.
The general counsel of the Federal
Reserve Board, Walter Wyatt, has held
that such a development is constitu-
tionally feasible. He has held:
IF Congress in its wisdom should find
that our heterogeneous banking struc-
ture-which has given rise to more than
10000 bank failures in the last IL years
CONSTITUTES a burden upon or an OBJ
struction to interstate commerce, there
is no doubt that Congress has the con-
stitutional power to correct the situa-
ton by bringing all commercial banking
business into single system subject to
effective regulation and supervision by