Evening star., 1934-10-23
FEDERAL RESERVE
HELD FINANCE KEY
New York Economist Sees
Danger in Substituting
Central Bank.

A unified national banking system
under control Of strengthened Fed
eral Reserve System free of Govern
ment domination is the solution of the
Nations financial problem, Prof. Wal
ter E. Spahr, noted New York Uni
versity economist, declared today be-
fore the twelfth annual convention of
the American Association of Bank
Women.
He characterized those who are agi-
tating for destruction Of the Federal
Reserve through substitute Of other
authorities "an erratic, impatient
people"
A central bank, under Government
control, such as has been prominently
advocated, would be political toy"
on which could be unloaded the Gov
ernment's deficits, Mr.. Spahr said.
Would Eliminate Dual System. :
He urged Congress to pass law ma
tionalizing all commercial banks.
Congress is vested with ample author
ity to take this step and thereby wipe
out the dual National-State banking
system which exists today, the speaker
asserted.
"All commercial banks must be
made national and a part Of the
Federal Reserve system said the
economist, minimum capital require
ments must be raised to not less than
100000, and branch banking should
be permitted within the limits of the
Federal Reserve districts"
He said this would involve the
strengthening Of the Federal Reserve
Board by establishing greater safe
guards to insure its freedom from "in-
reference or domination by the Gov
eminent" The Secretary Of the
Treasury should be removed from the
board and at the most made a men,
ber of the Federal Advisory Council,
the women were told. Spahr also rec
commended that the Office of the con-
troller of currency be absorbed by the
Federal Reserve Board.
Number of Small Banks Hit.
As an equal defect to the dual
banking system, Prof Spahr named
the multitude of small banks. A sys-
tenn of branch banking would take
care of this situation he said.
Basing his remarks on study
covering the period between 1914 and
1880, he outlined seven salient con-
clusions. They were
Il. The heaviest failures, absolutely
and relatively, were among the State
banks.
-. The failures were greatest
among banks with small capitaliZa-
ton.
"3. Bank suspensions were heaviest
In small towns and villages.
~ Bank suspensions were heaviest
among banks outside the Federal Re-
serve System.
'5. Since 1920, bank failures have
been uniformly heavier than COM
mercial failures, demonstrating that
during this period the ordinary busi-
ness enterprise was run better on the
average than we're the banks.
"6. Bank failures have risen and
fallen in harmony with commercial
failures, usually reaching the peak at
the same time.
81. Bank failures have been more
pronounced in the United States than
in any other country in the world"
Miss Perkins Speaks.
A new plan of living for the whole
human race, is being shaped by a
steadily developing social cooperation,
Secretary of Labor Perkins told the
bank women last night.
The new mode of living. she said,
will make possible broader participa-
ton in creature comforts, culture. in
tellectual opportunities and greater en-
joyment Of leisure.
Social means are the weapons en-
ployed in the rising social order to
provide social necessities, she said. en-
phasizing that permanent economic
security depends upon the security OF
that group of individuals who are
without power to help themselves.
Indications of Social Program.
The social program is typifled by
such measures as oldage and unem-
ployment insurance, laws for the med
ical care of the disabled, and public
health service, the bank women were
told.
The convention opened yesterday
morning and will continue through
Wednesday afternoon. Mrs. Franklin
D. Roosevelt and Sir Willmott H
Lewis, Washington correspondent oi
the London Times, are to speak tonight
on the general subject of internationa.
peace.
The 100 or more delegates were re-
ceived by Mrs. Roosevelt at the White
House yesterday afternoon.