Nogales international., 1935-07-20
Would Serve Politics Rather
Than Business Needs, Says
r. S. Hecht, Citing Previ-
ous Experiences.
QUOTES PRESIDENT JACKSON
Extent and Diversity of This Ccun-
try Presente Different Situation
From EuEone and Makes
Hecional Barking
Necessary.

WASTINGTON, Il. CA refuta-
ton OF arguments IL favor Of a gov.
er1ment-own central bank system
for the United States is presented
in a statement by II. S. Hecht,
President Of the American Bankers
Association, on the basis CT exhauS
i've studies of European central
banks. He also points out the disas
trous consequences of previous cen.
trail bank experiments In America.
"Our present regional Federal Re-
serve System under private owner
ship is infinitely better for this coun-
try than would be government.
owned and controlled central bank"
Mr.. Hecht says. IF history teaches
us anything, It is that 1t is almost
certain that a central bank so owned
would be run to meet the varying
exigancies of the government in
power rather than to serve the COM
mercial needs of the country"
Central banking has been tried
twice in the United States, but was
finally abolished because the credit
control which the central banks ex-
ercised became Objectionable and
unpopular, he goes on to say.
What Andrew Jackson Said
1.-THE continued existence OF the
Second Bank finally became bitter
political issue and President Jack
son succeeded in abolishing it." Mr..
Hecht says. Permit me to quote
from his farewell address: The i'm
, mense capital and peculiar priv
;leges bestowed upon it enabled it to
exercise despotic sway over the
other banks in every part of the
country. From it's superior strength
It could seriously injure, if not de-
stroy, the business Of any Of them
which might incur it's resentment. 80.
If you had not conquered, the govern
ment would have passed from the
hands Of the many to the hands Of
the few; and this organized money
power, from it's secret conclave,
would have dictated the choice OF
your highest officers. The forms
Of your government might, for
time, have remained, but it's living
spirit would have departed from
it,"
When the Wilson Administration
considered banking reform 1t care
fully kept away from vesting central
banking powers in single institu-
ton and instead introduced the re-
gional idea by creating twelve re-
serve banks located in different eco
nomic and geographical sections OF
the country, Mr.. Hecht says, plan
that has worked exceedingly we'll
because the separate banks are un-
der the guidance Of men chosen on
account Of their intimate acqualnt-
ance with the problems and needs OF
| their respective territories. He adds:
1.-THE great size and diversity OF
America tends to make a central
bank undesirable. The central banks
Of Europe such as the Banks Of Eng
land, France and Germany, cover
areas not as large as come Of our
states. A central bank in the United
States on the other hand would be
! called upon to administer the finan-
! cial policies OF an area larger than
all Of Europe, In which there are
! quite a number OF central banks.
Subservient to Popular Demands
Moreover, history has proven
that any banking system entirely
owned and dominated by the gov
ernment usually demonstrates much
greater ability In aiding expansion
of credit than in putting on the
brakes at the right time to prevent
undue imitation by restraining and
| contracting credit. This is easy to
| understand because In times of de-
preston everyone is urging the gov
ernment to make money and credit
easy and to encourage expansion.
| "On the other hand, it always has
been and always will be a difficult
task for any government TO call q
halt In time OF apparent prosperity
because In the very nature Of things
| the government would be very sensi
| tive to public criticism and would
| hesitate to take any action which
| would tend to curtaM business &C
| tivity. 1t is such undue susceptibili'
ty to popular demands which makes
! government b " k ii 6 inherently
weak.
Our studies show that Of all the
! central banks at present existing
| there are only four whose stock is
owned by the government"
The American Bankers Associa-
ton, Mr. Hecht says. is convinced
| that a central bank would not be in
| the interests Of the public or the
banks It's position, he concludes, is
well understood by the President
| ard the leaders in his Administrd.
F.; ton, for We have been absolutely
| frank vi;.i them in all of or dis
| cussions and have missed no oppor
| tunity for emphasizing that in Our