The Coolidge examiner., 1935-08-02
Would Serve Politics Rather
Than Business Needs. Says
R. S. Hecht. Citing PreYi-
Gus Experiences.
QUOTES PRESIDENT JACKSON
Extent and Diversity OF This cour
try Presents Different Situation
From Europe and Makes
Regional Banking
Necessary.


ton Of arguments ia favor ~ gov
srnmeu,.owncd central bank system
for the United States is presented
In q statement by r. S. Hechi.
President of The American Bankers
Association. on the basis q exhaus
tire studies Of European central
banks tie also points out the disas.
,rous consequences of previous cen.
trail bank experiments 10 America.
"our present regional Federal Re
serve System under private owner
ship Is infinitely better Tor this coun
try than would be 4 governmcnt
owned and controlled ceo'ral bank.
Mr. Hsch' says. III History teaches
as anything. II la that II ia almost
certain that central bank SO owned
Souid be run 10 meet the vars ias
exiEoncies Of the government In
power rather than 10 serve the com
mcrclal needs of the country
Central banking has been tried
twice IN the unlied States. uut was
anaily abolished because the credit
control which the central baaks eR
erciHed became Objectionable and
unpopular. be goes on 10 say.
Wha, Andrew Jackson Said
The continued existence u the
Second Bank finally became a bitter
political issue and President Jack
son succeeded in abollahinE IT.. Mr
Hecht says Permit me TO quote
from bis farewell address The im.
menae capital and peculiar priv
ilcgos bestowed upon Il enabled q 20
exercise despotic Sway over the
ether banks In every part of the
country. From It's superior strength
II could seriously iniure. II not de-
Kroy. the business of any of them
which might incur its resentment
II ron had no, conquered, the govern.
ment would have passed from the
hands - the many 10 The hands n
the few. aud this organized money
power. from its secret conclavc.
would have dictated the choice Of
your hiehcsy officers The forms
Of your government might. Tor
time. have remained bat lta living
spirit would have departed from
it'-
When the Wilson Administration
considered banking reform IL care
fully KEEP, away from yeallne central
banking powers In a single laBgliu-
ton and Instead introduced the re-
Eionai idea by creating twelve re-
serve banks located in different eco
nomie and geographical sections of
the country. Mr.. Hecht says. a plan
that has worked exceedingly woll
because the separate banks arc an.
der the guidance Of men chosen on
account OF their intimate acquaiut
ance with the problems and needs OF
their respective territories. He adds
The great size and diversity Of
America tends 20 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 some ~ our
states. A central bank In the United
States on the other hand would be
called upon TO administer the dnan.
ciai policies OF an area larger than
all Of Europe. In which there are
quite number OF central banks.
Subservien- 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 10 prevent
undue Imitation by restraining and
contracting credit. This is easy TO
understand because I'm times Of de
preston everyone is urging the gov.
ernment TO make money and credit
easy and TO encourage expansion.
"0n the other hand. II always has
been and always viii be a difficult
task for any government 10 call a
halt In time OF apparent prosperity
because In the very nature OF things
the government would be very sensi.
tive 10 public criticism and would
20 So Hsh
would tend to eurtail business &C.
tiyity. II Is such undue susceptibill-
ty 10 popular demands which makes
government banking 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 central bank would not be in
the interest OF the public or the
banks Its position. he concludes. is
well understood by the President
nd the leaders in his Administra.
lon. for we have been absolutely
-ank with them in all OF our dis
ussions and have missed no oppor-
nifty for emphasizing that in our
1inion no banking system viii. In
70 long run. be sound II 1t Is domi.
1ted entirely by the ever-changing
olitical administrations. We should
, all we can to keep our banking