The midland journal. (Rising Sun, Md.) 1885-1947, 1935-07-19
GOVERNMENT BANK
UNSU|TED TO U. S.
Would Serve Politics Rather Than
Business Needs, Says R. S.
Hecht, Citing Previous
Experiences.
QUOTES PRESIDENT JACKSON
Extent and Diversity of This Country
Presents Different Situation From
Europe and Makes Regional
Banking Necessary.

Banking Necessary.
WASHINGTON, d. CA refutation
Of arguments in favor of a government.
owned central bank system for the
United States is presented in a state
ment by R. s. Hecht. President OF the
American Bankers Association, based
on exhaustive studies of European cen.
trail banks. He also points out the dis.
astrous consequences of previous cen.
trail bank experiments in the United
States.
Our present regional Federal Re.
serve System under private ownership
is infinitely better for this country
than would be a government-owned
and controlled central bank" Mr..
Hecht says. IF history teaches us any
thing, it is that 1t is almost certain that
central bank so owned would be run
to meet the varying exigencies of the
government in power rather than to
serve the commercial 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 exercised be.
came Objectionable and unpopular. he
goes on to say.
What Andrew Jackson Said
THE continued existence of the Sec.
ond Bank finally became bitter polit-
ical issue and President Jackson sue
ceeded in abolishing it," Mr.. Hecht
says. Permit me to quote from his fare
we'll address: The immense capital and
peculiar privileges bestowed upon 1t
enabled 1t to exercise despotic sway
over the other banks in every part of
the country. From its superior strength
it could seriously injure. If not destroy.
the business Of any of them which
might incur its resentment. If you
had not conquered. the government
would have passed from the hands of
the many to the hands of the few; and
this organized money power. from its
secret conclave. would have dictated
the choice of your highest officers
rhe forms of your government might.
9r time. have remained. but its living
ipirit would have departed from it. "
When the Wilson Administration con
sidered banking reform 1t carefully
kept away from vesting central bank
ing powers in a single institution and
In "a ro0innol f1pa nv
,reating twelve reserve banks located
IN different economic and geographical
sections of the country. Mr.. Hecht says
plan that has worked exceedingly
we'll because the separate banks are
lnder the guidance of men chosen on
account of their intimate acquaintance
with the problems and needs of their
espective territorie3 He continues:
THE great size and diversity of
America tends to make central bank
undesirable. The central banks OF Eu
rope such as the Banks of England.
France and Germany. cover areas not
as large as some Of our states. cen
raj bank in the United States on the
,ther hand would be called upon to ad
minister the financial policies OF an
area larger than all of Europe. in
which there are quite number of cen.
trail banks.
Subservient to Popular Demands
Moreover, history has proven that
any banking system entirely owned
and dominated by the government usu'
ally demonstrates much greater ability
in aiding expansion of credit than ir
putting on the brakes at the right time
10 prevent undue imitation by restrain
ing and contracting credit. This is easy
10 understand because In times OF de
preston everyone is urging the. govern
nent to make money and credit cas-,
and to encourage expansion.
ION the other hand. 1t always has
been and always will be difficult task
for any government to call a halt In
time of apparent prosperity because in
the very nature OF things the govern
ment would be very sensitive to public
criticism and would hesitate to take
any action which would tend to curtail
business activity 1t Is such undue sus'
,eptibility to popular demands which
makes government banking inherently
weak.
Our studies show that of all the cen.
al banks al present existing there are
,nly four whose stock is owned by the
government. The newest central bank
IS that Of Canada. which opened Its
loo:s only few months ago after a
INST exhaustive stndv had been made
Ut the experience OF all nations with
the result that the stock OF the Bank
Of Canada is privately owned"
The American Bankers Association.
Mr.. Hecht says. is convinced that a cen
trail bank would not be In the interest
of the public or the banks. This posi-
ton, he added. is well understood by
the President and the leaders in his Ad
ministration for we have been abso
lutely frank with them in all of our
discussions and have missed no op
portunity for emphasizing that In our
oninion no banking system will, In the