Coulee City dispatch. [volume] (Coulee City, Wash.) 19??-19??, 1935-10-31
Would Serve Politics Rather Than
Business Needs, Says R. S.
heeht, Citing Previous
Experiences.
QUOTES PRESIDENT JACKSON
Extent and Diversity Of This Country
Presents Different Situation From
Europe and Makes Regional
Banking Necessary.

ment Dy II. 3. Hecnt, YraSl1ent OF the
American Bankers Association, based
On exhaustive studies of European cen.
trial 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
10 infinitely better for this country
than would be q government-owned
and controlled central bank" Mr..
Hecht says. "If history teaches us any
thing, 1t is that 1t is almost certain that
. central bank 30 owned would be run
b meet the varying exigencies of the
90vernme emit In power rather than to
serve the commercial needs Of the
country"
Central banking has been tried twice
H. 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.
Whist 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 It
enabled Il to exercise despotic sway
over the other banks in every part Of
the country. From its superior strength
1t could seriously injure, If not destroy.
the business Of any Of them which
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. >.
The forms Of your government might.
for time, have remained, but its living
spirit would have departed from It,"
When the Wilson Administration con.
sldered banking reform It carefully
kept away from vesting central bank.
ing powers 10 . single institution and
instead introduced the regional idea by
creating twelve reserve banks located.
n different economic and geographical
sections Of the country, Mr.. Hecht says,
q plan that has worked exceedingly
well because the separate banks are
under the guidance Of men chosen on
account Of their intimate acquaintance
with the problems and needs Of their
respective territories. He continues:
sThs great size and diversity of
America tends to make q central bank
undesirable The central banks Of Eu.
rope such % the Banks Of England,
France and Germany, cover areas not
- large ~ some Of our states. A cen.
tfal bank In the United States on the
eeher hand would be called upon to ad-
uiAister the financial policies of an
aeee larger than all Of Europe, in
watch there are quite a number Of cen.
o1ol bankA
Subservient to Popular Demands
Moreover. history has proven that
0Ay banking system entirely owned
and dominated by the government usu
ally demonstrates much greater ability
- aiding expansion of credit than in
butting on the brakes at the right time
70 prevent undue imitation by restrain.
ing and contracting credit. This is easy
to understand because in times Of de-
preston everyone is urging the govern.
ment to make money and credit easy
and to encourage expansion.
"On the other hand. 1t always has
been and always will be difficult task
for any government to call halt in
time Of apparent prosperity because in
the very nature Of things the govern.
ment would DO very sensitive to public
criticism and would hesitate to take
any action which would tend to curtail
business activity. 1t is such undue sus
eeptibility to popular demands which
makes government banking inherently
weak.
"Our studies show that of all the CEN
trail banks 1t present existing there are
only four whose stock is owned by the
government. The newest central bank
10 that OF Canada, which opened Its
doors only . few months ago after a
most exhaustive study had been made
q the experience of all nations with
the result that the stock of the Bank
Of Canada 10 privately owned"
The American Bankers Association.
Mr.. Hecht says. 10 convinced that cen
trail bank would not be in the interest
Of the public or the banks. This posi-.
tion, he added. Is well understood by
the President and the leaders in his Ad
ministration for we have been abso.
lately frank with them in all of our
discussions and have missed no op
Dortunity for emphasizing that In our
opinion no banking system will, in the
long run, be sound II 1t Is dominated
entirely by the ever-changing political
administrations. We should do all We
can to keep our banking mechanism %
far removed from partisan politics o
DoeoiblA."