Evening star., 1935-04-02
ADAMS CITES VAST
BANK B|LLPOWERS
Colorado Senator, in Forum
Speech, Sees Uncertainty
in Other Regimes.

The banking system Of the country
would be subject to far greater
measure of control by the National
Government than ever was exercised
by central bank if the pending bank
ing measure sponsored by the admin
istration becomes law, Senator Adams,
Democrat, of Colorado. last night de-
clared in a speech in the National
Radio Forum. The Forum. arranged
by The Star, was broadcast over a
coast-to-coast network of the National
BroadcaSting Co.
Senator Adams, member OF the
Banking and Currency Committee
considering the legislation, explained
in detail the measure, which Is de-
signed to revamp the Federal Reserve
System.
He said that it maintains the de-
centralized form of the original Fed
eral Reserve System, but ceEtralizes
in Washington the actual control Of
that system"
The extent of the power thus con-
centrated in the administration in
Washington is almost inconceivable, !"
he concluded. For the present, it
may be a source of efficiency, comfort
and security I am sure that under
the present leadership of our country
only good can be expected from this
concentration, but we know not what
is ahead of us. Franklin Roosevelt
will not always be President of the
United States"
The text of Senator Adams address
follows:
The presentation by the national
administration of new bank bill
modifying in essential respects the
banking system of the country is a
matter of vital importance to the
entire citizenship of the United
States.
The proposed bill consists of three
subdivisions designated as Titles I, II
and III
Title |.
The Title I provides for the merger
of the present temporary deposit in
Surance plan into a permanent plan.
All banks now insured under the
temporary plan will come under the
permanent insurance plan without
further examination or certificate.
The permanent plan will insure the
deposit of each individual depositor
to the extent of $4,000, as under the
present temporary plan. The existing
law, which would have put the perma-
nent plan in effect July of this year,
would have imposed an unlimited liza
bility upon insured banks for assess
ments to replenish the insurance
funds. The new bill proposes to
change this requirement so that the
obligation of banks insured in the
permanent fund will be limited to an
annual payment into the insurance
fund of one-twelfth of per cent of
the amount of their total deposits,
insured and uninsured.
Title iii.
Title III contains a number of
amendments of various features of
the banking law which seem to meet
the approval of the administration
the public and the banks. My limited
time will not permit a full or ade-
quate consideration of the more i'm
portant provisions of title II, so it
will be impossible to discuss the pro-
visions of title III
Title III.
Title H. if adopted, would make
radical and fundamental changes in
our banking system. Under the exist
ing law the IL Federal Reserve banks,
which are located in commercial GEN.
ters in the IL Federal Reserve dis
trictS of the country, exercise high
degree of independence in their oper-
alton. The capital of these Federal
Reserve banks is furnished by the
banks affiliated with them. OF the
nine members of the Board of Direc-
tors of each Federal Reserve bank.
six are elected by the stockholding
banks, or. as they are designated, "the
member banks within the district.
Three members of the board are
selected by the Federal Reserve Board,
at Washington. The executive officer
of each of the Federal Reserve banks,
known as the governor. is selected by
the Board of Directors of the Federal
Reserve bank and paid by the bank
which he serves. The Federal Reserve
Board has no control over the selee-
ton or compensation of the governors
OF the Federal Reserve banks. The
deliberate purpose of the trainers of
the Federal Reserve system was to Sc
cure decentralized banking and cur
rency control to avoid a centralization
Of banking and financial control in
Washington or New York City. 1t was
planned that there should be a con-
nection and relationship among the
Reserve banks so that the resources of
one or more of these banks would be
available to the other Federal Reserve
banks when their own resources were
inadequate to meet the demands The
funds in the control of the Federal
Reserve banks consist of the capital
all OF which is subscribed by the mem
Der banks. the deposits of the mem
Der banks and the earnings of the
Federal Reserve banks from their
operations. The new bill proposes to
repeal the statutory requirements
which now require member banks to
keep on deposit with the Federal Re-
serve bank as reserve not less than a
fixed percentage of their deposits and
to give the Federal Reserve Board
complete discretion to fix the amount
thereof. The new bill places no Inn
It's whatever upon the discretion of
the Federal Reserve Board in fixing
these reserves. They can increase
these requirements over the present
statutory requirements or can reduce
them. The act further provides that
there need be no uniformity in these
Reserve requirements, so that there
can be different rates in the several
districts and different rates in the
several classes of cities within the
same Federal Reserve district. The
proposal would give power to the Fed
eral Reserve Board to control to a
large degree the lending capacity of
the individual member banks and. as
a consequence, their earning posi-
bilities.
Control in Washington.
Under the present law the gov
ernor or executive officer of the Re-
serve Bank is naturally sympathetic
and responsive to the needs and
policies of the individual banks which
are really responsible for his selection