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About The commoner. (Lincoln, Neb.) 1901-1923 | View Entire Issue (Aug. 1, 1913)
The Commoner VOL. 13, xo. 23 IS . '!' r. L- r t- ' x l? , v &" i IA, . r The Commoner 1SSUI0I) MONTlIIiY IQnturod at iho PoBtofllco at Lincoln, Nebraska, cih Hccond-claHB muttor. W I T.I.I AM J. IlllYAN Kdltor nml Proprietor Editorial Hooiiih mid liiiRlitoin Ofllco, 3-330 Soulh Twelfth Street CltAltf.KH W. UllYAN Awioclftto Kdltor nnd Publisher One Ycnr f 1.00 Six Mont lift BO In Clubn of Flvo or more, per year.. .73 Three Mantlin -" SImkIc Copy 1() Sample Copies Free. Foreign Post, 25c Extra. SUli.SCHH'TIONS can bo sent direct to Tho Com nionor. They can ilIho bo Bent through newapapors which have advertised a clubbing rate, or through local agents, where such agents havo been ap pointed. All remittances Bhould bo sent by post ofllce money order, expreBB order, or by bank draft on New York or Chicago. Do not send Individual chcclcH, stamps or currency. UlSNISWAIi.H Tho date on your wrapper shows tho time to which your subBcriptlon la paid. Thus January 11 means that payment has been re ceived to and including tho Issue of January, 1914. CIIANCI-3 OF ADDRESS Subscribers requesting a change of address must give old as well as new address. ADVERTISING Itatcs will bo furnished upon application. Address all communications to THE COMMONER, Lincoln, Neb. TUB LOBBY INVESTIGATION The Investigation of the "lobby" continues, and tho public will profit by the disclosures. One cannot feel much affection for the lobbyist who deserts his employers and sells their secrets, but tho man who turns state's evidence is used in court and those cannot well complain who havo entered into co-partnership with him in wrong-doing. Caro must be taken, however, not to rely toe confidently upon tho boasts of the lobbyist in his reports to his principals, for ho is trying to earn his money and may report that ho "Influenced" persons whom he only mot casually. But, allowance being made for exag geration and misrepresentation, a good deal of light is being thrown upon tho mothods em ployed by the privileged class to secure favors from congress. Wo are finding out whom the lobby opposed and whom it supported. When the evidence is all in, a few conspicuous offend ers, caught in bad company; will retire from public life and those who are really innocent will, by good deeds, proceed to remove any nspicions that may havo been aroused and re gain popular confidence. SIGNIFICANT SILENCE Senator LaFollette has brought to the atten tion of the senate the fact that only sixty-six replies have been received to the twenty-five hundred sets of questions submitted to manu facturers throughout the country and that the replies received gavo little information in regard to comparative cost of production here and abroad. It is certainly significant t'tat the man ufacturers make so little protest against tho new schedules and that those who do protest so largely ignore tho important point, namely, rela tive cost of production. Moral The day of high tariffs is past and even the protected manu facturers know it. The cartoonists havo been making use of Sen ator James' rebuke to the republicans who criti cised Mr. Bryan's lecturing. He said that be fore Mr. Bryan became secretary of state repub licans predicted that he would ruin the country if he ever got into office; but now that he is in office they insist that the country will go to ruin if ho leaves Washington for a few days. It used to bo that Wall street summoned the secretary of the treasury before it when, any thing went wrong. Now the secretary invites the bankers to Washington to consider financial matters. What a. change! The business men's associations formed by Wall street two years ago to bring pressure on congress to proviue an elastic currency are now i back-pedalling to prevent what they claimed they wanted. The desire on the part of borne people to havo Secretary Bryan spend his vacatiou in Wash ington might be considered as a compliment. The Banking and Currency Bill By Senator Robert L. Owen, Chairman Committee on Banking and Currency The proposed banking and currency bill, sen ate 2039, mobilizes the reserves and provides for elastic currency. These are tho two great features upon which thero may bo said to be substantial concert of opinion among those who have studied the finan cial problem of the United States. By late report, tho national bank reserves amount to $1,422,000,000 against $7,058,000, 000 of deposits in tho national banking system to-wit:. Central reserve cities $ 431,000,000 Other reserve cities ' 483,000,000 Other banks 508,000,000 $1,422,000,000 and consist of $978,000,000 of specie, legal ten ders; lawful money; five per cent redemption fund, and accounts with reserve agents not rep resented by specie These reserves are unavail able for the purpose of extending comirercial accommodation, no matter how urgent the neces sity. Whenever these reserves reach the mini mum required by law, tho banks are not permit ted to make any further loans to business men, no matter how urgent their need. Sometime this need is vital. It is of urgent importance to have additional funds available for moving the crops, but these reserves ' cannot be used when the minimum reserve is reached. It is therefore agreed by all financial experts that the reserves should be mobilized and made more easily available for our national commerce. This annual demand for more money could be moro easily met if we had elastic currency which could be automatically expanded to meet any special necessity. The proposed bill accomplishes this purpose by authorizing the issuance of treasury notes under conditions which will lead to their auto matic retirement when the exigency passes. In this way by mobilizing the reserve and making them available as a basis of loans and supplementing such funds with elastic currency the business necessities of the country can be adequately and fully met at all times. WThen it is necessary to move the wheat crop, the corn crop, to feed cattle and hogs on a large scale, prepare other forms of human food for the market, move the cotton crop, move man ufactured articles of every class, and furnish men engaged in similar legitimate industries with reasonable credit accommodations based upon their actual merit, this system will be found adequate and satisfactory. PANICS PREVENTED Under this system financial panics will be made impossible because panics are based upon financial fear, and the fear itself is based upon the idea that those entitled to it may not be able to get money when they want it. Under this system anybody actually entitled, can get curroncy, and therefore no man with a deposit in bank need be afraid that the bank cannot furnish currency while is honestly and effi ciently conducted. This will prevent runs on tho banks and in preventing panics it will also prevent unfair and undue constriction of credits with its consequent paralyzing effect on busi ness and on the productive energies of tho na tion. Business enterprises therefore will have a stability unknown in the past history of the United States. Men will not be thrown out of employment wholesale throughout the country by the fright of financial and commercial panic, but finance and commerce will become steady. Men will be regularly and systematically em ployed. Men will not be ruined by violent and abrupt changes of values. Hundreds of thou sands of men will not suddenly be thrown out of employment during these national waves of depression. There will be no national waves of depression, nor unduo feverish buoyancy. The consequence will be that the national energies of our people will be employed upon a firm basis that will be continuous. It is impossible to ex aggerate the extreme importance of this work. We have been studying this problem for many years, and have now reached a point of national knowledge and certainty where we not only know what tho difficulties are, but we completely understand how to give stability both to our commerce and our finance, and put this country upon a basis of enduring prosperity. THE RESERVE BANKS The bill proposes under the United States Fed eral Reserve Board at least twelve reserve banks with tho right to establish a branch for oirh $500,000 of capital. This would make a maxi mum of two hundred branches, much more than there would be any need for. The Federal lie serve Board will designate the twelve reserve cities, and the territory belonging to each city Within the territory assigned to each Federai reserve bank, the national banks, and state banks and trust companies desiring to enter the sys tem, would contribute a capital amounting to ten per cent of the capital of each such proposed member bank. The gross capital would be about $100,000,000, and if the state banks came in, a much larger sum. The member banks in each 'federal reserve bank would be divided into three classes ac cording to relative capital, and each class would elect one banker a director of the federal re serve bank, and one business man as a director .of the federal reserve bank, making six direc tors in all. The Federal Reserve Board would name three directors of the federal reserve bank. These nine men would elect the officers of tho bank. One of the three appointed by the Federal Reserve Board would be chairman of the board of directors, and at the same time would be the direct "federal reserve agent" representing tho interest of the United States at such bank. Ho would be custodian of any elastic currency placed with such bank for use and retirement, and would have charge and supervision of the se curity required to safeguard the United States. The function of tho reserve banks would bo to receive the capital above referred to of a minimum of $100,000,000. After the banks aro started they would hold $160,000,000 of re serves furnished by the national banks of tho country and after fourteen months up to $400,- 000,000 of reserves. These federal reserve banks would also handle the current funds of tho United States amounting to from $150,000,000 to $200,000,000, making a total of about $700,000,000. The federal reserve banks would discount for tho member banks, their paper, based on actual commercial transactions maturing within short periods. The federal reserve bank will keep on hand a reserve of 33 1-3 per cent of gold and lawful money, against its demand liabilities. The federal reserve banks will only do business with member banks and with other reserve banks and with the United States, except that it would have the right to buy gold or certain bills in the open market. The federal reserve banks would be under the general supervision of the Federal Reserve Board of seven members, to-wit: The secretary of the treasury, tho secretary of agriculture, the comp troller of the currency, ex officio, and four mem bers chosen by the president of the United States, by and with tho advice and consent of the United States senate. These four members would serve for terms of eight years each, with a salary of $10,000. They would have complete supervisory power over the reserve bank, wlu the right among, other things to require or per mit one federal reserve bank to rediscount for another, to supervise and if necessary to deter mine the rate of discount for each federal re serve bank with a view to accommodating tlie commerce of the country and promoting a stable price level. ADVANTAGES TO COUNTRY BANKS The first great advantage to country banks and to other banks" is that this system womu prevent future financial panics, prevent tneie fore the destruction of the lives of business men, and therefore would prevent the destruction ui the lives of hanks. This, of course, would S' stability to tho banking business. It would make available the redundant re serves in one part of the country for use tuiw the reserves were short in another part oi country yet where there was urgent neeu fl crop moving purposes in another part b jng. country. It would prevent a bank from suddenly embarrassed by a run of its uu & .i : , t?.j ,-... M-sSaJisi