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The Commoner
JULY, 1914
21
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I
to borrow a total of $200,000, the
amount of Its capital. If a run
should start on such a bank the
amount which it could raise by loans,
if strictly held to the old law, would
bo but $200,000, the amount of its
capital, which might be quite Inade
quate to meet a run, and the bank,
though thoroughly solvent, might be
forced to suspend.
Under the new law, however, if a
bank with $200,000 capital and de
posits of $1,500,000 should have
loaned $1,200,000 to Us customers
on commercial paper and should en
counter an unexpected run, in addi
tion to borrowing $200,000, the
amount of its capital, such a bank
would have authority to rediscount
with the federal reserve bank of
which it is a member notes,- drafts
and bills of exchange issued or drawn
for agricultural, industrial or com
mercial purposes, having not more
than ninety days to run, to any rea
sonable extent which may bo ap
proved by the federal reserve bank
to which application for such redis
counts may be made. In other words,
if such a national bank as wo have
used in this illustration should have
loaned the entire amount of its de
posits, less the 15 per cent which it
is required to keep as reserve, to its
customers on acceptable commercial
paper, and for any unexpected reason
should be subjected to a run, the fed
eral reserve bank of its district would
have the authorlt; to rediscount for
the member bank tho entire amount
of its bills receivable, as represented
by its commercial paper, thus en
abling the bank to pay its depositors
immediately and in full.
We cannot overestimate the value
of the additional security which this
provision of the act confers upon
every honestly, capably managed
member bank, and the relief from
Btrain and anxiety and frpm the fear
and apprehension of panics and un
reasoning runs which it gives to the
officers of every member bank,
t Another important change provid
ed for by the federal reserve act is
the new arrangement for the com-
pensation of national bank examiners.
Under the present law the compensa
' tion of national bank examiners is
based, except as to reserve cities,
r on the capital stock of the bank ex
. amined. Under the operations of this
i law a national bank examiner has
i been receiving for the examination of
a certain national bank in the Fifth
district, with over $9,000,000 of as
sets and many thousands of accounts,
i the munificent sum Qf twenty-five
dollar. It is, of course, clear that
an examiner could make only an im
perfect examination of such a bank
in the space of three days, at a com
pensation of say eight dollars per
day, out of which eight dollars allow
ance he has to pay his own railroad
fare, hotel expenses, as well as cler
ical assistance. It is not unnatural
that but few examiners would will
ingly spend the ten days or two
weeks which it might require to
make a thorough examination of
such bank, when he is running per
sonally in debt in doing so.
Under the new currency law the
federal reserve board, upon the rec
ommendation of the comptroller of
tho currency, is given authority to
fix the compensation of bank exam
iners on the basis of annual salary,
so that those banks which need ad
ditional time and attention from the
examiner may receive the careful,
close scrutiny which the case may
call for. It is believed that the new
system of bank examinations will re
duce materially the number of bank
failures and enable the department
to check up many abuses and correct
many evil situations which in the
past have been ignored or glossed
over by examiners in their hasty and
incomplete investigations.
I thank you, gentlemen, for the
opportunity to address you. Ap
proaching the study of this now and
revolutionary measure with tho cau
tion natural to every man trained in
banking under tho system with
which we havo grown up, I have be
come more thoroughly aroused to its
merits, and raoro deeply impressed,
as I have watched tho methods of
construction, tho processes of growth
and havo considered the underlying
principles directing those who did the
work.
It would bo unjust, in congratulat
ing ourselves upon the benefits and
blessings we are to receive from this
epoch-marking piece of legislation,
not to acknowledge the obligations
we owe, for the splendid results
achieved, to tho patient and untiring
labors, resourcefulness, and construc
tive genius of the distinguished
chairmen of tho banking and cur
rency committees of the senate and
house of representatives and to tho
secretary of the treasury, whoso
counsel, skill and support in the
shaping and enactment of thiB groat
measure were of inestimable value.
Here in North Carolina the records
show magnificent natural progress
and you havo special interest in
changes in the banking systom which
are so surely destined to promote
and encourage your growth and ex
pansion. In the triumphs of peace and in
dustry, as in the glories won on
battlefields, and in tho domain of
statesmanship, all classes of your
people have done full and honorable
parts; have united in making the
name of your state stand high, and
shine bright, in the roll of tho states,
in building and maintaining this
mighty republic of ours. You are
living true to your record, have fur
nished to the cabinet two of its
ablest and most useful members,
North Carolinians, tireless, faithful
and courageous, the strong support
ers of huge responsibilities.
I invoke yor aid to promote the
success of this new system in which
your calling gives you special inter
est and opportunity. It is a system
designed to distribute the benefits
and blessings of ever increasing re
sources and wealtli equitably among
your people of all stations who have
done so well their respective parts
towards creating your greatness. I
believe this new system for which we
are indebted, in a great measure, to
the patient guidance and masterly
leadership of the scholar and states
man, chosen to the presidency, will
bring new strength, new scope, new
assurance to our entire commercial
system; and for your state, and my
state, and all the states, and the peo
ple as a whole meaa deliverance from
dangers that beset us, and a new
career of advancement based on the
solid foundation of real substance,
honesty, justice, and democracy in
its highest meaning and purpose.
RAILROAD EXPECTS PROSPERITY
Few chapters of the country's
history compare In interest with the
growth of our railways both in mile
age and mechanical equipment. And
the advance is always going on. The
Pennsylvania railroad is bout to
change its huge 100-pound rails for
still larger 120-pound rails. In ad
dition it is ordering tremendous loco
motives, locomotives that will pull as
mucli as sixty old-time engines
pulled.
Such plans mean only one thing.
The Pennsylvania ! i a business prop
osition; it is not run for the purpose
of speculation. And it knows that
business is going to be good, that it
will justify these great orders for
new equipment. J has learned the
precept of Mr. Morgan that "the man
who is a bear on America will go
broke."
It looks as though real business
concerns were not distressed by the
outlook. They are getting ready for
prosperity. Milwaukee Journal.
Labor Backs Anti-Trust Program
The following editorial appoarcd in
a recent Jsbjo of tho American Fed
eration of Labor Weekly News
Letter:
"About a year ago President Wil
son charged that powerful and in
sidious influences were at work to
prevent tho passai. j of tariff revision
legislation.
"There had long been vague asser
tions that ehind tho vlsiblo govern
ment was tlio real government, tho
invisible influence that determined all
big issues. But tho president's charge,
bold, sweeping, positive, came with
startling effect.
"Tho people demanded tho facts in
tho case.
"At first congress was inclined to
treat the matter lightly, but bogan
an investigation. But soon tho whole
world was shocked, amazed, as tho
story revealed tho machinations of
the subtle Influences that had pollut
ed tho fountain head of political life
of tho republic.
"Tho craft, the audacity, tho un
scrupulousnesB of tho special inter
ests proved to be of the proportions
paralleled only by tho operations of
tho British East India company in
India.
"A powerful organization of em
ployers the national manufacturers'
association was proved guilty of be
traying the people of tho land and
was condemned by tho report of the
investigating committee.
"The charge made by President
Wilson in regard to tho operations
of an insidious lobby to prevent tariff
legislation was proved true with ap
palling convincingness.
"But the 'interests' did not yield
their special privileges without a
struggle. Special privileges mean
workless dividends and profits to
them. They havo greater regard for
dollars than for people.
"The democratic party came into
tho control of tho government
pledged to legislation to return to
all the people the rights and oppor
tunities which tho special interests
ha'd monopolized. The administra
tion proceeded to enact legislation
which would release "business from
tho strangle-hold of predatory
wealth.
"Unable to influence tho admlnlR-
tration directly, 'big business' en
deavored to create a public opinion
favorable to their purpose. They de
liberately fostered business uncertain
ty, increased financial depression and
in every way magnified the effects of
tho natural disturbance to business
from changed regulations and read
justments. "Somo timo ago the president
made the assertion that tho present
situation In tho business world was
merely physchological. Tho 'inter
ests' seized upon the statement as a
target for further satire and com
ment intended to increase their con
trol upon the nation's psychological
processes and to creato popular de
mand for delay in enacting trust
legislation.
"But tho interests should have
been warned by the experience of a
year ago. The president does not
speak without deliberation. The
president has power to Influence pub
lic opinion, because the people be
lieve in his honesty.
"On June 15, President Wilson
charged that the same subtle influ
ences that attempted to block tariff
legislation are now working to defeat
the anti-trust legislation proposed by
tho administration.
"Simultaneously with the charge
of the president, letters were made
public which prove the existence of
a conspiracy to defeat anti-trust
legislation. The special interests
havo resorted to time-honored meth
ods of 'accelerating public opinion
"Their purpose Is to retain their
control over tho lives, tho welfare
and tho destiny of America's masses.
They gained control by cynical,
brutal, disregard for humanity. They
would retain their advantago by con
scienceless disregard for human wel
fare. But tho interests will fall. The
president's fearless chargo was time
ly. Tho conspiracy of the interests
will act as a boomorang for their de
struction. A frco peoplo will not
tolerate Insidious attacks upon their
government and their liberty. The
conspiracy will Increaso popular In
terest and demand for trust legisla
tion. "Trusts and monopolies arc by na
turo specially privileged. Special
privllego has given them control over
tho economic and tho political life of
our country. Anti-trust legislation
restricting and regulating these trusts
and monopolies In noccssary for tho
welfaro of tho people.
"President Wilson Insists that such
legislation bo enacted without delay.
Ho declares that It is unstatcsman
llke to defer action upon tho meas
ures now pending In congress and
thus prolong tho period of economic
adjustment.
"That the president is right In his
anti-trust program is evident to all
who consider tho real interests of
tho wholo nation.
"Organized labor of America
staunchly supports the position of the
president in his anti-trust program,
as passed by the house of representa
tives. "The American federation of labor
has for years been committed to anti
monopoly legislation. Now Is tho
time to secure it.
"The representatives of the Ameri
can federation of labor and the rep
resentatives of tho railroad brother
hoods stand as a unit upon this legis
lation. "As citizens of this country organ
ized workers Insist upon the enact
ment of anti-trust legislation. As
workers vitally interested in secur
ing their rights as free human beings
wo insist upon tho enactment of the
laDor sections of the Clayton bill as
passed by tho house of representa
tives. "The decision rendered by the
United States supremo court In tho
case of the International Harvester
company versus state of Missouri,
completely and wholly justifies tljo
position for years maintained by the
organized workers of the country.
That decision justifies beyond the
peradventure of a doubt the legisla
tion passed by the house of repre
sentatives on June 5, In the form of
tho Clayton bill, which clearly differ
entiates between labor power and
tho products of labor. This decision,
rendered by the highest judicial tri
bunal, effectually silences that coterie
of opponents who have -continuously
insisted that to classify humanity
outside tho category of accumulated
wealth in the shape of material pro
ducts, is legislation arbitrarily deter
mined. "The cause of organized tnhnr i
just. It is the great cause of human
ity. The greatness of our purpose
justifies the uncompromising nature
of our demands. The United States
senate must reerard th nana a nf
humanity."
THE CROPS AND STEEL
We are about to harvest the great
est CTOD in historV. and rnnritHnna
as reflected in the orders for steel,
are right for as era of great pros
perity. Indiananolis Star. nnnravit
Prog.
'.