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The Commoner
VOL. 14, JNO. 11
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CURRGNT
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THE NEW REGIONAL RESERVE BANKS
Tho opening of tho twelve Regional reserve
banks provided under tho Glass-Owen currency
1)111, following months of careful preparation
and organization, is an epoch-making event in
Amorican history. Tho far-reaching benefits of
tho now currency law are recognized by bankers
and business men in evory section, and regard
less of political affiliation, they look forward to
this now law as a boon to tho business interests
of tho country. In roference to the operation
of tho new currency law an editorial in tho Du
buquo (la.) Telegraph-Herald, says:
"On November 1G, 1914, tho twelve regional
banks provided for in tho now currency law will
opon for business undor governmental control
and this should mark the inauguration of the
groatest ora of prosperity based upon finance
over known in this country. Tho law under
which they open is mado up of all the best fea
tures of tho banking systems of tho entire world
and whqn it is put into effect lb will banish for
ever that specter of American business, the un
warranted panic. 'Never again will Wall street,
or any other combination of capital, be able to
dictate Amorican finance, and never again will
one small group of men hold tho destinies of
the country in their hands, to be dealt with as
they will. America, which has so long been
lagging behind other nations in matters of
finance, will take her place in the fore-front.
"Tho workings of the new currency law, which
took so much careful thought by the greatest
finance experts of the nation, aro easily under
stood. The twelve regional banks which are
fiRtfihliolip.fi are not hanks in tho accented sense
of t' o word, since they will not deal with tho
people direct, but they aro banks for bankers.
Under tho present system, which will soon be
abolishod, a bank is permitted to loan a sum
equal to a certain per cont of its capital stock.
When that amount has boen loaned no more is
nvqibblo. If a bank, for instance, has loaned
its full capacity, say $100,000 and a business
man. desires to borrow another $75,000 the bank
enn not loan it and tho man must go elsewhere
or do without. That feature is what has made it
possible for Wall Street to control and preci
pitate panics. Under the new system if this bank
has loaned $100,000 on good security and an
other customer wishes to borrow $75,000 tho
bank may tako the securities for the first loan,
the $100,000. to the regional bank and secure
the needed $75,000 loan on them at perhaps 4
per cent interest. It will then take that $75,000
and loan it to the customer at perhaps 5 per cent
interest, taking his securities for it. The bank
may then tako these socurites to the regional
hank and borrow moro money on them to loan
to a third customer, and so on, down to tho last
$100.
"It will readily be seen that by this system
tho banks of tho country have almost unlimited
resources and can make loans to their custom
ers on a scale hitherto unknown. Tho plan has
the additional advantage of governmental su
pervision over tho securities accepted by the
banks and will prevent the acceptance of shaky
collateral. In effect it makes the United States
treasury, the big bank of tho nation, somewhat
after the fashion of the Bank of England which
is tho big bank of England, but with the added
safety of all the nation's resources and super
vision behind tho huge central bank. Under
this system legitimate business need never suffer
for lack of capital or be subject to unwarranted
financial panics."
CLOSER RELATIONS WITH LATIN AJVIERICA
A special study of the Latin countries on this
sldo of tho Atlantic was strongly urged by Dr.
P, P. Claxton, commissioner of education, In a
recent address to high school principals. In
view of the opening of new trade routes and
ths opportunities offered for securing larger
markets in South America for the products of
tha United States as the outgrowth of the Euro
pean, war, Dr. Claxton's suggestions K will be of
interest at this time. Ho said-,
"W, should teach, in our schools and colleges
mora -of th geography, history, literature and
life of the Latin-American countries, and we
shall offer instruction in the Spanish and Por
tuguese languages to a' much larger extent than
in now done.
"All our relations with the republics to the
south of us aro bound to become much more in
timate than they have been in the past. The
completion of the Panama canal, the changes in
commercial relations brought about by the war
in Europe, as well as other recent events, have
served to call the attention of the people of the
United States to the recent rapid growth and
development of the Latin-American republics.
"These countries comprise an area three
times as great as tho United States. They are
rich in minerals, forests, water power, and a
wide range of agricultural products. They have
70,000,000 people, with governments modeled
after our own. Their foreign commerce amounts
to more than $3,000,000,000 annually, and is
rapidly increasing.
"The third American city in population is in
Latin-America. Another Latin-American city
has 1,000,000 inhabitants. Three others have
approximately1 500,000 each, and five others
have each 200,000 or more. Some of these
cities rank among tho most beautiful and at
tractive in the world.
"These countries are making rapid progress
in elementary and secondary education and in
industrial education. Several of their univer
sities enroll from 1,000 to 2,000 students each.
The history of their countries is interesting,
and they possess rich and varied literature.
"A further .reason for teaching Spanish in our
schools more than wo do is that it is the lan
guage of one-tenth of all the people claiming
protection under the American flag, as well as
one of the cultured nations of Europe."
THE SECRET OF GETTING FOREIGN TRADE
The .par tial or total cessation of the foreign
trade of the nations engaged in the present
European war has served to emphasize the rel
atively .small development of the foreign com
merce of the United States, especially with the
South American countries. That something
else, other than taking advantage of Europe's
temporary extremity, is needed to develop and
hold foreign trade is becoming apparent to
American business men., A wr.iter in the Sioux
City, (Ja.) Tribune gives some of the reasons
why the United States has lagged behind in the
race for the world's trade, together with an
encouraging note as to the beneficial effects of
the new tariff act upon our foreign commerce.
Ho says:
"John F. Fowler is at the head of the export
department of W. R. Grace & Co., New York,
which does the largest business with South
America of any firm in the United States. Mr.
Fowler Is credited with knowing more about
actual business conditions ia South America than
any other man in the United States, having
handled exports to that continent for 25 years,
and 15 years of this time living in the various
South American countries and acquainting him
self first hand with conditions as they are.
"In an article in the New York World, Mr.
Fowler says It is not lack of banking facilities
or a credit system, nor lack of shipping facili
ties, nor yet the lack of experienced salesmen
or advertising that has heeu the drag on United
States trade with South America, while Germany
and England and even Holland and Belgium
have gono ahead.
"He states tho fundamental proposition;
j.'copie in &outn America do not buy on senti
ment any more than people do elsewhere,' so
the fact that this is a republic, and there is a
Pan-American union and a Monroo doctrine and
all that sort of thing, gets nowhere in South
America when it comes to commerce. South
American people patronize people who patronize
them, which leads Mr. Fowler to make this ob
servation: " 4ln seeking trade relations outside our own
boundaries we have been prone to oyerlook the
fact that barter is a good principle. Hitherto
our tariff might well be considered as 'in re
straint of foreign trade.' Our old tendency was
to exclude everything that we were not absolute
ly compelled to obtain abroad, but our new ta
riff is something like an invitation 'to trade
both ways' and a sign that we are at last open
to do more bartering. We must not overlook
the fact that Europe has always been the large
market for South American products and, reci
procally, naturally got a corresponding share of
the return trade.'
"Nobody knows Mr. Fowler's politics. May
be he hasn't any. He is simply an experienced
trader in the world's markets, and he is but
telling what must appeal to everyone as a log
ical and fundamental truth.
"This country can not expect other nations to
buy, buy, buy of American manufacturers and
jobbers and not sell to Americans in return.
Commerce is not a jug-handled affair like that.
This country can not erect a wall of high tariff
schedules and say to other nations, 'You can not
sell in our market,' and then expect the other
nations to welcome us in theii markets.
"According to Mr. Fowler, our new tariff has
given trade with South America a wonderful im
petus and it will steadily increase if we main
tain the present tariff policy. In view of this
testimony and other testimony exactly like it by
men familiar with trade conditions in the
world's markets, what folly to consider serious
ly the reactionary program to re-enact a tariff
that is 'in restraint of foreign trade!'
"The thought suggests one ray of light. Tho
manufacturers who increase their business by
the abolition of the old 'restraint of trade' will
probably cease to subscribe to campaign funds
for its re-enactment."
s
DIVORCE AND LEGISLATION
The remedies sought to curtail the divorce
evils of the country often fail .because of the
fact that they can not of themselves reach the
fundamental causes of marital unhappiness.
Discussing this subject, a writer in the Wash
ington Post, says:
"Most of the evils of which complaint is made
can be corrected only by education and religious
methods. The unkindness and lack of tolera
tion which provoke many quarrels in the home
can not be halted by legislation. Remarriages
might be prevented, but the result of such a law
might be worse than the evils of divorce.
"Those who complain -about the increase in
the divorce rate are dealing with superficial
rather than fundamental conditions. Every
state in the union takes precautions against
hasty divorces. There is always a delay that
gives the parties a chance to change their minds.
'.'There is no such delay with regard to mar
riages. Young persons who have not known
each other a day may marry at will. Were
greater restrictions thrown about marriages
there would be fewer divorces.
"It is much better to go to the root of the
problem. The interest of the nation is in the
production of strong and intelligent population.
To this interest the preservation of the home is
essential. If the right kind of marriages aro
made, and there is no haste in the beginning,
there will be fewer divorces and fewer unhappy
homes in tho end."
LAST ROLL" CUTS PENSION LIST
Decreases in the annual expenditure for pen
.s ons, due chiefly to the death of veterans of tho
civil war and their widows, is shown to''a mark
ed degree in a recent report of Gaylord M. Saltz
gaber, commissioner of pensions.
Quoting from the report the New York
Herald says:
"The payment for the fiscal year 1913 on ac
count of pensions was $174,171,6G0.80, wliile
payments for the same purpose for the fiscal
y,ear 914 was $172,417,564.26. This shows
tnat the largest amount ever paid out was ex
pended in 19r3. Up to that time there had been
a gradual ascent, but the summit has been pass
ed and a decrease in the amount may be expected
to continue.
iilM Saltzgaber presented figures showing the
loss and percentage of loss to the' pension roll
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