| Show GOVERN GOVERNMENT ENT BANK UNSUITED TO U. U S. S Would Serve Politics Rather Than Business Needs Says R R. R S. S Hecht Citing Previous Previous ous Experiences QUOTES PRESIDENT JACKSON Extent and Diversity of This Country Country Country Coun Coun- try Presents Different Situation From Europe and Makes Regional Banking Necessary WASHINGTON D D. D C. C C.-A C. A refutation refutation tion of arguments in favor of a gov gOY government owned owned central bank system for the United States Is presented in a statement by R. R S. S Hecht President of the American Bankers Association on the basis of tivo tive stu studies les of European central banks He also points out the disastrous disastrous trous co consequences sequences of previous contral central cen con bank experiments in America Our present regional Federal Reserve Re Re- servo serve System under private ownership ownership owner owner- ship Is Infinitely better for this country country coun try than would bo a government government- owned and controlled central bank Mr Hecht says If history teaches us anything it Is la that It is almost certain that a central bank so owned would be run to meet the varying exigencies of the government in power rather than to serve the commercial commercial com com- mercial needs of the country Central banking has been tried twice in the United States but was finally abolished because the credit control which the central banks hanks ex ex- er became objectionable and unpopular he goes on to say What Andrew Jackson n Said The continued existence of the Second Bank finally became a bitter political Issue and President Jackson Jackson Jack son succeeded in abolishing it Mr Hecht says Permit me to quote from his tare farewell well address The Im mense mease capital and peculiar pecullar privileges privileges lIeges bestowed upon it enabled it to exercise despotic sway over the theother theother I other banks in every every part of the country From Its superior strength it could seriously injure If not destroy destroy de de- de stroy tho business of any of them which might Incur Its resentment If you had not conquered the government government govern govern- ment 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 or your highest officers The forms of your government might for a time have remained but Its living ll spirit would have haye departed from It it- When the Wilson Administration considered banking reform it carefully carefully care care- fully tully kept away from vesting esting central banking powers in a single Institution Institution institution tion and Instead Introduced the regional re gional Idea by creating twelve reserve reserve re reo serve banks located in different economic eco and geographical sections of or orthe the country Mr Ir Hecht says a plan pIau that has worked exceedingly well because the separate banks are arc un nn under under der the guidance of men nten chosen on account of their Intimate acquaintance acquaint ance with the problems and needs of their respective territories He adds The great size and diversity of oC America tends to make a central bank undesirable The central banks of Europe such as the Banks of or England England England Eng Eng- land France and Germany cover areas not as large as some of our states A central bank in the United States on the other hand would be called upon to administer the finan policies of or an area larger than all of Europe In which there are quite a number of central banks Subservient to Popular Demands Moreover history has proven that any banking system entirely I owned and dominated by the government gov gOY government I usually demonstrates much greater ability In aiding expansion of credit than in putting on the brakes at al the right time to prevent undue Inflation by restraining and aud contracting credit This Is easy to understand because in times of depression de de- everyone Is urging the government gov government to make money and credit easy and to encourage expansion On the other hand it always has been and always will be a difficult task for Cor any government to call ahalt ahalt a ahalt halt in to time of or apparent prosperity because in the very nature of or things the government go would be bo vcr very sensitive tire tive to public criticism and would hesitate to take any action which would tend to curtail business activity ac It Is such undue susceptibility ty to popular demands which makes government b banking a n 11 k kin i n g Inherently weak Our studies show that of oC all the central banks at present existing there are only four whose stock Is owned by the th government The American Bankers Association tion Mr Ir Hecht says is la convinced con that a central bank would not nol be Inthe inthe in inthe the interests of oC tho the public or the banks Its position he concludes Is welt well understood by the President and the leaders IP in his A Administration tion for we have been absolutely frank Crank with them In nil all of or our discussions discussions dis dis- cessions and have missed no opportunity for emphasizing that in our opinion no banking system will In Inthe Inthe inthe the long run be sound It if it Is entirely by lIy the ever-changing ever l political 1 administrations We should do all we can to keep our banking mechanism as far Car removed from partisan politics as ns possible I |
