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Show SEEN HEARD around the National Capital By CARTER FIELD i Washington. Probability that congress will enact legislation forcing forc-ing every state bank (except mutual savings banks) to take out a federal charter Increased considerably with endorsement of the plan by Representative Repre-sentative John W. McCormack of Massachusetts. McCormack is a member of the house ways and means committee, which does not deal with banking legislation, but the Importance of his view on this subject Is due not to his committee connection, but to his own influence In the houses, plus the fact that he is very obviously carrying the flag for the Treasury department. No one in the treasury, from Secretary Sec-retary Morgenthau down, and including in-cluding Comptroller of the Currency Curren-cy J. F. T. O'Connor, Is talking on this subject at all. It Is not a subject sub-ject which lends itself to much open talking, for to advocate such a change Is to antagonize not only the stockholders, officers and directors direc-tors of all the state banking institutions, institu-tions, but the 48 state banking offices. of-fices. The latter see in any move to end state banks a threat at their jobs. And some of them are quite important politically. But down underneath the administration admin-istration is strong for a unified banking system, for much the same reasons as voiced by McCormack. And if treasury officials see a chance to get the desired legislation enacted they will come out for it strongly. They have several influential influen-tial members of the house and senate sen-ate talking their arguments without with-out official authority and trying to find out what the chances are. For In the nature of things the administration would much rather this particular move originate in congress than to demand it. And it is not vital enough to President Roosevelt's program for him to turn the heat on members whose connections back home would make it politic for them to oppose the change. "The present depression has shown the weakness of the present banking structure," Mr. McCormack told the writer. "The conflict of laws and of supervision is responsible responsi-ble for much of our banking troubles. trou-bles. The idea of having 49 authorities author-ities granting charters to banks is absurd. The idea of 49 agencies examining ex-amining banks to see if they are solvent, and are complying with 49 sets of banking laws, is ridiculous. Require Federal Charter "I would force every bank doing a commercial business to take out a federal charter. In fact, I would permit no bank save mutual savings banks to do what Is normally regarded re-garded as a banking business. Then all the banks that loan money commercially com-mercially would have similar charters, char-ters, granted under the same laws and by the same agency of the government, gov-ernment, and all would be examined exam-ined by the same agency. It is not just a question of economy. That is important enough, but the benefits bene-fits of the change far transcend that. "I am not discussing the central bank idea, nor the authority of the Federal Reserve board over the 12 regional banks. I am considering simply the question of granting charters, and of examining the banks which loan money to our citizens. citi-zens. "I am strongly In favor of our dual system of government, national nation-al and state, and I would resist strongly the encroachment of the federal government on the rights, functions and prerogatives of the states. But times and conditions change. It is no longer the case that what happens to our banks in Boston is confined, in its effects, within the state lines of Massachusetts. Massachu-setts. "Any ten-year-old child knows that If a group of banks, or perhaps only one big bank, should close in Chicago, the reverberations would affect business harmfully from Maine to California. The people of Oregon have a right to have their national government protect them from harm, which may come to them through reckless banking In Florida. "I meet men who oppose this change. In defending state rights they ask me if I would have the federal government take over conduct con-duct of the schools also. It seems to me that the line of demarkation is very clear. Of course I would not want to have the federal government gov-ernment take over the conduct of the schools. Would Affect All "Suppose anything imaginable that might happen in the schools of my city of Boston a strike of the pupils, or the inclusion of some debatable subject in the curriculum, or whatnot How could that possibly pos-sibly affect the people of Kentucky? Ken-tucky? Or Texas? "But If two or three big banks in Boston failed, every bank in those states, and every other state, would be affected, seriously, and at once. And those failures might be due entirely to perfunctory, careless, care-less, or even crooked examination of those banks by the state banking bank-ing examiners, or perhaps by some oversight in drafting the state banking laws, or any one of a dozen tilings about the set-up with which no oue o-itside Mif-sacliusetts had anything to do whatever. "Many of as remember the so-called so-called panic of 1007. It was started by the collapse of the Knickerbocker Knickerbock-er Trust company In New York city. There was no excuse for a depression depres-sion at that time. It was simply a money panic produced by a very local situation. We learned our lesson les-son from that As a result, we had first the Aldrlch-Vreeland emergency emergen-cy currency bill, and later the federal fed-eral reserve system. "Now the time has come to take the next step, and make impossible for the future nation-wide troubles due to preventable local - disturbances. disturb-ances. Banking Is not a local function func-tion any more. It is national, If not international. So it must be controlled, con-trolled, in toto and not Just in part, by the strong arm of the federal government." Extend Authority Not only does the administration want to force all commercial banks to become national banks, as told in a recent dispatch, but It desires to have the authority of the Federal Fed-eral Reserve board over the 12 regional re-gional banks made a great deal stronger. The fact is the aim of the administration ad-ministration Is not very different from the purpose of the late Senator Sena-tor Nelson W. Aldrich of Rhode Island, Is-land, whose central bank studies were actually the basis of the federal fed-eral reserve system. When the Democrats came into power in 1913 they rewrote the Aldrich bill, giving him as little credit as possible. They did not change the fundamental features very much, but in several spectacular spectacu-lar details they varied it. One of the most important details, in the minds of the Democratic framers, . Including Senator Carter Glass, then chairman of the house banking and currency committee, and Senator Robert L. Owen of Oklahoma, then chairman of the senate committee of the same name, was that instead of one central reserve bank they made 12. Carrying their idea of decentralization decentral-ization as far as possible, they gave a degree of independence to these 12 regional reserve banks, which has often irked the federal board since, and for that matter, various Presidents, who found themselves unable to control the policies of the individual reserve banks as much as they would have liked. Bearing in mind that one of the objects of the new system was to get the financial control of the country coun-try away from New York, and down to Washington, it Is rather curious that the reserve bank which has given Washington the most trouble ever since has been the New York bank. Headed by strong-minded gentlemen, who knew what they wanted, and had firmly fixed notions of what was best, the New York bank again and again disregarded the pleadings, even, of the federal reserve authorities. Irks Reserve Board Reserve board members still remember re-member with anger the stubbornness stubborn-ness of the New York bank in the early days of 1929, when the reserve re-serve board was doing its utmost to stop the sensational rise In prices on the stock exchange. This effort, backed by President Hoover, proved futile. What would have happened, if the New York bank had been under un-der the control of the reserve board, no one Is sure. But as good an illustration il-lustration as any other is that the federal board began trying to hold down speculation when American Telephone was around 225. Whereas Where-as the boom, gayly continued until this stock touched 310. Many contend that anything done at that time would have been futile fu-tile so far as heading off the crash is concerned, but the present administration ad-ministration wants to be able to control the reserve banks to be able to give them orders. This is not the same as the central cen-tral bank idea about which so much has been said, and which Secretary Morgenthau has advocated. So far there is no Indication that President Presi-dent Roosevelt has been convinced of the necessity of this. On the contrary, all indications are that he is not for it Soldier Bonus The very top figure on which the administration Is willing to compromise com-promise on ' the soldier bonus is $1,200,000,000. So that the fight is to save something like $1,000,000,000 more. Friends of President Roosevelt Roose-velt say the sky is pretty nearly the limit to which he is wililng to go in fighting to hold the bonus figure at $1,200,000,000. If the bill which should pass congress con-gress exceeds that amount, the President Pres-ident will veto It, beyond any doubt. The next step is not much In dispute dis-pute among those who have canvassed can-vassed the situation. The house will pass the bonus bill, In whatever form It may be by that time, by more than the necessary two-thirds majority to enact a measure over the veto. The only doubt Is as to the senate. sen-ate. Friends of the White House are confident that they will be able to prevent a two-thirds majority for a bonus bill larger than $1,200,000.-000. $1,200,000.-000. Any opinion based on the canvasses can-vasses is only an opinion. It cannot can-not be anything else, for the simple reason that there Is a small number of senators who do not themselves. 1 know at the moment what they wLU do in such an emergency. Copyright. WMU &-.t1c. |