Show I URGED CHANGES IN BANKING Bill i Business Men ren and Bankers Agree I in fl Objecting to Political Coni Control Control Con- Con i Over Banks AMENDMENTS ARE SUGGESTED i t Political Domination of Federal Re Re- cerve Board Boud Declared to Bs Be Undesirable for Depositors as Well as Their Banks W. SHI WASHINGTON D. D C. C Business Businessmen men and tankers ers alil alike c who have appeared ap ape ap- ap committees of or Congress Con ConS before etore pc views lews regarding the gress greEs to LU present Banking Act of or 1935 have found round common com cornS mon man cause for criticism In those provisions pro pro- visions which they agree would create the means for COl undesirable political control con conS over the tho Federal Reserve Reser System Individual banks and thereby over o throughout the United States Stales They this thia undesirable undesirable have ma made c the point that able condition would affect depositors In lii banks even more than the banks J. J themselves t The Thie view has been heen stressed In criticisms r. r by hy the Chamber of Commerce of or the United States and the question of partisan control over banking was vas the central theme of a statement presented by hy R. R S. S Hecht President of the AmerIcan AmerIcan American Amer Amer- ican Bankers Association who appeared ap before the Senate Sub SubCommittee Sub Commit CommIt J tee on flankIng Banking and Currency hearings s here hore Mr Hecht declared that his organization organization or or- Is actuated by a desire to be 1 helpful to Congress In enacting effective tive live and workable ban banking legislation In the Interests oi 01 all our He said in part art If It it is finally decided that it Ills Is necessary necessary essar essary to carl carry this legislation through at this session sef we are strongly of the opinion that special care should be betaken taken to Keep our credit control and banking mechanism r-de r from om om any sort of political considerations In Iu In making this statement 1 do not wish to appear to question the propriety propriety pro pro- ro- ro of or the Governments Government's exerting a n certain amount of control over banking operations so far Car as ns they affect the nations nation's na na- na tion's currency ncy and general moneta monetary ry policy Nor do ve we object to tu broad powers pow pow- ers era of supervision over the operation of or our banking institutions because of or the tile semipublic semi responsibilities they t arry But nut when It comes to such matters as the granting of or credit and md the tile making of or investments by our banks these are questions of or business policies that surely sure suie- 1 ly should net be under th sole control of or a board co zo constituted as to be dependent dependent de de- le- le pendent upon partisan or political considerations con can under any administration The Thc Bass Basis of Sound Credit i The real conditions that create the necessity for the expansion exp or contraction contraction tion of or credit arise from the needs of or agriculture Industry and trade themselves them them- selves wholly Independent of the administrative ad nd policies of the party which happens to te in power We feel that the financial requirements of the nations nation's nations nation's na na- na tion's business constitute a n continuing economic process that Is not i related elated to political changes Th The fundamental principles of ot sound credit do not notary vary ary with variations In public thO l thought ht All AlJ I experience teaches that the quality of or credit is sound only so 80 long as it is purely on the requirements of or sound business It Is not sound when any other considerations or motives enS en- en Iter Into its composition S 1 The Banking Act would centralize Jn In the Federal Reserve Hoard luard at Wa Wash Wash- h. h means aimed to control the supply supply sup sup- ply py of or money In the country which term leim includes the sum t tal of or currency in n circulation and demand deposits in Inthe he the banks which become lecome current through h checks cheeks checks The Tue powers which It Is proposed to give the Board are Intend Intend- ted Cel to enable e It to Influence the quantity Of ot this tills deposit money through open j operations the discount mu rat oO r The Need for Independence That Is the tile reason why we are so strongly Y in favor r of m making 11 ln- ln the I Federa ledr led Fed r Ite cral era Reserve Board a bo body y of or such Independence In t dependence and prestige pre that It would r roe rae definitely removed from ruin all political cal eat thought influence and dictation Its t. t s should be flee fice ice to study and md to act lct In accordance with the nee needs Js and I j W- W conditions of or agi agriculture Industry and itA J. J trade raIe The policies of the thc board should ha e zave no r reference to the politics or the tile J changes In politics of or the national ad ad- ministration In our studies of or the bank bill we flave been with ith the tact act that It IL would set ct up a 1 situation un un- tier fler which tic the Federal I. Reserve Board and ind Its policies s might be subject to conI control con cou r I rol from front the political administration of or the country In Iii saying this I do not nOl charge e that it Is the Intention of or the present to bring about any undue control over the nations nation's banking mechanism The point polut Is that J II it the bill passed is s now opportunity op for or control would h be lIe there for the use LIse of the l-c l or whatever F future administration might be in I power Our criticisms of or the bill are aie not aimed therefore at the motives of or the 7 present administration but the they are wholly y and nd political non and are aimed entirely at the basic principles involved I Desirable Change e. e Proposed Careful study by his organization t Mr Hecht said Enid had lad resulted In a n number num aura her ber of suggestions for constructive 1 revisions re 0 visions in the bill which he submitted to Congress On at tb tbt ot other er hand band he de de- that man many of at the changes change pro proposed posed paced by tb the act In e existing l laws are of or a constructive e nature and arid have the support of oC bankers l If th the method of or appointment and the tenure of at of or the merub members rs of the F Federal Re Reserve ervo Board In whose bands hands It Is planned to concentrate greater ter power than ever before could be so altered as asto asto asto to Insure as far as ns possible the lute independence of or the Board Boar from partisan or political considerations He added Supreme Court of Banking Baning Since the passage of the Federal Reserve Reserve Reserve Re Re- serve Act over 20 years yeal-s a ago o In Congress and among bankers hankers has hos been striving towards the ideal of making the tho Federal Reserve Board a body ot vI such Independence and prestige th that t It might b be described as the Supreme Court of or Finance and Banking We believe believe be be- lieve there thero Is greater need now than ever before for realizIng ng this tills Ideal Y Yg 1 4 g l R. R S. S HECHT Mr Hecht emphasized that It Is the genuine desiro of or the banking fraternity frater r to be helpful and anel constructive In In making suggestions in connection with I this pending legislation The changes I we arc are ur urging are arc we ve believe essential to the continued Independence of or the the Federal era I Reserve System We have made it iL clear that we donot donot do not object to a a measure of or public control control con con- in the national interest for proper I coordination of or our manifold credit I operations he said and we do not believe the sponsors sponsor of or the tho legislation desire any political domination over these activities through our Federal Reserve Resene System Under such circumstances we feel reel that our recommendations should be favorably acted upon because they would enable the tho reconstructed Federal Reserve Board to function freely as a nonpolitical body actuated only by the tile dictates of at sound financial and economic eco ceo nomie policies conceived In the Interest interest Inter inter- est of or all of ot our people The adoption of 01 our suggestions would both place operation of or the Federal Federal Fed Fod eral Reserve System wholly and anel distinctly distinctly dis dis- apart train from the fluctuations and vicissitudes of or political conditions and free from undue Influence by banking opinion only Such a solution would thus have a stabilizing and anel confidence inspiring effect on the entire business situation |