Newspaper Page Text
SENATOR HOKE SMITH EXPLAINS
OEMS OF NEW CURRENCY ACT.
Bankers x\stonished at Georgian’s Marvelous Grasp of
Detail As He Shows Them How New Law Means
Greater Prosperity Than Country Has Ever Known.
Senator Hoke Smith’s speech on the
new currency bill, delivered before s'*o
ttorjia. bankers at the Capdtol t ity
#lub Monday morning, where they
were the guests of the Atlanta Clear
ing House association at a luncheon,
Is given here in full.
Senator Smith said:
“I have absolute confidence that the
fervency bill passed in December will
bring anew freedom to the America 1
jfcople, and that it will be especially
ieneficial to our own section. I look
forward w r ith absolute assurance to a
period of great prosperity and th ; s
fiction of our union is now known
everywhere to be the section to which
r ill come the greatest growth.
“I wish to point out some of the fea
tures of the new banking bill that a! 1
*,ay see its certain value.
Old System Defective.
"All lines of business at times dur
lug each year require more money or
currency than their ordinary capital.
Ibis is equally true of manufacturers,
Bterchants and farmers, and it is es
pecially true when a great crop lik
cotton is to be moved.
"Banks should be prepared to meet
tbe requirement in their different lo
calities, and the success with which
they meet it involves the welfare of
tic clerk in the store, the laborer ie.
tl e factory, and the small as well as
t e big farmer, for it affects the sale
of crops, the continued operation of
factories, and the business of th
merchants.
‘‘Banks accept the custody of de
posits, making it easier thereby for
tke customer to use his funds and also
furnishing places of safety for thos
funds.
“The expense of conducting a ban\
exceeds the interest it receives fo ■
leans of its capital and profits muse,
be made from money of depositors.
"Reserves kept by banks are por
tions of their depositors’ money set
apart to protect depositors and keeq
banks in position to meet any special
call of depositors.
"The banking and currency act pass
ed in December was intended to over
come undenied defects in the old sys
tem, and benefit not alone banks bu‘
t.-,e entire public.
Reserves Used for Speculation.
“Under the old system bank reserves
re concentrated in central reserve
cities, and chiefly in New York City
'1 wo per cent interest was allowe J
cn them. The reserves were chief
loaned on call for speculative pur
poses. In case of extreme stringency
the reserves were not available to th'
banks for payment to depositors.
“There was no provision under tl* ?
c’d system for increase of currency
in time of stringency. The banks cou’d
not issue it, and no provision existed
oy which the government could issu -
additional currency except under th
V: eeland-Aldrich act of 1908, whic \
was almost, prohibitive.
“When money became scarce in a
locality, the depositors in the bank?
wou’d be needing their funds and
therefore, withdraw their deposits
Ulster County Gazette Published 113 Years Ago.
General George Washington’s Death and Funeral,
Published at Kingston by S. Freer & Son.
Saturday, January 4, 1800.
#
A full account of Gen. George Washing
ton’s (our first President) death and funeral.
It also contains the speech of President John
Adams on the opening of Congress at that
time; an English account of the of
Zurich; despatches dated OctobeV 20, 1799;
extracts from Lieut. Col. Ramsey toLord Green
ville, dated Headquarters Shaffhauscn, Sep
tember 30, 1799.
London, Oct. 24, Evacuation of Holland.
Resolutions of Congress paying the last
tribute of respect and affection to the departed
President; expression of regret to President
John Adams and the answer of the President.
The Gazette also contains several poems
and a number of advertisements of slavery.
An exact reprint on similar paper sent
post paid on receipt of 10 cents, (silver,) or
stamps,
TRIBUNE PUBLISHING COMPANY.
Tie banks relying on deposits to
make loans instead of being able to
relieve stringency by increasing loans
when good notes were offered were
compelled to contract loans to mee
demands of their depositors.
“The banks which should have been
alle to relieve the stringency did bus
iness under a system which compelled
them to increase the stringency.
Reserves Made Available.
“The present law will take the re
serve out of the central reserve cities
and keep them in regional banks or li
the vaults of the member banks where
they will be free from the speculative
use now made of them and where
they can easily be placed at the poim
most in need of their use and wher •
they will furnish an increased ser
vice and security to depositors in the
banks for whose benefit they art
maintained. The law also furnishes a
means for the ready movement of cu--
rency from one section of the country
where it may not be in demand to an
other where it is specially needed. I r
will also give elasticity to the cur
rency through the issue and retire
ir.ent of federal reserve notes.
Lack of Elasticity.
“The greatest defect in our recent
currency system was its want of elas
ticity, the utter lack of any provision
by which, in case of stringency, banks
could not take notes, no matter how
good, and obtain for them currency
when they were themselves pressed
for more currency by their depositors.
“It is really surprising that we have
not. had more currency panics an-1
more distress from the past lack o*
elasticity in our currency. Ours was
me only great country wh>ch had a
banking and currency system with no
provision of that character.
“Germany, France and England long
ago recognized the absolute necessity
for affording temporary enlargement
of the currency. The Bank of Germany,
tne Bank of France and the Bank o
England each had the power to issue
paper currency under plans to enlarge
its volume to meet an emergency, and
> etire it as soon as the emergency wa
iver. Under their systems, runs upon
banks have been almost impossible.
Any solvent hank whose depositors
concluded that they wanted their mon
e/ could take its good paper and go
to the Bank of Germany, or the Ban I
c France, or tbe Bank of England
and discount that paper, thereby ob
taining all the currency necessary t
moot the call of depositors across th
counter, and this could be done with
out delay.
“The Bank of Germany, though it;
stock i? held by individuals, Is entirr
j iy controlled by the government. Th
; same thing is true of the Bank o'
| Trance. The Bank of England excludes
Ifi om its directorate men engaged ii
| the business of lending money and it
i t; controlled by a constitution as fix
•id as the constitution of the Britisn
; empire.
j “The right, therefore, to call for a
enlargement of the currency in each
! f these three countries has been de-
THE BARTOW TRIBUNE, FEBRUARY 12, 1914.
SENATOR HOKE SMITH.
pendent, not upon the willingness o‘
the banks to respond, but upon the law
of the land.
Plan of New System.
“Our new act provides that the
United States shall be divided into
districts, not less than eight nor mere
than twelve. In each of these districts
there is to he designated a reserve
city in which the reserve bank of the
district will be located. In other cities
tnere will be established branches of
the reserve bank. Every national bank
in the district is required to subscrib
0 per cent of its capital and surplus
to the stock of the reserve bank. One
half of this is to be paid in during a
period of months in cash. The rest
will be subject to call.
“The reserves o t national banks,
from this time on, when not locate
in reserve cities, are fixed at 12 pe
eent of their demand deposits and 5
per cent of their time deposits. Four
twelfths of this reserve permanently
v ill be retained in the vaults of the
home bank; five-twelfths in the rc
serve bank of the district and three
twelfths in its own vaults, on in thy
vaults of the federal reserve bank
according to the preference of the
home bank.
Federal Reserve Board.
“A reserve board of seven located
in Washington will have general sup
ervision over the reserve banks. Each
ft Jeral reserve bank will be controll
ed by nine directors, six of whom will
be elected by the member banks,
stockholders in the partidhilar federal
bank, and three appointed by the re
serve board. Two of those appointed
by the reserve board must be skilled
m banking. Three of those select:;:]
by the member banks can be chosen
by them without limitation. The c-the -
three chosen by the member bank
must be engaged in commerce, agri
cuiture_ or some other industrial pur
suit in thbir respective districts and
cannot be officers, directors or ®m
pb yees of banks.
“The federal reserve banks ctn**on
!y do business with member bank*
and with other federal reserve banks
Currency Will be Ample.
"Each federal reserve bank will
have available to meet the money o
currency wants of the member banks
of its district; the capital stock paid
5 n by the member banks, the reserve
of member banks on deposit with IT
A Meat Market
Ought to be the Cleanest
Place you could Find .
My Market is open for inspection
at all times.
I guarantee cleanliness, quality and
16 ounces to the pound.
1 handle at all times everything that
is kept in a first-class Market. Come
and see me and be convinced thah you
are buying vour meats from a
CLEAN MARKET.
I pay the highest market price for
hides.
J. C. FINK
Wholesale and Retail Dealer in FRESH MEATS
107 W. Main St. Phone No. 29
i and such funds from time to time as
line treasury of the United States, in'
! co-operation with the reserve board
; may deposit with it. Latitude of de
! posit has been given to the secretary
j v.' the treasury that the surplus funds
of the government may be placed in
that district in which at the time they
may be most needed.
“The reserve board can permit, or
by vote of five of the seven member**
; require one federal reserve bank to re
■ discount* the discounted paper of ai>-
c-iher federal reserve bank, thus mak
i* g it practicable to move the surplu
money of the country to the locality
in the country in which, at the timi
it is especially needed.
Can Mobilize Funds.
“Thus we have an organized co-op
eration between the banks of the
country for the mobilization of the
surplus money and currency of the
; country with a general board of super-
I virion free from any interest whatever
! in any bank given the power to con
11xol the federal reserve banks and to
j compel a mobilization in the public
! interest.
“In addition to this at each federal
resrve hank there will be stationed a
! federal reserve agent. Through this
! federal reserve agent, under t.he ru’es
| prescribed by the reserve board . the
1 federal reserve banks caw redi couf
I paper and obtain federal reserve notes,
| these notes being new issues intended
| to make it ; o=sible temporarily to ex
j pand and contract currency. This fea
I lure of the bill is similar to the provts
| ions under which the Bank of Ger-
I many, the Bank of France and the
II ank of England enlarge and contract
j their paper currency to meet specie,
i neds in their respective countries. Ir
Is from this source that each bank’
ptoperly managed, which has h am i
fh< money of its depositors on good
paper to solvent debtors, has the op
j portunity f rediscount with the re
i serve bank to meet any emergence
; and to prevent the possibility of a
j and sastrous run upon a bank.
Details of the System.
“After the expanse of each fsdera*
tank has been paid the st ckholder
rre to receive an annual cumulativ;
dividend of six per cent on the paid
in capital. After the payment of this
dividend, the net earnings are to bi
paid to the United States as a fran
chise tax, except that one-half of the
i.et earnings above the six per cent
dividend are to bo put into a surplus
fund until it shall amount to forty
ier cent of the paid in capital stool
of such bank.
“Ordinary discounts by me-mbe
banks with the federal reserve bank.
e:e limited to paper, wiih a maturity
vt the time of discount of not mor
than 90 days.
“It is, however, provided that paper
issued for agricultural purposes, hav
ing a maturity of not exceeding sU
months, may be discounted in amounr
proportioned to the capital of the fed
eral reserve bank, to be fixed by the
federal reserve board.
“It is also provided that, a membe
bank not located in. a central reservi
city may make loans secured by fa r m
lands for a time not longer than fiv
years and for an amount not exceed
ing 50 per cent of the actual value o
the property and for an amount not
to exceed 25 per cent of the capita
and surplus, or one-third of the time
deposits, of such bank making the
loans.
Vreeland-Aldrich Amendment
• “We realized in the senate that a
considerable portion of the present
year would he required to orgauiz
aid to put into effective service th
federal reserve banks. It was appar
ent last fall that loans were being con
traded on account of the belief that
pending the complete organization o.
the federal reserve hanks, the sub
scription by member banks to the
capital stock and the transfer of re
serves to the federal reserve bank
would lessen the amount of currency
,j< the command of the banks.
“To avoid this trouble we amendeo
the Vreeland-Aidiich act. As passed ir
1 'OB, and as it stood upon the statute
books, while it provided for the loan
to banking associations of $500,000,000
of notes, the lax placed upon the loan
was so heavy, reaching in the fifth
month 10 per cent, that the rate was
a most prohibitive.
“We, therefore reduced the rate o
tax in the Vreeland-Aldrich act so
that the maximum rate w r ou;ld be <*
pei cent, while the rate for the first,
six months would average only about
rv, per cent per annum. This provis
ion of the banking currency act has
greatly relieved an apprehen-ion ot
enforced contraction during the pres
cut year, and as it will continue i~
force until July 1, 1915, there need b
vo scarcety of currency pending t.h
complete organization of the federal
reserve banks.
“Under this amendment the use of
SIOO by a banking association for six
months involves a tax of only $1.75.
.It is impossible, therefore under suc.i
\ condition to have a currency strin
gency pending the organization of the
system.
New Freedom to Business.
'1 do not h .-.itate to give my mote
cordial approval to the new law. Jt.
will prove anew freedom to tile bus:
nos® cf our country. It will preven
currency panics. It will saf guar,’
f gainst runs upon banks. It will make
the reserves of banks available wl e
needed. It will make currency elastic
r will enable banks to expand theiv
business. I will facilitate the removal
of money from a section in which it, is
r. t needed to a section in which it is
needed.
“Those who have objected to gov
ernment supervision and control oc
federal reserve banks forget that whil
the stock cf the Bank of rmany and
the Bank of Francp is owne<f by in
dividuals the directors are and slgra'ed
hv the government and that, while the
stock of the Bank of England is pri
vately owned, bankers, brokers and
discounters of bills are exc'udcd front
the board of directors and the bank
1’ really controlled by and under lav
that amounts to government super
vision equal to that provided by our
hanking and currency bill.
Advises all to Join.
‘‘lt is now perfectly evident that a!
the great national tanks of the coun
try intend to avail themselves of the
privilege of becoming members of fed
eral reserve banks.
“I do not hesitate to advise
banks to take advantage of the oppor
trinity to become members of a fede’ -
ci reserve bank. They will only be re
quired to take from their a-sets 3 per
cent of their capital stock and surplu
to be invested in the stock of the fed
eral reserve bank. They will receive
t per cent interest on the investment
if they are disposed to complain that
the law requires that a portion of
their reserves be deposited with th'*
federal reserve batik while they now
receive 2 per cent interest in Nev'
'ork, I would reply that the money
which the hanks keep there on deposit
P the money of their depositors, and
tre benefit that would come to the de
positors and the local hank from hav
ir-g the deposit in a federal reserve
hank would be greater than the 2 per
cent interest on reserves in New York.
“And It is my judgment that the
hank which does not avail itself of the
benefits of the banking and currency
law will find it more and more diffi
cult to maintain & Mat of depositor*
against a bank which is a member.
Atlanta Should Have Bank.
“At oue time during the prograss of
the legislation 1 feared that & move- _
r ent might be made to put the state
if Georgia into a reserve district witK
N ;w Orleans as its center.
“I felt that this would be injurious
to our state and I, therefore, insisted
that the number of reserve districts
should be changed from a fixed num
ber of eight to not less than eight, nor
mote than twelve.
“I believe the southeastern eectioa
I? logically entitled to a reserve d.s
-- ict. I have pressed that v'*,v in the
aemocratic caucus and upon the mem j
bers of the organization committee.
“One of the arguments which I have
presented was that in the center cf
cur southeastern section we have a
city which leads all the south in posts'
receipts; which led ail the south 1 a
1912 in the erection of new buildings
which is second only to New Orleans
and barely behind her in clearing
house receipts; and the growth of i
which in banking capital and bank an- |
iosits has exceeded during th* pas
’in years any eity in the south.
“I have been gratified to see that
banking experts in New York, Bottom
and Washington have nearly a.!
agreed that the southeastern sectie’.i
should contribute one of th* res: rvr
districts and that a reserve bank for
the district should be located at A.
lanta.
“A reserve bank will in all proba
bility be located at Boston, one in New
York and one somewhere between New \
York and Atlanta. A reserve bank wdl*
naturally be located in Chicago, St
1
Louis and San Francisco.
“Beyond this 1 am not able to give
•in indication.
“There are those who have insisted
that we should have but one centra ,
tank. In working out this act we have
believed that there were advantages
h) avoiding the concentration which
would come from the existence of om
ly one bank. We were convinced that
tne division of the country into dis
t'icts would give to the different fed
ej al reserve banks a more complete
iecognition of local conditions an!
free our currency from the control by
localities at a distance.
“At the same time we have adopted jj
-i system of general control of the dif
ferent reserve banks through the feE
eral reserve board which will bring te
the system as a whole all of the ad
vantages of a central bank, while pre .
serving the advantages of localizatio*
the different reserve boards.
South Great Section.
“I have used the opportunity to pro j!
sent our section, with its wonderfuT
resources and its marvelous progress!
to those who are now engaged irl
studying tbe different portions of on |
country and I have found that it wa jl
necessary for me to arouse their im>
aginations to make them comp:ebdnJ®
how we are growing and what we ar Ml
capable of doing.
“1 have the utmost confidence in th p:
f .ture of our section. YVe have great!:
ir natural advantages than any othe !*.
section cf the union, arid this mean
of the world.
“While we invite the good men ofp
'• e balance of our country to com? 8
end settle among us, if necessary on • ff
cwn people, have the enterprise an
force to build this section.” 4$
STOP in ATLANTA
at HOTEL EMPIRE
Opposite Union Depot on Pryor
Street. Renovated and refurnished
throughout. Reservations made on
application. Hot and cold water,
private baths, electric lights and
elevator.
First class accommodations at
extremely moderate rates. Euro
pean plan 75 cents up.
•lohit I-. KdmondKon, Proprietor.
2 Houses for Rent.
7-Rooms, electric lights
baths and good sewerage
Both houses in good con
dition. Located on Sout’
Erwin street. Phone Nc
67. W. H. IELD.
—..
Money to Lend
on Farm lands. Low rate of intere
PAUL F. AKIN,
Cartersville, £n.
BUYING TO SAVE MONEY
Buying Foley’s Honey and Tar Cot'
pound saves money because just a fe
doses stops the cough and cold ai j
ore bottle lasts a long time. It quick, j
heels raw and inflamed surfaces, sto<|
tickling throat, harsh, rasping couglj
croup, hoarseness, bronchial and 1
grippe coughs. Ben. C. Gilreath Dr.i