America's Money Machine

The Bill Considered 71
question to the public, and the Committee continued to hold hearings in
a well nigh futile attempt to resolve its differences. The American Bankers
Association convened in Boston that year on October 8, but the day
before the formal opening a pre-convention conference ofsmall bankers
-banks with less than $250,000 capitalization-was held with about six
hundred country banks represented, and this conference adopted resolutions
ofprotest against the bill. These protests were seconded by the full
convention, representing some two thousand banks, and the Currency
Commission of the Association brought in a resolution "that the bill in
its present form imposes unwise hardships upon the banks and equally
unwise hardships upon the general public." In his opening address the
acting president of the Association, Arthur M. Reynolds of Des Moines,
declared:
Weare facing proposed legislation which I can hardly regard as less than
an invasion of the liberty of the citizen in the control ofhis own property by
putting under government management enormous individual investments
and a branch of the country's business which should be left to individual
effort. ... No nation in the world has ever found it necessary to assume such
broad powers as are contemplated under the new bill. 3
The Times in an editorial stated the case:
After the proceedings in Boston it will require hardihood to maintain that
only the big banks are opposed to the pending banking bill.... Big banks
would not be listened to in arguing that their profits would be prejudiced
against the counter proposition that the country would be benefited. The
country is thinking of larger things than the bankers' commissions, large or
small. The issuing and redemption of currency, the control of banks by
government as administrator rather than as regulator, the trusting of credit
accommodations to distant sub-treasurers rather than to neighborhood
bankers ... these are all topics larger than the rate of bank dividends. 4
It was now apparent to the Administration that further changes would
be necessary. Among those demanded by the banking community were:
a reduction of the proposed regional reserve banks from twelve to not
more than five; the note issue to be an obligation ofthe banks rather than
of the government and the notes to be redeemable in gold rather than
in "gold or lawful money"; finally, that small banks should be relieved of
compulsory subscription to the capital stock of the reserve banks.
Unfortunately, the bankers' drive was blunted by a division among
some of the leading bankers. Frank A. Vanderlip, president of the National
City Bank of New York, came forward with a proposal for a single
central bank with a board ofdirectors all appointed by the President and