There has been pending in Congress for nearly three years banking
legislation to clarify the national bank act and reasonably to increase the
powers of the national banks. I believe that within the limitation of sound
banking principles Congress should now and for the future place the
national banks upon a fair equality with their competitors, the State
banks, and I trust that means may be found so that the differences on
branch-banking legislation between the Senate and the House of
Representatives may be settled along sound lines and the legislation
promptly enacted.
It would be difficult to overestimate the service which the Federal reserve
system has already rendered to the country. It is necessary only to recall
the chaotic condition of our banking organization at the time the Federal
reserve system was put into operation. The old system consisted of a vast
number of independent banking units, with scattered bank reserves which
never could be mobilized in times of greatest need. In spite of vast
banking resources, there was no coordination of reserves or any credit
elasticity. As a consequence, a strain was felt even during crop-moving
periods and when it was necessary to meet other seasonal and regularly
recurring needs.
The Federal reserve system is not a panacea for all economic or financial
ills. It can not prevent depression in certain industries which are
experiencing overexpansion of production or contraction of their markets.
Its business is to furnish adequate credit and currency facilities. This it
has succeeded in doing, both during the war and in the more difficult
period of deflation and readjustment which followed. It enables us to look
to the future with confidence and to make plans far ahead, based on the
belief that the Federal reserve system will exercise a steadying influence
on credit conditions and thereby prevent tiny sudden or severe reactions
from the period of prosperity which we are now enjoying. In order that
these plans may go forward, action should be taken at the present session
on the question of renewing the banks' charters and thereby insuring a
continuation of the policies and present usefulness of the Federal reserve
system.