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Meixiber, Federal Reserve ^oaru.

Delivered at the Convention
ox' the
Oklahoma State Bankers Association,
Oklahoma City, Oklahoma,
December 10, 1919*



Gentlemen of the State Bankers* Association:
It is unnecessary for me to state ny fereat pleasure in meeting
with you. at this Convention.

I regret exceedingly that Governor Harding,

could not be here as you desired« May 1 ask you to let me come in with
you as a State Banker, for as you know, for twenty-five years this has
been ny business, serving a country-agricultural community and'I fesl
more at home.
I come not for the purpose of making a speech but to sit with you,
if 1 may, in conference and to have a chat with you regarding some things
of mutual significance and importance at this time. Indeed I regard it
as unfortunate to come here perhaps in a way representing the Board upon
which I have the' great honor to sit, and you may think that I speak from
the larger supervisory relations rather than with you as a banker. May I
assure you I do not - a desire to be of service to ny fellow-barikers, alcne
prompts me..My serving in this capacity however, as substitute today, is
not your fault.
It is a sigpal honor to meet with this distinguished gathering of rep­
resentative business men and bankers of Qfrlahoma, this great new Empire
of our country. The exfent-of your imsciense territory ana of your resources
with only thirteen million of your forty-three millions of acres of land
under cultivation, can hardly be measured.

Some twenty odd years ago it

was-my great privilege to spend some time here. .Your cities then were
small; your country new.

Transportation facilities of little consequence.

Today the evidence of your prosperity, of your enterprise and vision, over­
whelms me.
The rest of this country has learned to respect and honor Oklahoma
not only for your progeessiveness- and your enterprise, but because of your
Americanism so pronounced and so wonderful in the stressful days just passed*
A state that can produce in one year (1313) nearly three hundred millions

of dollars in food crops and 2f5G millions in oil and can pro.2u.ce and maintain
$120,7^9,000 of live ctor.Ir and have so potential a part in producing tiicse
things so necessary for the pregai-vation of life end for the comcsrce of our
naticn, is incomparable»

I a^j.rociate too that you not only represent this great

and significant volume of resources but that you men are the pioneers, the key
men, the leaders in your banks, in your State chartered institutions, rep resen tin g
eleven million dollars of capital and nearly four and a half milli ons of surplus
and the deposits of your clients approximating 150 millions of dollars.


figures are significant. And I would be indeed recreant as a citizen to come
to you with any mea&dge of pessimism, because these are days when we should
value the resources of cur c m lives and the contribution that the wwrld and
events have made to uo.

They are a challenge not to look Vaokward but only

forward to the opportunities and .privileges and blessings that confront us and
to en&CVJrage ourselves only because of the achievements of the past.
A writer recently says, "Pershing with the whole strength of his personality,
set himself the task of injcctlng this "will to win" into his exay. Nothing
typifies Pershing1s chprac ter sc/
as does the driving force t’
iat he put
into his campaign« He hai a plan of campaign, a aefinttp plan, and he stuck
to it through thick and thin, letting nothing come in the way.
" His officer* were made to feel this driving force.

"General Pershing has

ordered this and it's got to be done" - that was the spirit that dominated the
"Just two instances:
*An officer sent this message to headquarters.

"Unless I have reinforcements,

I oust surrender." Immediately the order went bade from Pershing: "Turn your
cemmand ever and report at fceadou2*:ters.n An ©fficj?r could ask for needed reinforceoacts, but he cculd not talk surrender.
" IVrsMng asked another officer:

"What condition are your troops in?”

"They are tired out. They are not in condition to continue in action."

-3" The answer was saapped:


s not your ieen that are tired out, it is you.

Show your men that you've got the stamina to hold on and ycur men will hold on
with you."
Quoting from an editorial in a Metropolitan Journal«
"We are besieged by an artcy of calamity howlers« The Boldaeviki is the

The nerves of these people go all to pieces when they discover scire

radical literature or a radical spcech, and they can almost name the day when
Revolutionists will overthrow our Government."
"We must silence those who would make us believe that we are to have a panic,
and to assert not only our courage hut our faith in our American ideals* If those
who had come before us hadn* t had faith and courage there would not have bean any
United States of America.

It is demanded of the Americans of today that they

have the sane faith and courage, if this country is to overcome any future diffi­
culties and be better and greater for the experience."
"We must have patience. We all hav’
e our ideas as to what should be done,
but they caxmat be realised at once* The United States end its institutions have
case through a century and a. half of change.
and further development«

It is going ^n *o

other changes

It is for us to concentrate on that fact with courage,

with faith, and patience»”
Why should our message not be one of optimism? Who upon this planet have
greater reason to be optimistic than the citizens of our Republic? Two years ago
or mere we were called in the Providence of God, I believe., to the great mission
of redeeming and saving the world from the despot and the autocrat to a larger
and more pronounced liberty than yet any of us of the hucan family have reached
or believed.
It is not possible that men could make the sacrifices in vain that our sens
have made in going with clear hearts and clean hands to help the oppgg&sed peoples
on the other side of the world. To us who have had some humble part

with them in the sacrificial thing, to go back to do our work in life as
before would be to dishonor ourselves.

It is our privilege as business

aen to occupy completely the sector that belongs to us.

Great trials and

obstacles and problems asay confront us but wLat. care we; this is what has
nade the hone and sinew- of ovx people* This it is that &as made our
country great. As we confront the new situation economically in this world
and as we launch our bark upon an uncharted se&, economically speaking, let
us remind ourselves that cur boys, new and untrained in war, for days &nd
nights lingered in the trenches before the ensmy, unafraid, and yet could
not go out to engage the enemy in c cribat because the time was not yet* But
when the word was given, trench or bombs or barbed wire or overwhelming odds
did not retard or stagger. With one voice tn-iy cried "Let us go". It was
this spirit, unconvertible, that made the *ssae ooitplete and qAick. When
America with its men arrivsa a new spirit w^s projected into the plans of
battle. It is this spirit that I would like to reflect, if I could, as we
think of our problems as bankers.

Vfc have a right to believe that the things

we have accomplished as a Nation and as men we cannot only dppli*?ate in the
future but can improve and enlarge.
Who would have thought that two years &30 or so that this nation could
have raised in money in so short a time a sum of thirty“two billions of
dollars« Twenty-two billions to equip our boys and armies in the fields, and
ten billions to loan to the Allied Nations. So you renumber that when it
was proposed to make the first war loan thi great financiers of our country
from N«w York said "The sum asked for under no circumstances should be larger
than a half billion of dollars; that it would be impossible to get *mor<S?r
The Secretary of the Treasury, struck the heart of the sons of liberty,
they not only gave a half billion but over ni^it added three and more full
billions. You men in this room aixd patriots like you all over the country,
have boon the leaders in accomplishing this.

-5 -


May I remind you that before we were called into this great conflict
and when war was declared on the ot’
ier side of the world, we owed the nations
of JPurcpe in trade balances about UOO millions of dollars» Besides this,
Europe owned and held in their strong boxed about fovr and a half billion
dollars worth of the securities representing the railroad and conmercial and
industrial capital of our covntry* The problem of paying nett only this debt,
but of toying back our securities which were being dumped upon the exchanges
was most appalling. But to be brief, Gent?,ensn, we not only paid this debt
but bought these securities back in the main*
I am sure from this brief recapitulation that I have given you a fair
reason «toy we should be optimistic as we approach the problems of the future«
The pioneer never was a pessimist.

The producer who sees the reward of his

labor is always an optimist and I appreciate today that 1 am facing not only
pioneers but producers« Men, you are honored to have to do with the greatest
producing class of America, namely, the farmer*
We hear roach these days about "inflation" and "over expansion" and
"deflation" of credit. Would not "credit regulation" be the better term?
It is perfectly obvious that with twenty-five billions of credit opera­
tions, represented by the Government bonds issued during the war, that for
a long time things will be abnormal and it may be fair to state that the
credit situation is inflated. This can only be changed by an absorption of
this debt by the savings of the people. This means econoncy and thrift and
saving on a no mean scale«
It is just as equally obvious that Anarica never had such opportunities
for production and when I say 'credit should be regulated1 I mean that avail­
able funds of the baciks in the Pederal Reserve System and all barks
should be wholly directed into the channels of production for the increase
of all commodities, the need for which is worldwide* and without pjc©oe<i5ivl'«
Bankers will have to become analists, to discriminate carefully



loans «dll be a daily task; they will have to stand as guardians and trustees
as never before in their b\i3 in ess to see that no fruads go for sp ecu latio n
whether it is upon the stock oaxkets, in couzoodities or in land or anything
else« The full power of all credit should fee conserved and be behind pro­
With patience and care A&erica will surmount all her difficulties«
Tine is essential«
You know our city friends do not fully understand tfur relations to the
economic welfare of this country. Too often they regard the dollar as rep»
resenting true wealth« This is not so. There is no wealth created except
by the laborer who produces an article to sell or the farmer who from the
soil or the earth produces sobs thing for us* to maintain and su sta in life*
And I consider it a signal privilege and honor to «peak to men who have to
do with the agricultural interests of our corn try.

I am sure that none of

us fully appreciate the significance of this. The country banker has without
question the largest opportunity of all other business men at this tine in
our country. You are to deal directly with the men who this year in this
nation of ours have produced ten billions of dollars worth of food crops
alone and who added an increase of live stock approximating 700 millions
of dollars»
I desire also to take you bade briefly into the financial history ef
cur own country as compared with your position today* I am reminded to do

as I have recalled for your oonsidnfttion the achieveoects of these years
and to state to yew. without any fear of exaggeration or contradiction that
none of these things could have he m possible if it had not been for the
Federal Reserve System* As I have stated to you, my banking experience has
been confined almost entirely for a qptarter of a eea+ury to a State chartered
institution« Hy life has been related almost entirely *o the activities and
business of the f«*nter and with you I have had the oxperience that every barker
has bad, not of going thrcu# a war but of going through financial war and
panics* With chagrin and eh&oe as a trustee of the people's money repeatedly
we have had to and refuse to give them their i«onsy when called for«
And I wish here to state that t am a firm believer in the position of the
State Banker in our economic life» 1 believe you have Just as distinct *
relation of importance io the people as the National Baak has* Each have
their place and «re should preserve the independent relations we occupy as
bankers, but if we wish to preserve this independence I ask for your
and careful consideration of what this relation has to do with the Federal
Beserve System at this time» Are you a participator in aid fo* the System,
or are you satisfied with being a beneficiary? 2s it of any concern to you
as a banker that you plqy into the gtoce end be part ana psreel of tbie fi­
nancial organism or that you superficially stend cn the side line, too often
to *
and yot partske of the wlessin* and benefits ana atfce no real

I do not come here today in any spirit of criticism, and as *

commenced, I desire to talk only as a State bo&er *"ith ny fallow state
backers, believing that we have a message for your ihougjfciVful consideration.
The remedy for our existing fL-iar*.oial. condition and the r»occurring paulc.:
in the financial history of ok ? country was plain to « U our Statesaen, but
because of centralised influences, selfish in the extreme, it was quite im­
possible for legislators to project a prcgraoire to retsedy this situation. I*
took a so-called University Professor, now the outstanding figure if* all tte



world - President Wilson - to not only conceive the plen in its fullness
and to add the necessary vision but also the necessary force to denana of
congress the enactment of th*o law establishing the FedarJ. Reserve System.
We shx’
-daer to think ’
'»hat our position would have been if this system
had not be^n ready when war broke' upon the world» Without doubt financial
chaos would have reigaed.
In the old days when tho stock gamblers would plan their little parties
and set the» wheels of speculation going, wh^n the game get beyond their
control, you will remeuber, they were playing with the funds the producing
people had on deposit, and when we desired these funds for their use, and for
legitimate puroosso to iacr3as3 production and care for our coox<unitles, we
were told that we could not have them and w: compelled to resort to one
device and another to care for our need. The Gklukouiu Bank had its reserves
deposited at Kansas City, and Kansas City in Chicago and the Chicago Bank in
New York. Thus were our reserves pyramided.

Never i^obolizad for use for the

day of stress. I an. not going to waste any tina tort^y talking to ¿ny luan here
who has not the vision to see *.he importance of this g^eat matter« The first
necessity if we preserve cur ind3penuent-->relationship as bankers to our own
institutions, and 'our a m cotaruaities, is the mobolization of our reserves
for use. When we commit them to another interest,

ssifish or personal,

they must of course be used for profit, and when sarce sure so used they may
not always be liquid enough to become available,
I do not believe it is necessary longer to try to prove to any banker
what it means to xtobolize reserves* This has bssn a proven fact and instead
of pyramiding as we used to in the old days we find now a foundation in the
mobolized re serve»s of the Federal Reserve System, upon which we can build
a. strong superstructure of credit. If the assistance of thege reserves in
the Federal Reserve System
not yet appealed to

you a« bein^ the foundation of your own business os banker» I shall
not waste tin» to 2x 500 further. It is obvious M l self-evident if
not ¿pprecii.tod* Tho lar~er contribution you make to those reserves,
the stronger your bank will bo
your community«

the ¿raptor your ability to s^rve

If you ure still on the side lines as I h-vo indicated,

you are still building -jpon the contribution ¿nd service of others.
Bo you thi:3c it vould be possible for Oklahoma to havo dons
hor noble vaA splendid purt in contributing $l6o,918,UOO for tiu nur
issue8 of Government bonds« vrhidh is» approximately 30 millions ~bove
her ¿Uotment, if it h^l not .been for this foundation laid?
In 1917» $25,693*556 worth of ps$er .»as rediscounted for
banks in Oklahoma by the Federal Eaoervo Bsaks ~t Xjtns.'£ City oriel
Dallas. Thcnin 1918, as tho of who Sj'stoa hid iuor-o
widely known ¿nd as score banks had become members, * total. of
$lUs,3^,SS6 was rediscounted for Oklahoma. For the first nine months
of 1919 the tot-^1 of p-?3r rediscounted was $2**,9^3,665«

In other

words, ths.t much mon3y was lo^axed to your state from outside-sources;
that much money was civen to Oklahoma* s Use bccvuse it has banks
prudent enough to Join tlu Feasrj.1 Bo serve Systeju XSirX «ill it be for
1320 if you do your ¿.*¿¿7 in production?
May I suggest here, Gentlemen, the need of the closest
analysis of all loons - that credit for speculative purposes, either
on stock exch&nge, in conrcodities’
or in l*nd, be denied*

A stem

situation confronts us. Trentyfive billions of Government debt has
been erected which must be absorbed by the savings of the people. Any
additional credit created other than necessixy for increased production,


i8 but ¿dii££ a hazard* This is your first duty &s As»ric*.*n
bankers. Lot us not inflate, but deflate in orderly fashion. T.'o
should ill be preachers ¿ni ¿oars in thrift and economy.
I need not tnlee isoro of your tino to revieur those funda­
ment'JL propositions« Tte iuve *t the precent tins in this country in
the control of the Federal Reserve System, over two billions of .old*
As near as c m be estimated* there is outside eòa» 600 pillions of
gold in the pockets of the people or in the control of st^te bsnks*
I appeal to you, gentlemen of finance, os the custodians of the
interests of your eomaunities, th^t it is self-evident -md highly
iaportint tiut this ¿old be deposited in the common reservoir for use
in the d~y of opportunity or stress tfcut muy be before us*
fthile wo are concerned for the d*y of stress, *v» oust
provide abundant resources to take ^vant^e of our present job as a
world power, to produce the necessities of life imjediatel? -nd in
volume as «re never have before, if the **orld is to be ou.ved from utter
starvation -nd finunciJL distress*
I know tiut there -*re alarmists in the covntrj** ®hc croaker,
critic, efficiency everts, .nd so c lied economists sre cIk^ts in
evidence. They were here when the Federal Reserve Systess v?r.s sstiblished, you «ill remember.

«hen the proposition*«»* conceived of

brining into the credit f vbrics of our country the liquid assets, the
wealth if you pl:ase, os represented by the note.» of the f~mor,
merchant ^nd m.Jiuf.-.cturcr, to bo available for currency, c-nd vdien
it was proposed, and as it is now a fuct, to put with this wealth
:.r;d credit of our people n additional Uo£.of cold to undcrly the
Feder J. Reserve note issue, many of these experts met and that


cu?wniy Mould lw ooiw too inflatsi ‘
.nd tlv*t v;e 'vould not hive ouou^i
¿old to hold tba structure up.

Lot xe rimind you a^-Aa of the volume
of gold no» in thefcountry, uai
our currency «&edium ¿»i of its vduo
as coopered .tith uny money standard in the .vorld*

But I w o l d further

remind you, if I Day, in & more forcible v.*^r, that for the first tice
in the hi8tory of our country the re «1 wealth as represented hy the
laborer .viid tho products of our «hole people and property «re aeobilized.
Yes, we hctve t!ie ¿old. Tie are a. creditor n~ti?n* Tfe have now *
foundation to bu*ld tho superstructure of credit, safe, deep '¿nd sound,
tfe hi.vo democratized our banking system - 12 cre~t tanks with bruichcs serving ¿11 our people, commorcially &nd ¿cogrqphicJly, i-nd not :ny
one ¿rovp, city or district* The Feder.vl Reserve System is tho
greatest single piece of constructive legislation ever placed upon
the statute* of our country*
© & doau.nd8 to bo nude upon us if we do our pvrt ar:» to be so
grsv.t thj.t rjaythi..? «3 c a; do to iucrcis«. production as th* l^jderc
representatives of the farmers should ha done -vith precision :md in
volume* The Federal Be serve. Act was passed to stabilize the industrial,
commercial and agricultural interests of our country* The* resources
of the System wore never calculated by the founders or by the Government
to be used for «peculation*

It has ^l<Tjys been the full purpose to

have the law so '-drninistored by the Bourd at Washington to ¿live
preferential r&tesufor all pupcr based upon commodities arii to provide
for the s.*fe, ordinary movement of sssae to tho markets*

If 'Q c -ji

as country boners, play our p^rt as leaders to see to it that our
customers, our clients, trill :.void 11 speculation in coaooditids ori.



that there is an orderly market at all tine3 , there never need be
a fear but What you can go on end increase without fear the expansion of
all effort to increase production« There may be soueone here who would
like to muddy the water and warn us about the danger of inflation.


fcrudent man in’
the banking business would fail to study end appreciate
this danger. The events of the past four years, however, will not warraat
any mun in susi-iisdfclly st«>tiu£ or proving tiiat we are suffering frcafo
over-inf lation of currency at the present time, - but over-inflation of
credit is a possible danger. May I refer Vriefly to the letter cf
Governor Harding to Senator McLean, dated August 8 , 1919»


"There has undoubtedly taken place during the lest
two yecrs a certaf.n amount cf crcdit expension which;*,
under the dreams fcnnces ccnnacted with cur war financing,
was inevitable, but this will be corrected as the
securities issued by the United Stat3 8 Government for war
purposes ere gradually absorbed by investors. This credit
exj^nsion is e^usi. to the difference between tbe total of
the wqr expenditures of ths Goverrimsnt on the one hand.
an-1 on the other, ths total saA<:«*u.v)l>8 raised b/ the Covsrrment
through taxation ur«i by the sale cf ito cb ^c-'jtionc so far
as paid for out of savings. TI;> r*lt&s»l« e^U^at- c .n be
made of this difference. Which rawt '¿ti ¿r run'si«.’
y cbowoed
through future savings for tfc/5 r-3as0.1 trut ’
f.uiJcs’ere landing
and will always lend freely on Goverrmutit bonjs as collateral."
I urge 4 upon every banker here to read that letter carefully
and to get is import.

1 again wish to state that I am f.n expansionist

or any other old thing that you may*wish to call it, tohen I say to you
that we can finance the farrier without li’
dt to increase his operations
to produce that which tne people may eat or weai without cny danger of over­
production. No man or economist lives in this world who can guage or
prophesy wnat the outcome will be economically in tr& countries of Europe,
so weak and broken down by the war, but one tning we may be sure of, this
slacic will never be taken up by our standing still or by piling up" reserves,
/gain let me state, real wealth is only produced, for problem is simple

and we should lejm our lesson as rapidly as possible. Produce more
spend less, economize and save.

I do not cods Lero to soli anything

or to solicit anything.. I may perhaps be rac.Jlng a feobl-3 effort to
advertise something worth while.


You remec-ber the story viiich is the foundation of HusseJl Conw?ell *s
great lecture entitled "Acres of Diamonds" which he gives so



plain to his audiences by illustrating hot; so muay people look for their
fortune, their £1 Dorado, sooeiShere else than whore Sod has put them to
work and achieve*. He tells how a farmer, I think it was in Africa, who
had heard of a great diamond nine sort»where and with all the allurement
and passion that cooe to him with the -overwhelming desire to possess an
immense fortune he sold his little farm and personal property and went on
a long search for the dionom mine. The purchaser of his furca one day,
while at the well wuteving his stock* discovered u glistening in th» sand
and upon investigation foraii a aiamond. . Cn f*>cthei investigation he fo’
more end to mrke a Ions story short the piTohf.s*jr of the farm \t?& th* o«ner
of the greatest diamond mine in the world.

Illustrating a great Its son

that we all ought to learn to value well our own possessions, our present
opportunities end 0'ir piase in life.

It would be well worth while to

think of this as citiZons of the Republic, out I would like to call your
attention to the other story as & basis for his other lecture ontitlod
"Five Million Dollars for thj Face of the Kooni

He commences this

lecture by telling the simple story of a r*n lying sick unto death in
one of our Easterncities, &iven up by physicians, surgeons and specialists.
He resigned himself to aie. An old lady in the neighborhood hearing of
his condition asjsed for a visit.

She prayed she might have the privilege

of serving some tea brewed from herbs she had gathered in the woods.
The result was, to make another story short, the patient begun to improv?,
soon was convalescent and began to realize he had a lease on life*


He began to study aad think of what he should do with his life so dearly
bought. Being a true philosopher, he decided to secure the recipe for
the herb tea which cured him* Es began to sell it to his friends, its
fane grew, soon he had salesmen and wagons on the rosd. He began to build
large buildings to manufacture and the world was blessed by the use of
this new medicine. His advertisements appeared on the bams and the
fences, on the sides of the roads and on places of prominence« Even the
Rocks of Gibraltar were plastered with advertisements of his medicine so
that the passengers an passing ships could read; on the mountains of the
Andes he dared to go« Cbe night his friends found him star-gazing, lt>oking up into the moon in all its brilliancy.

One bold spirit asked him

what he was doing, life sighed and said "If I .could secure the face of the
moon I would give five million dollars". He was asked "What fort"» He
said he would place five words upon the face of the moon so that all the
world might gaze, read and profit thereby. He was asked what the five
words would be that he would choose from the languages of the earth to
place -:here. What do you suppose were the words he would ’
jluce there?
The great lecturer, Conwe 11,after taking his audience to this point would
leave them and draw lessons from life as to what men was really placea
upon the earth for. Service.

The five words hid would place upon the
moon were the«e:"Elnd Good, Then
It". A simple but wonderful
thing which I have often thought we should practice. There is in the
heart of man enough good which if encouraged, corralled, coached end
coaxed would be sufficient to drive out all the evil or darkness«

I cna

here to advertise, if I may, a good thing.
I believe, Gentlemen, that from this war we have all bee on» better
men, better citizens, but I would like to apply this last thought to you


as State bankers, asKing for your good consideration of the benefits
that may cone to you by becoming members of the Federal Reserve System*
To those of you who as bankers qp^recifite the new responsibility
upon you as com&unity builders end as trustees of the people's rjonsy,
I ask for your very ccreful c onsiderd ion to the importrxice to you of
flrcing your banks into the Federal Reserve Systom, end having that close
complete relatiunship which assures absolute safety for the future»
whatever problems may be*. You will be a port cf a Ited.-.ral institution)
which is nation-wide, cohesive, a complete financial organization having
full respect for every interest of our people, in urgiinizttion controlled
by the strongest Government on the face of the earth* A system which
today consists of 7821 national bonks and li03 state institutions, with
a total ccgpitcl of $1,527,173,000 and a surplus of £1,312,305*000
and with total resources of $30,280,23^,000 indic&te a f inincial machine.
of strength and one of cooperative power without corapare. Jki institution
which has in its control over two billion dollars worth of ^old* the
greatest amount of gold ever assembled in the history of the world in
the control of any one Government.
Does it me<31 mything to you to be a real peart of such aa
institution; to be recognized by it and as part of it?
Save you taken time to secure the viewpoint of your depositors
when they once grasp this tremendous fact aid >s they draw checks upon
your institution upon which is printed the fact that your bank is & number
of the Federal Reserve System end that the check of theft customer passes
current aaywhere in the United States?
Tou may, if you pleas©, magnify sane of the scalier losses or
charges that you would have in joining the system, but let me appeal to
you as I h&ve tried to thus far, to get the largpr viewpoint of your



leadership as a banker and as a leader in your community. That you put first
things first. You may discover that this principle when once worked, out will
be not 'unlike the tides of the ocean.

They come in with unfailing regularity

and when they go out they take with them not only the great war vessels, mer­
chantmen, but the little dory and canoe are lifted alike upon tne bosom of the
tide. A well known philosopher put the idea something like this: "Just as in
religious hysteria a single text becomes a whole creed, to the exclusion &f
every other text, and instead of being itself subject to rational tests is made
the sole test of the rationality of everything else»"
I am confident, Csntlsinen, that if we v?culd give more attention te these
first things, like all our troubles, the small ones would all recede and be
Besides the enlargement of your business and the opportunity of service,
to say nothing about enhanced profits as a member of the Federal Reserve Systeu,
you would have the privilege of the rediscount at the Federal Reserve Bank, tc
care for all your needs with your customers engaged in commerce and industry,
and with your farmer customers on paper taken for not to exceed six months,
representing the actual activity of a farmer in the operation of his business*
The need for enlarging his operation is so great and so immediate that
there will be no paper coming to the Federal Reserve System during the next
five years that will be regarded as safer, as so fundamentally proper, as this

This-may mean to you, Mr. Banker., that you will have to change some cf

your methods in taking this paper.

It may be to your advantage to secure his

statement to his worth, briefly, in asking


.17for credit.

It may become necessary for him to attend to his paper

more promptly at maturity»

It may become necessary for you to change

your operations in taking this paper for six months instead of for a
year or more or upon demand. But if so, this will be distinctly to
your advantage.

I have often wondered why it was that State bangers

will sit back without m y seeming concern, allgw their competitor
perhaps in the National baking System to
himself with this
great parent institution of power and strength and position nnd go
after the business and get it, 1ufaen he could, have the sane advantage
that every national baaker has.and under the. law all the existing
advantages that hie may «»joy as a State chartered institution.
To be able tTo discount your customers1 paper by sending the same
as you do your cash items to the Federal Reserve Bank in proper form
to receive credit immediately. And also where the rates of discount
are certainly always advantageous«
I am not making a plea here f oii the sake of getting business
but only of showing up the actual advantages that would be derived*
Do you understand that what you would deposit with the Federal Reserve
Bank of your District would be an actual reserve upon which you could
build credit necessary for your operations and. which would never
be denied you.
As I stated previously, I believe in the independent relation­
ship that we have and prize as bankers. We can not tolerate a
branch bank system as it is hostile to the American idea.


This is one wcy to fortify your position; to use the Federal

as a reserve end to understand thut your locns can

be taken to this elder brother in the n«xt room and that you ciM
realize same in casn by t&king bock with you good Feaeral Reserve
I appeal to you, gentlemen, to give this question of the
privilege of rediscounting in the Federal Reserve System
serious und coreful consideration
I feel you have given it
thus far. The profit that you would make surely would take up any
slack that you woula lose because of the non-payment of interest
upon your balance.

¿¿&tn my I reminu. you chat yui»r reserve is not

only a reserve for the day of stress, but for increased opportunity.
I shall not attempt to argue with you.

If experience has- not

taught you this it will be a waste of time for me to continue.
Again may I inform you that you can ask for currency of the
or .
reserve bans
the brmch bam: and sane will be shipped to you
without cost, fully insured and express charges paid.
worth anything to you?

Is that


S also ‘
.vish to readncL you that y^u e:.n transfer funds by
tjlsgr-sph, ri thout jxponsc, to ~ny p^rt of the country*
It has been urged that you may be deprived of the eschtJ»..o -.vkich
you hj.vo been .xcustonsd to on clucks ¿ent you for collodion.


has been of course a knotty problem, but may I remind you of the
wording of the Act, v;hich Is explicit ind in f ..ct mandatory -jad
fcndar the recent ruling of the Attorney Goner .1 ox *fce United St ..toe
the Foder.*1 Reserve Bank c~n do nothing else but to see C;r.t th3 ch~d£s
coming to it '¿rc collcctod at par jaa they .re not permitted to pay
exchange. Tour recourse, if any, is to the Congress of the United
States, •'Jad not in criticise 01 the Board or B-nks.
May I refer you ¿¿»in to Section 15 ~t& ask for your serious
consideration and .Iso Section 16.
The Federal Reserve Banks sz required under Sections 13
~nd 16 of the Federal Reserve J>ct to reccive from macaber banks at par
deposits of current funds in lawful money, nati&nal b-rik notes, Federal
reserve notes, or checks and dr„fts,

t^on presentation, -nd

also, for collection, suturing notes .jad bills. There. 1*» a proviso
to this section which allows iiunb sr and non-msmber bunks to m.Jrc
reasonable charges "to be determined cjad regulated by the Federal
Reserve Board, but in no ease to exceed 10 cents per $100 or fraction
thorcof, basod on the totzJ. of chocks *nd drafts presented-tat any
one tin», for collection or payuent of checks 'Jad dr afts und remission
therefor by exchange or otherwise; but no such charges shall bo
rs.;de aralnst the Federal Reserve Jink?1. Tho Attormy 0;nir:.l of the
United States has construed this as au uaiAg th-t .»■F-dcr-1 Rcs.rvc
B'.nk c^ni'.ot lo ~..lly p-y ;j»y f jo to .ay .au&jr or non-m.nii^r b^nk for


the collection and resistance of ft c&eck.

It follows thervforo thut

if the Fedir^L Resjrre bunks <xe to ¿ive the service required of
thorn under the provisions of Section 13 they must 1» eases v;hcrc
b~nks refuse to reudt icr their checks At prjr ,us-2 soi:» other me^ns
of collection no nutter how ;xp.;nsivo.
The action of the various Feder-l Reserve banks in
.xtending tfcoir par lists h..s xot with the approval of the Federal
Rosorvo Bo^rd, which holds the view that unless the law should he
.¿tended by Congress the Federal Reserve banks nest use every effort
to collect «11 bonk bihocks received from sacc&or bcaiks, X par.
About 30 pur cent of the banks of this country, members
;jsd nonnssfeers, are new upon a par basis.

It will not be lon^ before

it will bo 100 per cent Jid th->n I predict that we will bo eskin^
ourselves the question "TThy didn't we do this before; why did we
stand in our own lijht ¿d step on our own feet on so ciecentu.’
y a
Finally, let us h..vo a fall unierst..ndinj of the wonderful
opportunities that ¿re before us as business nen not only to develop
our coanunitiee, increase the production us-on these f xaa, to auJce
living conditions h-^pier :aad our people core contented, but to enl-jr^e
our vision as business sun,for I am sure shat in a fc-.v ye.vrs hence «0
will find our deposits :aid our influence doubled end qu^clru led
b;e-usj of this larger application .jad relationship.
Tou ~rc ^11 f ¿mili ,r tv.lth the rules of the Federal Reserve
Systena. They precise, short -nd coa^lete and to reaind you x&nX
while there is criticise here.and, as there .J;v;y3 will be,



that you have not seen the national banks scrambling to get out of
the system. They fully ~pproci~te its benefits -nd nre reaping than
daily while I fear many of our State bankers ure sleeping at the
switch. It has cost our country a great treasure of blood and money
to have won this world war.* You htxve a right to expect the spiritual
blessings that will come from this sacrificial effort and we have
just as much right to reep any economic rewords that muy corns. Let
us h-ve an appreciation in our conduct as stewards of the people's
money for this heritage*
A short time ago I went with my children to the. great
Congressional Librnry at Tf-shington, the most beautiful building in
chiseled on
all the world. Som 2 great heart and mind has caused to be
marble short mottoes to be treasured ¿nd never to be erased. One,
my child wrote down, to my great pride, which I would like to pass
on to you as a thought worth your note. This is it: "IVc taste the
spices of Arabia; yet never feel the scorch of the sun that brought
them forth«M
Indeed it has cost much to make this Republic.

The man

of the ¡(evolutionary and of the Civil Wars and of the great World
TTar have felt the heat of the sun, they have paid the pric.e. To you
-nd your children will be the blessing of'ever tasting the fruit. Let
us be worthy of this heritage*