Completing the Reform of Our Banking System

• Author: George J. Seay
• DOI: 10.1177/000271621606300113
• Date: 01 January 1916
• Published date: 01 January 1916
• Subject Matter: Articles

142

COMPLETING

THE

REFORM

OF

OUR

BANKING

SYSTEM

BY

GEORGE

J.

SEAY,

Governor,

Federal

Reserve

Bank,

Richmond,

Va.

Any

change

in

the

economic

practices

of

a

nation

of

such

vital

importance

as

the

adoption

of

a

new

banking

system

and

the

con-

sequent

changes

in

banking

and

commercial

credit

practices,

which

will

undoubtedly

be

involved,

must

require

some

reasonable

time

for

the

adjustment

of

the

minds

of

those

most

directly

concerned

-the

bankers.

‘

This

remains

true,

notwithstanding

the

thoroughly

known

fact

that

we

have

been

working

towards

this

change

for

some

years,

and

the

further

fact

that

the

law

finally

enacted

was

discussed

from

one

end

of

the

country

to

the

other.

Its

principles

are

understood,

but

it

is

the

practical

working

of

the

law

which

is

now

being

studied.

The

national

banks

were

swept

into

the

new

system

by

opera-

tion

of

law,

but

they

constitute

a

minority

of

the

banks

of

the

country,

both

in

numbers

and

resources.

What

magnitude

the

development

of

the

federal

reserve

system

will

attain

will

therefore

depend

upon

the

entry

of

the

state

banks.

What

is

the

present

attitude

of

the

state

banks?

The

liberty-

loving

people

of

this

Republic

are

impatient

of

either

restraint

or

regulation

of

their

personal

or

business

affairs,

and

their

experi-

ences

with

excesses

of

regulation

of

business

within

the

last

ten

years

have

not

deadened

their

sensibilities,

but

the

contrary.

Regu-

lation

is

yet

on

the

increase.

Organization

of

bank

resources

is

far

more

the

keynote

of

the

federal

reserve

system

than

regulation,

but

it

seems

clear

that

the

thought

of

regulation

is

at

present

the

cause

of

hesitation

on

the

part

of

state

banks,

particularly

the

large

state

banks.

It

matters

not

that

the

national

banks

may

have

been

regulated

to

their

own

good

and

the

good

of

the

country,

and

that

state

banks

in

some

of

the

states

are

now

strictly

regulated.

It

is

combified

regulation,

or

too

much

regulation

which

is

feared.

One

of

the

purposes

of

the

Federal

Reserve

Act

set

forth

in

its

title

is

to

&dquo;establish

more

effective

supervision

of

banking

in

the