Rechartering

Secretary of the Treasury Andrew W. Mellon is scarcely a short-sighted man. He is already looking forward to 1935, when the 20-year charters of the Federal Reserve Banks expire. Mr. Mellon pointed out, last week, that the latter institutions can exist only as long as their present charters permit, unless new legislation is enacted; otherwise Banks must close their operations in 1935.

It may seem that 1935 is still rather far off. However, Mr. Mellon has reason to know how slow is the progress of even the most necessary legislation in Washington and doubtless wishes to get a good running start now.

Also, as he himself admits, it is important to recharter the Banks in a period of prosperity rather than during a depression, when opposition to renewing the Reserve charters will be strongest.

The Secretary, by alluding to the failure of Congress, in 1836, to renew the charter of the second Bank of the United States, showed that he wishes to avoid the consequences of that political action of almost a century ago.

At that time, Nicholas Biddle of Philadelphia was the guiding spirit of the second Bank of the United States.

Biddle unfortunately became embroiled in a long controversy with President Andrew Jackson, who thus set his face against continuing the Bank, and in 1836, carried his point. The result was the panic of 1837 and a disorganized currency and banking system for almost 83 years.