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Let me trace briefly how this magic power was concentrated. Under the old banking system, before the passage of the Federal Reserve Act, the need for a common banking centre through which to “clear” inter-community and inter-state debits and credits, following upon the exchange of goods and the sale of crops, led the “country” banks all over the United States to maintain in some New York bank a considerable deposit of their funds, so that interbank transactions could be settled expeditiously and without cost by the simple device of drawing a draft against the New York account. The sum total of these country bank deposits in the metropolitan banks placed in the control of the New York bankers a vast reservoir of liquid capital. What should have been done with this money was to use it as the basis for financing the movement of crops in the fall and the exchange of commodities during the rest of the year. What frequently was done with it was to lend it to New York financiers for speculation in the price of crops and commodities, preventing the farmers and country merchants and small industrials from securing money at the times they needed it. Another use to which this reservoir of capital was put, was to lend it to the great industrial groups battling for supremacy in the fields of sugar, steel, textiles, railroads, and the like.