New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-07-17
IlfPOIEN1 L1UMAHING.

When the Bank Charters OIL passed the
Senate with Objectionable features that caused
some alarm, The TRIBUNE stated that
those features would "prOve void or
practically imperative" and said, The clause
designed to prevent certicatOns of checks
% for brokers will do no harm and no
good, because it can easily be Obeyed in let
ter and spirit both without any diminutiOn
Gin the practice" 1t did not take the banks
one hour to devise and adopt method of af-
fording precisely the same facilities to GUS
toners as before without disregarding the act
in any particular. Perhaps the folly of attempt
ing by law to regulate business of which the
lawmakers know nothing was never more
clearly illustrated. Of course, congressman
will never be convinced that they are not SUI
premely wise and the banks supremely wicked.
But the banks have absolutely obeyed the law /;
they do not certify checks without actual
money in hand to meet them. Their right to
accept drafts prior to the receipt of money Tor
their payment no law has yet attempted to
take away, and if any such attempt should be
made, at least hundred other forms of
reaching the same end could be successfully
devised. The bottom fact of the matter
is that it is not possible to prevent
n bank or an individual from lending
| money or giving credit without other Sc
curity than the known honor and per
sonal interest of the parties. The only security
that can possibly be given against the loss of
money by unsecured advances is the self-inter-
est of those who lend, and that is an infinitely
better security than any that legislation could
supply, even if lawmakers were as well in
! formed as they now ignorant III regard to
the business which they try to govern.
So long as the banks do not feel that it is
! for their interest to check the practice OF uDse-
cured advances to brokers, that practice will
he continued in spite of any legislation. The
banks which keep up this practice justify
| themselves by showing that III actual eXpe-
rence for many years advances of this class
| have proved much less dangerous and have
| involved much less loss than ordinary CONNER
cial loans. Undue expansion of credits in
either direction, they admit, may do mischief
and involve risk but the initiation of CONNER
cial credits raises prices of commodities and
the cost of living and may bring disaster to
the whole industrial and financial system, while
excessive advances to spectators in securities
| bring their own swift cure in a reaction on the
Exchange, merely transfer money from one set
|
business very little. These pleas have some
force, no doubt, and yet the good sense OF the
bankers of this city, we believe, is steadily
leading them to favor decided change in
their modes Of doing business. 1t is really
most unsOund to say that particular form OF
risk ought not to be avoided because some
other form remains that is greater. The duty
and the interest of bankers should lead them
to avoid all risk as far as possible TO protect
the business of the country wherever they can
from the evils that excessive expansion OF
credits is apt to produce. If it is practicable,
then it is duty to avoid any risks and evils
that arise from the present mode of doing
| business
II is the general opinion that better and
safer mode of effecting the exchanges incident
to dealings in securities can be devised. Per-
haps the proposed clearinghouse for stocks
NAV not be the best mode discOvcrable ; GER
| IA nly il seems TO involve dISadv antages which
have not been entirely obviated thus far. But
some mode Of separating this business from
other financial operations, and saving great
part of the inconvenience risk and loss now
involved, is certainly practicable, and bankers
are wise in giving especial attention to the
subject at this time. Having shown that Con-
grees is incompetent to mend matters, the
bankers ought next to show that they are
competent
The attempt of Congress to regulate
the Clearing House Association in the mat
ter of silver certificates was a piece of su-
preme folly, which has also come TO gIiAf-