Savannah morning news. [volume] (Savannah) 1868-1887, 1884-08-15
rnE nANKERs, coNvENrIoN.

THE BANhEst&Sf 0ON v EANIlONs
Opening Address Of President Gage.
SARATOGA. Aug. Is.-The following are
the salient points in the address of Presi-
dent L. j. Gage, of Chicago, at the open
ing session Of the Bankers Convention on
Wednesday last:
Upon me has been imposed the pleasing
du Y Of bidding you welcome to this the tenth
annual meeting Of the American Bankers.
Association. The association is TO be con-
graduated on 50 large and respectable re-
presentation, AMI YOU who are here present
are TO be congratulated that You have had
the courage and good sense TO break away
from ofhee and desk 10 indulge in this pleas
ant reunion. to take part in the agreeable but
important work we have before US. as look
into your faces can see the lines OF care al
ready softeulng under the influence Of mutual
words Of greeting and goodwill. rms Valu-
able, ii incidental. feature to more serious
labors it must be the desire Of each OF as 10
improve.
As an association we are yet young. Nine
years covers cur entire history. We can as
yet point to no distinguished achievement,
but II we consider the progress made from
year TO year IN advancing correct ideas ana
in opening questions for future realization,
these give strong assurance of future good.
Large questions in our national finances re-
main to be settled. Questions touching at 8
vital point every industrial interest. and az
ton our own future we'll being. The national
debt, taxation, coinage laws, the currency OF
the future, bankruptcy legislation, these are
3 few Of the subjects upon which we should
gain wise and just views. and to procure the
proper settlement of which our judicIous intu-
ence should be exerted.
AT present we meetin the midst OF some OF
the most interesting and most important phe-
nOmena of finance, the result OF what Is popu-
larlY known as a panic. A panic Is possible
at any time 1t means an unreasonable fear
amongst great mass OF people. AT sueh
times men doubt everything. Ihey dlstrust
their own judgment. and refuse to act, or II
they act, it is in a wild and unreasonable man
Rer. Your memories are yet allve with the
financial panic Of May last. The causes which
led up TO it, the course and range of its action,
the results which have followed and will fol-
low. must excite our deepest interest. A
proper understanding of us causes VIII sug-
gest valuable safeguards for the future. Its
course Of action. il lrly recorded, would
become most valuable reference in similar
periods hereafter. To comprehend its full
and final effects is important to rs all. AS the
physician is called upon IN ordinary periods
to deal with ordinary troubles. but must be
prepared in times of epidemic to deal wisely
with extraordinary cases to which he is not
accustomed. so we. dealing with the body
polite. must be ready to act well, not only in
the ordinary course of banking affairs, but
also in the extraordinary periods when mems
fears and unreason are epidemic.
The bank is a convenient and economical
medium, and upon 1t the commercial and in
dustrial system comes at last to depend. II
cannot, in a moment, find any substitute
therefor. If this is closed confusion ensues,
confidence is lost and disorder and panic be-
gin.
am not setting forth any new doctrine in
affirming that the true remedy for panic ii
OF 4 twO-fold character:
l. The maintenance, in ali ordinary times,
of adequate cash reserves.
2. A liberal use of the cash reserves in
times of panic by judicious loans.
n -
reserves for banks located in the s0-called re-
demption cities at Is per cent. of their de-
posits, one half OF which may be redeposited
| with approved New York city banks. and
| final holders Of an important part Of all our
| bank reserves. For national banks located in
| the city of New \ Ork, full reserve in legal
| oney of % per cent. is by the law required
Experience, / think, proves that if applied to
| the New York banks as holders Of the final re-
| serves, this minimum Is too small 1t is not
| an adequate cash reserve. 1t does not furnish
| the proper sense OF strength and security tC
| the banks themselves when the hour Of trial
| comes. The result of experience is the final
| test of every theory and every action, and
| guided by this test the minimum Of p pei
| cent. is too small. A larger ratio should be
/ voluntarily adopted.
The New York banks. as body. are the Ill
/ innate or final holders of the cash reserve
/ They bear to the banks Of the country a rela-
/ tion similar to that of the Bank Of England
| in its relations to the British banking system
/ AS has already been seen. experience ha:
4 taught the Bank Of England its true duty and
/ Its path of safety. 1t always lends in pane
/ more freely than in ordinary times. Its re-
/ fusal in a time Of financial alarm to make ad-
\ vances on customary securities would shake
/ the whole financial fabric to the ground. Two
things however, distiu uish it from any
| bank or body Of banks in this country:
| l. The power to raise tie rate Of interest
/ without limit.
2. The power to issue its own notes.
1t is at last, perhaps. choice between
1 evils. 1t may be dangerous to loan. 1t i:
/ more dangerous TO refuse.
A panic is an agent of destruction. Left to
run its course, ike confagration, it will
| cease only when all it feeds on Is destroyed.
| With approved engines, we put out lncipient
| fires. With improved guards, we have
| brought down the percentage of steam boiler
explosions to a practical nullity. Dynamite
| is transferred in safety from one end Of the
| country to the other, to do useful work IN
| quarry and mine. Electricity lies under con-
troll, and lights Of 29,000-candle power turn
night into day.
banker VINO should try the remedy OF ex-
pansion, when all his neighbOrs were enfCrc-
ing contraction. might soon find his reserves
transferred to his neighbours vaults.
The principle does not admit OF partial aP-
plication. 1t must be thoroughly embraced
and generally acted upon, or 1t viii fail.
II these reflections upon the remedy Tor
financial panics are justly founded, four gen.
eral suggestions are in order:
l. The keeping Of cash reserves considerably
larger than rs per cent. in ordinary periods
by banks in the reserve cities.
2. A repeal of the usury laws-thus leaving
the price of money to be regulated. as are all
other commodities, by the law Of supply and
demand.
8. 4 removal OF the injurious restriction
now imposed by the national bank act. A re-
strici ion which if observed in time Of panic
will prejudice the bank and imperil all busi-
ness interests.
4. The adoption OF some rule to secure a
uniform practice in loaning freely IN times OF
panic out Of the cash reserves.