The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1895-07-20
SEATTLE, SATURDAY, JULY go.
THE SYSTEM OF BANKING.


Although tho United States Is powerful
enough TO put into operation any govern
ment machinery which affects only fits own
people. and Is powerful enough to extend
abroad any institution which does not re-
quire a contractual relation 10 sustain 1t.
there lis no want Of patriotism in seeking
20 profit by the wisdom as well as by the
mistakes OF other countries.
The American people are suffering from
a disturbance in commercial conditions.
There are few people who will deny.
whatever their opinion on coinage may be.
that there is something lacking I'm our
monetary system. Outside OF the very
few people who traffic in money. and
whose interest is served by instability OF
values. there Is generally recognized
need for better system. An international
money Is one of tho needs; but the enor-
nous cost OF recoinage stands in the way.
We cannot hope for that desirable result,
but an international agreement as to the
proportion 10 the quantity or gold is not
by any means a chimerical notion.
The greatest need rs better system of
circulation. Our currency system is UNI
like any other in the world, and although
It has some features in common with those
OF other countries. the main differences
are so great as TO practically stamp IL as
unique. There is no parallel 10 our green
back system. 1t is a relic OF war times. OF
treasury bankruptcy. and 1t menaces our
credit. Our bank note system is also peeu-
liar TO this country. The Bank of England
issues notes backed by government secu-
rifles. which are practically never pre-
sented for redemption. II also issues a
certain quantity OF notes based on an aver
age gold reserve.
President Walker. OF the Canadian
Bankers Association. who was a guest
at TIE recent bankers convention, gave an
account OF the Scotch system az banking.
which he considers preferable even 10 that
Of England. The vital principle OF Scotch
banking is credit. and It's employment In
stead OF capital as a medium or exchange.
How far this system has been perfected
may he seen by glance at their statistics
which show that deposit account Of more
than fSo,onooo0 IS carried on gold reserve
Of less than 5000. coo II il carried safely.
too. There have been only three hank
failures I'm Scotland IN 40 years. The AYR
bank failed In lT72. the Western hank in
1881. and the city OF Glasgow bank IN 1878.
and IN none OF these cases were there any
losses n noteholders. not even by de-
probation. How IS IL possible. he asks
for deposits TO be KEEP, at par with
gold when the latter is only rer
cent. OF thu former? The answer ,S
found In their system OF branch hanks
Tho banks are ten In number and
they havs altogether aoo branches Tba
ROYAL hank alone nas - branches. Every
hamlet in the country has SIS branch hank
or mere than one. All discounts All ..co.h
credits" al deposstors' checks AZ the
branches are rata IN the notes OF The ha,t
which are fcdeernahis IN gold AZ the head
eff'ce. Therefore e s. not necessary n
Keep goli AZ any other place than ire head
once. but 81 practice. ~ anybody wants
sold AZ branch bank he can get e.
The principal advantage IS fHat the
banks are able 80 ru, the surplus capital
Of business centers 1T the servtce Of the
country districts. ana 81 serves 70 >,,allra
the rate OF tnteres. on equal security.
TIE Canadian system Is better even
than that 90 Scotland in country Ike
this. TIE United States IS too large sor
any considerable extension og branches
ana. without any alSrcSpcct 70 our eau
tieUs aaa conservative cousins. they are
a ittle 100 much in8sHoss~d q risk -
NEE; American requirements. An Amer
Iran hank which sougs; 90 30 business
ouly on Scotch methods would - regaF-i-
ea as ola tNgy,sh and wcuia - tyiven
out OF business ~ SIS more enterprlsinsy
competitors. The Csnaalsn rle;hra ~
fnsr~ction IS hesteg than ours ard always
Will ee until speo.si fitness and experience
IN ere values - lScsl securities are
esteemed mere hss'hly than political ser