The morning times., 1897-03-04
FOR DETER BANKING LAWS
Stuyyesant Fish Gives His Views
on the Present System.
NOT NATIONAL OR RATIONAL
Interview Expressive of Practical
Bankers Opinions on the Ques-
ton English and French Sys-
tens Declared Supe rior to AmerI-
Remedies Proposed.

Remedies Proposed.
Baltimore, March 3.-Mr. Stuyyesant
Fish. president OF the Illinois Central Rail-
road, and Vice Presiclentu ftife Park n ationa |
Bank OF New York, one OF the largest
banks in the United States has given the
Manufacturers Record an intel esting
| interview. which is believed TO represent
the views OF the very inner circle of the
leading banking element OF New York, upon
the need Of better banking laws. Among
the suggestions Mr. Fish makes, AID Which
are calculated TO attract universal atten-
ton are these:
y lie ,iiriIcuiues which solvent tor
towers encounter in the smaller towns OF
the West and SoGth. the gyeat discrep-
ancy between the rates OF interest charged
them, when loan saTe at all ohtainabie and
those prevailing at the same time in money
CeuteTs, taken with the sudden aud ire
mendous variations in the rates Of our
money here in New York during the past
eighteen months, demonstrate that our
banking system is neither national nor ra-
tional.
The laws governing national banks
y
were intended to provide currency Sc
cured by pledge of government bonds,
and were framed in order to force the
old State banks, which had both capital
and credit, to support the governments
finances. As war measure this may
have been wise ana defensible, although
it was cruel and unjust to the merchants,
TO whom those banks owed first duty
4 g.F
widely scattered commercial people those
laws are unwise, in that they make no
use OF the clement OF credit, which neces-
Sarily is the basis OF banking.
The law requiring national bank to
lock up 100000 in government bonds in
order to obtain the privilege of issuing
$4,000 of circulating notes first dimin-
ishes the available funds Of every small
| bank 10y one-quartcr or more, and then
teaches those operating under it, espe-
Cialy men new To the business. to favor
loans by the banks against a pledge OF
securities rather than ON legitimate paper
given by the buyer to the seller in Com
mercial transaction and indorsed by the
latter.
Loans on hyrothecation generally and
naturally drift, through renewals, into
making the bank special partner iii com
merciaI, manufacturing and agricultural
enterprises if not also in street car and
other railroad corporations
THAT bank must at all times keep in
reserve a certain portion OF its depositors'
m0neyis Of course, necessary; but the pro
vision OF the law that part Of the reserve
may be deposited with other banks, in dis
tant cities, often places the reserve out of
the control of the bank whenits needs are
greatest. The law also creates congestion
IN the money centerS. II tends to leave the
country banks at all times without sufii-
cient cash TO adequately care for the legiti-
mate demands of their commercial depos-
itors.
The further provision that when the re-
serve Of bank falls below the per cent
named in the law, the directors shall not
make new loans or discounts, if strictly
and invariably followed, would. in every
| crisis, lead 10 the bankruptcy of all the
banks commercial depositors, and neces-
sarily to that OF the bank itself"
Figures are presented by Mr. Fish to
show by the diminishing capital of New
York banks that the business here had not
been particularly attractive. He makes
comparison OF the banking systems Of
the United States, England and France,
| in which are revealed the advantage OF
| the latter two, and adds:
''Why, then, this difference between
| our national banks and those Of other
countries? Chiefly because, after thirty
| four years of experience, Congress still
| insists upon Keeping on the national banks
| the bonds and fetterB which it was thought
necessary TO put on entirely new and ut
| tcrly untried institutions with small CAPT
| tai, at a time when the government S
| credit was none of the best, and the finan-
| cial outcome Of the war purely problem
| atical"
Mr.. Fish suggests as remedies for eX-
| listing evils a law to Iestahlish a safe sys
| tenn of banking on credit and not on hy-
pothecation, that the necessary cost Of
banking be made as small as possible, con-
sistent with safety, by establishing branch
banks and ANAL alganating the vast number
of small concerns with limited means, and,
therefore, limited and unknown credit,
into large institutions; that banks be di-
vided into two classes, those OF deposit
and discount only and those of deposit
discount, and issue; that the latter be
given the privilege of issuing circulating
notes to an amount equal to their capital
and surplus, less the book value of their
land and other permanent investments,
| and that the former be relieved of the re-
| quirement of holding % per cent or any
other fixed per cent OF their deposits il
cash.
1.-The interest," continues Mr.. Fish,
(which I have in one OF the largest New
York banks, much OF whose business is
with other national banks in every State
in the Union, would preclude me, If other
reasons were wanting, from advocating an
unsafe or even doubtful method of bank
ing. What have said, or may say, rep
resents only my own individual opinions
as a citizen having, or rather representing,
varied interests in many States in the West