The Roanoke times. (Roanoke, Va.) 1897-1977, 1897-03-04

THE TIME FOR a CHANGE HAS
COME.
Baltimore, March 3-Stuyvesant
Fish, president of the Illinois Central
railroad and vice president of the Park
National Bank, of New York, one of the
largest banks i'll the United States, has
given the Manufacturers Record of this
week IL comprehensive interview upon the
need of better banking laws, and among
other things says:
1.-The difficulty which solvent borrow
ers encounter in the smaller towns of the
West and South, the great discrepancy
between the rates of interest charged
them, wnen loans are ut all ohtainable,
and those prevailing at the same time in
the money ccnterS, taken with the sudden
and tremendous variations in the rates
for money i'll New York during the past
eighteen months, demonstrates that our
banking system is neither national nor
rational
The laws governing national banks
originally showed in their title that they
were intended to provide IL currency
secured 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 Il war measure this NAV
have hecn wise and defensible, n Though it
was cruel and unjust to the. merchants TO
whom these banks owed IL first duty As
II scheme for banking for great and
widely scattered commercial people these
laws are unwise, in that they make no
use Of the element of credit, which neces.
sarily is the basis of banking. The law
requiring national bank to lock up
300 UD0 in dc IN,
obtain the privilege of issuing $50, 600 of
Gil culating notes diminishes the available
funds of every small bank by one quarter
or more, and then teaches those operat-
ing under it, especially men new to the
business, to favor loans by the banks
against Il pledge of securities. rather than
on legitimate paper given by the buyer TO
the seller in II commercial transaction
and endorsed by the latter. Loans on
hypothecatiOn generally and naturally
drift, through renewals, into making the
bank special partner lin commercial,
manufacturing and agricultural enter
prises, if not also in street car and other
railroad corporations.
That Il bank must at all times keen i'm
reserve II certain portion of TIE deposi.
tors money is, OF course, necessary. But
the provision of the law that part of the
reserve may be deposited with other
banks, in distant cities. often places the
reserve out of the control of the bank
when its needs are greatest. The law
also creates congestion in the money CEN
ters. 1t also tends TO leave the country
banks ut all times without sufficient cash
TO adequately care.f for the legitimate de-
mnndS of their commercial depostors.
The further provision that when the
reserve of II 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 to the bankruptcy of ali of
the banks commercial depositors and
necessarily to that of the bank itself
Figures are presented by Mr. Fish to
show by the diminishing capital of New
York hanks that the business there had
not been particularly attractive He
sketches comparison os the banking
system of the United States, England and
France, in which we're revealed the ad.
vantnges of the latter two, and said
why then, this difference be tween our
national banks and those of other coun-
tries: Chiefly because. after thirty-f four
wears of experience, Congress still insists
upon keeping on the national banks the
bonds and letters which it WAS thought
necessary to put on entirely new and
utterly untried institutions with small
capltaI, NJ Time Wnen the HONcl umentf s
credit was none of the best and the
financial outcome of the war purely
prCblematic.'
Mr. ish suggests ms remedies for cX.
listing evils II law to establish Il safe syS.
TEN of banking on credit and not on
hypothecation that the necessary cost of
banking he made no small as consistent
with safety by establishing branch banks
and matchmaking TIE vast number of
small concerns, with limited means and
therefore, limited and unknown credit
into large institutions; that banks he
divided 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 the amount equal to its capital
and surplus, less the book value OF its
land and other permanent investments,
and that the former bc relieved of the re-
quircment of holding p per cent. or other
fixed per cent. of their deposits in cash
The interest, = Continued Mr.. FISH
which have in one Of the largest of
the 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 Il doubtful
method OF banking.
Concerning those Opinions. or their
/ expression, | have had no manner Of cen
sultation or conference with my coll
leagues in the bank. Indeed it is mar
ifest that she changes above advocated are
not in its interest, except in so far us no
evil can continue to happen to this coun.
s-.'>.nS