The times. [volume] (Richmond, Va.) 1890-1903, 1897-03-04
BETTER BANKING LAWS.
MIR. FISH POINTS OUT THE WEAK
HEssEs or THE PRESENT SYSTEM.
Issues Should BE on Credit and Not on
Hypothecation-Branc Banks Advo-
cated-Changes since the War.


stuyvesant Fish, president OF the Illinois
| Central railroad and vice-president o
| the Park National Bank OF New YORK
| one of the largest banks In the Unitet
] States, has given the Manufacturers
| Record OF this week a comprehensive
| interview upon the need of better bank
! ing laws, and among other things says:
THE difficulties which solvent borrow
| ers encounter in the smaller towns Oh
the West and South. the great discrep,
ancy between the rates or interest,"
| charged them when loans are at all Cd
| tainable, and those prevailing at tne
| same time In money centres, taken with
! the sudden and tremendous variations IN
the rates for money in New York during
the past eighteen months, demonstrate
that our banking system is neither ma
tional nor rational.
ORIGINAL INTENTION.
THE laws governing national banks
originally showed in their title that they
were intended to provide currency Sc
cured by a pledge OF government bonds,
and were framed in order to force the
old State banks. which had both capital
and credit, 10 support the government !
finances. AS a war measure this may
have been wise and defensiDle although
1t was cruel and unjust TO the merchants,
10 whom those banks owed a first duty
AS scheme OF banking Tor a great and
Wldeiy-scattered commercial people, these
avs are uhWSe, IN that they make no
use OF Inc element OF credit which ne
cessarily Is the basis OF banking. The
law requiring national bank 10 lock
up Sl<O,VVV In government bonds in order
10 obtain the privilege OF issuing $40 UOO
Oh circulating notes nrst dimlnIshes the
asailaoie FUNDS OK every sinau bank by
OHe-dudIter OF more, ana then teaches
lhose operating under II, especially men
~" ~ 1ho business, 10 favor loans py the
paihs against pledge Of securities ratn-
:. man Vn legitimate paper gwen to the
Duyet Ny the seller IN a commercial trans
actiOn ana endorsed by the latter loans
On hypothecauon genrraIIy ana naturally
uili'' through renewals, into making the
jam a special partner IN comm.rcIal
manufacturing, ana agricultural enter
pttoes, II not also in street car and other
IaliiOdo corporations.
BANK RESERVES.
mat bank must AZ all times keen In
reserve certain portion of The denost-
'oTS money Is, OF course, necessary Hnt
inc provision or the law that part OF tba
reserve may be deposited with other
banks IN distant cities, often places the
reserve out or the control OF the bank
~nen us needs are greatest. The law
,Ies; II also tends TO leave the country
DdhAs AT all times without sufficient cash
~ adequately care for tho Legitimate de-
mands OF their commercial depositors.
Inc further provision that when the
reserve OF bank falls below the per
cent named in the law the directors shall
not make new loans or discounts IN
strictly and invariably followed womb
In every crisis, lead 10 the bankruptcy
OF all OF the banks commercial deposi-
tors, and necessarily to that of the bank
itself"
Figures are presented by Mr.. Fish to
snow by the diminishing capital OF New
Ia hnT o. 49,.
not been particularly attractive lie
sketches a comparison OF the banking
system OF the United States, England ana
france. In which were revealed the ad-
vantages Of the latter two, and said:
why. then, this difference between
our national banks and those of other
countriesy Chiefly because after thirty
four years Of experience, Congress still
insists upon keeping on the national
banks the bonds and letters which il
was thought necessary to put on entirely
new and utterly untried institutions with
small capital, at a time when the govern
ments credit was none of the best, and
The financial outcome Of the war purely
problematic."
CREDIT. NOT INTERPRETATION.
Mr.. Fish suggests as remedies for exist
ing evils law TO esta blish safe system
or banking on credit and not on hypothe-
cation, that the necessary cost Of bank
ing be made as small as possible, consis-
tent with safety, by establishing branch
banks and amalgamating the vast num-
her OF small concerns with limited means
ana, therefore, limited and unknown Gre
dit, into large Institutions that banks be
divided into two classes, those Of deposit
and discount only and those Of deposlt
discount and issue, that the latter be
given the privilege OF issuing circulating
notes 10 the amount equal TO its caDital
ana surplus less the book value OF it's
land and other permanent Investments
ana that the former be relieved of the
former be relieved Of the requirement OF
holding 70 per cent. or any 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-
II DINER reasons were wanting, from advO-
eating an unsafe or even doubtful method
or banking. What I have said. or may
say. represents only- my own individual
opinions as q citizen having. or rather,
representing. varied interests In many
States in the West and South. Concern
Ing those opinions. or their expression,
have had no manner OF consultation or
conference with my colleagues in the
bank. Indeed. Il is manifest that the
changes above advocated are not In It's
interest. except In so far as no evil can
continue to happen 10 this country with
out affecting SO large an institution. so
also OF the gocdto the whole country.
which Will surely follow the release of the
national banks from the swadd.ing clothes
in which Congress put them in 1853"
CHANGES SINCE THE WAR.
Mr.. Fish notes tho mighty changes that
had occurred I'm the country since the
was as indicating the necessity for
change. and I'm conclusion said:
"As far as the mere safe-keeping OF the
money OF depositors and its prompt pay
ment on demand Is concerned. the national
banking system Is worked better than
any system OF which the country at large
has had experience.
"As system Of banking for those en-