Birmingham state herald., 1897-03-04
TIME FOR CHANCE HAS COME Says StuyveSant Fish, an Author
 fly on Banking, / SOME OF THE HARDSHlPS Now Imposed Upon National and Private Banks
 Which Should Be Taken Off
 by Congress.

and vice-president of the Park National bank, of New York one of the largest banks in the United States, has given the Manufacturers Record of this week a comprehensive interview upon the need of better banking laws and among other things, says:
 The difficulties which solvent borrow | CTS encounter in the smaller towns of | the west and south, the great discrepancy | between the rates of interest charged | them when loans are at all obtainable
 and those prevailing at the same time in the money centers, taken with the sud- den and tremendous variations in the
 rates for money in New York during the past eighteen months, demonstrate that our banking system Is neither national nor national.
 The laws governing national banks originally show on their title that they
 were intended to provide a currency se-
 cured by a 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 a war measure this may have been wise and defensible, although it was cruel and unjust to the merchants to whom those banks owed first duty.
 
 scattered commercial point the laws are unwise, in that they make no use of the element of credit which necessarily IS
 the bases of banking. The law requiring a national bank to lock up $120,0Oo in government bonds in order to obtain the privilege of issuing 90,000 of circulating notes first diminished the available funds of every small bank by 'one-quarter or more, and then teaches those operating under it, especially men new to the busi- fn fax 1aay htrf ha afalr Qifacf pledge of securities rather than on legi- innate paper given by the buyer to the seller in a commercial transaction and indorsed by the latter. Loans on hypoth- ecation generally and naturally drift, through renewals, into making the bank a special partner in commercial manu-
 featuring and agricultural enterprises, if not also in street car and other railroad operations.
 That a bank must at all times keep in
 reserve a certain portion of its depositors' money is, of course, necessary. But the provision of the law that part of the re-
 serve may be deposited with other banks
 in distant cities, often places the reserve out of the control of the bank when it's needs are greatest. The law also creates congestion in the money centers. It also tends to leave the country banks at all shines without sufficient cash to adequate ly care for the legitimate demands of
 their commercial depositors.
 The further provision that when the
 reserve of a 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 all of
 the banks commercial depositors and
 necessarily to that of the bank itseR
 Figures are presented by MT. Fish to
 show by the diminishing capital of New York banks that the business there had not been particularly attractive He
 sketches a comparison of the banking system of the United States, England and France in which were revealed the advantages of the latter two and said: Why, then, this difference between our national banks and those of other coun- tries? Chiefly because. after thirty-four years of experience congress still insists upon keeping on the national banks the bonds and letters which it was through out necessary to put on entirely new and utterly untried institutions with small capital at the time when the govern- ments credit was none of the best, and the financial outcome of the war purely problematic."
 Mr. Fish suggests as remedies for ex- isting evils a law to establish safe sys- tenn of banking on credit and not on hypothecation, that the necessary cost of banking be made as small $ possible consistent with safety, by establishing
 branch banks and amalgamating the vast number of small concerns with limited means, and therefore, limited and un- known credit, into large institutions, that banks be 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 an amount equal to it's capital and surplus, less the book value of it's land and other permanent Investments and that the former be re- lieved of the requirement of holding 25 per cent. or any other fixed per cent. of their deposits in cash.
 'Ihe interest" continued MT. 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 ad- vocating an unsafe or even doubtful method of banking. What I have said, or may say, represents only my own i'm divdual opinions as a citizen having, or rather representing varied interests in many states in the west and south. Con- cerniDg those opinions, or their express sion, have had no manner of consu1a- tion or conference with my colleagues
 in the bank. Indeed 1t is manifest that the changes above advocated are not in it's interest, except in so far as evil can continue to happen to this country with out affecting so large an institutions; so
 also of the good to the whole country
 which will surely follow the release of
 the national banks from the swaddling
 clothes in which congress put them in
 1S63"
 ,Mr. Fish notes the mighty changes that
 have occurred in the country since the
 war as indicating the necessity for
 change, and in conclusion said:
 AS far as the mere safe-keeping of
 the money of the depositors, and it's
 prompt payment on demand is concerned
 the national banking system has worked
 better than any system of which the
 country at large has had experience.
 "As system of banking fon those en-
 gagged in commerce who base their oper-
 ations on securing from their banks lines
 of discount commensurate with their
 average deposits, the system has failed
 whenever severely tested.
 Tt failed in 1869--Black Friday--it
 failed in 1884. the Marine bank and the
 Meropolitan bank going under in New
 York It failed again in 1890 on the Earrings
 suspension in London; again in 1893 and
 again in 1S96
 T do n.. say That t,,e national banks
 or any great number Of them failed, but
 dc say that the reliance of merchants
 on their banks failed them at each of those times. and that the fault lies in