Evening star., 1900-10-03
He Talks to the Bankers in Rich
mond.
MODERN METHODS 0F FINANCE
Varied Devices Which Have Been
Tried in This Country.
THE MONEY M A R K E 7

Ellis H. Roberts, treasurer of the United
States, made an address this afternoon be-
fore the American Bankers Association,
now in session in Richmond, Va. He spoke
as follows:
The American Bankers Association rep
resents in resources ten billion dollars,
which is more than double the banking
power of any other country in the world.
You are the guardians, the administrators,
of this enormous active capital. He who
appears before you should recognize the
honor and the responsibility. Let me ex-
press my deep sense of both. In response
to your invitation perhaps you will be will
ing to hear brief discussion of the rela-
tions between the treasury and the banks
as SUCH as they have been and they
Early English Practice.
The attitude of governments to the money
market has been, in all lands, in the large
majority of cases, that of the borrower,
often the needy borrower, whose effrontery
and persistence have on occasion become
bold beggary and more than once arrant
robbery.
Isaac of York in 'Ivanhoe," Is the type
of the money market in England in the
days of Richard Lion Heart. with extortion
by the lender enforced by torture by the
borrower. English Edward l, in 1910. ac-
row. but seized the whole property of the
Jews, save enough to enable them to leave
the country. BY 1897 the stress of his
with France led him to treat the producers
of his kingdom as he had treated the Jew
money lenders and to levy on and sell for
his own use all their wool and leather and
much other property. When the Lombards
mastered the money market Edward III fell
in debt ,.0o.Wt5 forms to two houses, which
became bankrupt on that account
Under the Stuarts the goldsmiths depos-
tied their moneys for safekeepng in the
mint, that Charles / was able to seize
there their balance of f2uD,0OJ, which he
then called a loan. His son, Charles Ii, i'm
proved on his example and in 1872 laid
royal hands on nearly FL ,5o0.HH so in trust,
and refused to pay at ALL After a while he
was driven to admit the interest. The prin-
cipal was cut down nearly 30 per cent. and
has become petritied as the first item in the
national debt-a monument of kingly finance.
Those centuries illustrate the temper and
bearing Of governments toward bankers as
even worse than the popular prejudices of
our own times.
Modern Methods. British and Eu-
rOpean.
Modern methods of finance begin at the
close of the seventeenth century, during the
activity of Louis XIV. which stirred the
world. To curb his ambition the British
government was pling up a debt at inter-
est of % per cent to 30 per- cent, when
and in 1904 the Bank OF England was de
vised TO unity the pressing public loans and
to handle them. They were only f1,2oOUOo.
and against that sum the bank put out its
own notes and paid f1W,HB for the privi-
lege. As with other borrowers, this first
transaction was only the entering wedge.
The government ran up its debt and in its
exigencies made hard bargains with the
bank In the struggle against the French
revolution Pitt forced loans against the
protests of the governors, and when asked
to pay II 1s6 445 he drove the bank to sus-
pend payment. The process has gone on
until the bank holds secur tiles of the gov
ernment for f20.o3S. 900 and in return en-
joys its monopoly and pays annual charges
or flIo.3w. In its issue department 1t has
been styled IAN office of the aiministra-
ton" in finance it is above the ministry
like a permanent official. a genuine War
wick.
The story is akin in all of Europe. The
Bank Of France Is a creation of Napoleon
IN 1896, under the directory. Now the
only source of paper money in that coun-
try, 1t has carried on its back successive
governments in their loans. Without a
rival in its sphere. its burden in recent
loans has been made light by the marvellous
response which the French people always give
10 the calls Of their government for money
Inc Bank of Germany Is the steward Of
the empire in its borrowing and general
finance. Austria Hungary uses its national
bank in the same way for a MONOPOLY of
note issue. In Russia the Imperial Bank
OF the administration. it's fiscal agent for
borrowing and for handling the debt and
Tor creating currency for both purposes
In all the old world the governments touch
the money markets first as borrowers. and
use the banks to secure funds for the ex-
cneqler They return privileges and inmu-
mites by these monopolies interest is put
up or down, foreign exchange is controlled
trade is affected every INDUSTRY feels the
pressure. The Bank of England is the
model OF all these financial engines, master
OF the national funds dictator of the money
markets of Britain. of Esarope and until
recently, of the world. long fetch i'm
finance. British criticism bf its principles.
its conduct and its effects has become
sharp, aggressive. unsparigg.
American Experience.
Finance has no devices which our coun-
try has not tried. The fio9d of continental
currency was the beginning of our evils.
To fund the revolutionary debt, to create
a currency, to provide way for collecting
taxes, Hamilton called into being the Bank
of the United States. His first aim was to
frame the most effectual instrument of
loans The institution served the treasury
well, but soon became a political force and
was permitted to die In 1911 With new
charter in 1916 Jackson found in II a monster
threatening the government. seeking Ito
concentrate the whole moneyed power" His
removal of the public deposits from it was
a chief factor in politics for decade. The
discussions in Congress and Jackson's state
papers exhibit the prejudice and frenzy of
parties. The chronicles of panic and dis
aster are lurid enough te the fall of the
bank In 1896, Yet the public moneys it
held were never more than $10,OOO,OO0
standing at 81. .StiS 435 in October, 1893
General Jackson is often represented as
waging banks. He did no such
thing. He only transferred the deposits
from one central bank, with branches to
several banks. Outside of politics 1t was
simply a conflict between banks, of several
institutions against monopoly. The larger
number won
Deposits With the States.
But the many banks Were met by an unex-
pected competition. The sales of the public
lands increased rapidly from So, ,90e, 600 in 1894
to s2t 800 600 in 1886 Banks to the number of
7SS were started, in large part to furnish
currency to pay for the Hands. SO that be-
tween 1891 and 1886 the bank circulation
ran up from Ss5,00000 to $4,000, 600 OF
public funds they held Nopember, 1886
$i9. .36T 1856. while they owed other deposit
only $26,513419. The states were greedy
and wanted the money Congress voted to
give them all but $5,O00.ae0 in four INSTALL
r,eats. pro rata. Three were paid, but this
demand with the infiatien proved fataLs
Specie payments were suspended, and the