Willmar tribune. [volume] (Willmar, Minn.) 1895-1931, 1901-10-23
WEDNESDAY. OCTOBER %, 100
sTlcKNEY ON "MoNEY."

A. B. Stickney, president OF the
Chicago Great Western Railroad,
delivered an address before the Ameri-
can Bankers association at it's meet
ing in Milwaukee last week that has
caused a great deal of comment.
His ideas are certainly original and
deserve some nOtlce.
According to Stickney, money is of
secondary Importance in business af-
fairs and credit is of primary impor-
lance. He shows that the boosted in
crease of bank desposits since the pa
MIC of 1913 is mainly an increase of in
debtedness. The apparent increase is
81. 500, 900, 900 while the increase Of
money in banks is only S207, 900, 900.
This means an increase of 81, 3O0,-
900, 900 of bank Indebtedness. In other
words, the business men have deposit
ed their notes, perhaps with collater-
ais, and have had that amount trans
ferred to their credit on the bank
books. This represents about the
proportion of actual deposits to the
so-called deposits which are only What
Mr.. Stickney calls "swapping Of
Credits" He regards this as perfect
ly legitimate and commendable bust
ness and thinks money is not at all
necessary for conducting the business
Of the country. In fact, he is an alb
solute 'fatist, but he does not want the
government to have anything to do
with the creation of this fat money.
He recognizes that there is danger in
the system, but he says it is because
in hard times the banks cease to swap
credits when it is the most needed.
Here is his way of accounting for a
panic:
When the banks, from whatever
cause, refuse to perform their part by
refusing to swap credits with merch-
ants, the merchants are compelled to
stop buying and to vainly attempt to
force their stocks upon the consumers
by lowering prices. Such an attempt
must always be futile, because the
consumption which produces the ulti-
mate redemption of credits is neces-
sarily a uniform hand-to-mouth pro-
cess. The merchants who do it early
may unload upon less foreseeing mer-
chants but passing credits from one
merchant to another does not reduce
the volume of credits. It only effects
the individual merchant, and perhaps
his individual bank, by transferring
the burden to other merchants and to
other banks. But the futile attempts
once commenced in large way force
values lower and lower until some
merchant and producers are ruined.
When some of the merchants and pro-
ducers are thus ruined, some of the
laborers are deprived of employment.
When some of the laborers are unem-
ployed their ability to consume is cur
tailed, which still further reduces the
demand, which still further reduces
values, ruins still other merchants
and producers, deprives more laborers
of employment, which still further re-
duces consumption and values and
ruins still other merchants and pro-
ducers, and finally ruins many of the
banks themselves.
While thus naming the banks as the
immediate cause of the panics, he con-
siders the present banking laws as
primarily responsible for the actions
of the banks. To remedy this he sug-
gests the following:
A banking system for a great ma
tion like the United States REQUIRES a
central bank, with head in the chief
commercial city, with branches in
each OF the commercial centers, which
shall constitute the head and the back
bone of the system. This central
bank should be the bank of the banks,
and the bank of the government. The
subtreasuries should be abolished.
The central bank should hold the gold
reserve of all the banks and of the ma
ton. The reserves of the other banks
should consist of credits on the ledger
of the central bank. Subsystem
should be formed, cons listing of heads
in important commercial centers. with
branches scattered over the country,
thus carrying the facilities of great,
strong, solvent banks to every ham
let and crossroad in the country. The
only legislation required is the repeal
of the subtreasury laws, and of the
provisions of the present national
bank law which in any manner re-
strict the business of swapping cred
it's, and which prevent banks from
conducting the banking function in
more than one locality. r
If this plan we're adopted there would
be only one bank in the United States,
it would have Offices in every
city and village of any Importance.
Talk about monopoly! This would
certainly cap the climax in that line.
Stickney naively says: It is very
profitable business to collect interest
IN what one owes" and adds that
lDder such q system the banks could
collect interest on twenty times their
actual capital. This would be good
hing for the banks, but where would.
he people come in? They would pet
he privilege Of paying the interest on
'wenty times the capital owned by the
banks. 1t nation can become pros
,erous BY making 9 few bankers pros
'erous Stickney q plan is und DUBBED
y the bes. one suggested so far. The
bankers evidently appreciated this for
hey gsye him = rising vote 81 thanks,