The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1901-10-18
SECRETARY GAGE SPEAKS
A. B Stickneyl Reads a Paper on
Medium Of Exchange.
VARIOUS RESOLUTIONS ARE ADOPTED
Reports Show Condition Of Business in the Coun-
try to be Satisfactory. John Shelton
Williams Elected President
Of Trust Section.
(By the Associated Press.)


Milwaukee, Wis, Oct. 16.--The second
days session of the American Bankers
Association was devoted to business from
the start. Upon the call of States bank
ers from various sections of the country
reported in five minute speeches the gen.
eral condition of business The general
trend of their statements showed that
business was in thoroughly satisfactory
condition
Following the call of States came dis
cussion on practical banking questions.
A. B. Stickney, president of the Chca-
go Great Western Railway Company, was
then introduced and read an interesting
paper on the medium of exchange and the
banking function.
He began by saying that the usual
statement that money was the medium of
exchange, was but small fraction, of
the fact. The most which can be said
about money as medium of exchange,
is that it may be used as such, but, as
a matter of fact, it is seldom, practically
never used as such medium, except in
petty transactions He maintained that
the medium of exchange is credit, in
many petty, and in all of the larger trans
actions. Legitimate credits for use as
medium of exchange are produced by
buying for the purpose of selling, and
they are extinguished by buying for the
purpose of consumption. Such credits
expand as production and commerce ex-
pand, and contract as production and
commerce contract.
The speaker then discussed the bank
ing function of which he said there were
many misconceptions growing out of the
meaning, which, in banking parlance is
given to the words deposit" and "bor-
row." When the public is told that the
bank deposits have increased billion
and five hundred million since the panic,
it is regarded as evidence of an enor-
nous increase of money. The increase
of bank deposits, he said, simply means
that conditions of trade are such that
merchants have increased their indebted
ness, which has been changed for bank
credits and by this means the indebted
ness of the banks has been increased.
During the period in which the so-called
deposits of the National banks have in
creased 81 500, 900, the money in the
banks has increased only $207, 900 600
modern commercial bank. he declared.
It's business consists in scrutinizng in
dividual credits and in giving it's own
credits in exchange for such individual
credits as are acceptable and thus fur
nishing an abundant supply Of the
medium of exchange of commerce.
The method of exercising the banking
function was then taken up. He contend
D1 hot T.
ously exercise it's function of swapping
credits fails to perform it's duty and does
incalculable mischief. When the banks
refuse to swap credits with the mer-
chants the latter are compelled to stop
buying. Ultimately. in the view of the
speaker, this brought ruin to the mer-
chants and producers and distress to the
laborer.
While the sneaker admitted that this
condition of affairs was the result of
banks contracting their so-called loans
he was not prepared to say that it was
the fault of the bank managers. That the
American bank, as at present organized,
should falter at every minor crisis and
stop, as far as possible, the swapping of
credits in a major panic, seems inevita
Bile. The necessity in his belief. was due
" TIC lack OIL ii banking SYSTEM MI.
Stickney then described briefly the bank
ing system Of England, a system he said,
which enabled the banks in London at the
time of the Rarings' failure, not only to
continue the exercise of the banking
function, but to increase their liabilities
S125,000,000 by assuming those of the
Earrings. Panics, such as occurred in this
country in 1887, 1857, 1873 and 1898, were
system of banking and he gave the En-
glish system, which originated in Scot
land. as the remedy.
Passing on to discussion of legisla-
ton, he said: "A banking system for a
great nation like the United States re-
quires central bank, with head in the
chief commercial ctv 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 Sub
Treasures should be abolished The
central bank should hold the gold reserve
of all the banks and of the nation The
reserves of the other banks should con-
sist of credits on the ledger of the CEN
trail bank.
SuD-SySleuiS SHOULD DC FORMED, consist
ing of heads in important commercial
centres. with branches scattered over the
country, these carrying the facilities of
great, strong, solvent banks to every
hamlet and cross road in the country.
The only legislation required, he de-
clared, was the repeal of the Sub-Treas-
ury law. and of the provisions of the
present National bank law, which in any