The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1901-10-17
THURSDAY, OCT. II, 1901.
WANTED-4 BANKKNG SYSTEM.

WANTED-1 BANKING SYSTEM.
The address of Mr.. A. B. Stickney be-
fore the American Banking association
at Milwaukee yesterday, and which we
publish in full elsewhere, deserves a care
ful reading by every man, whether he
be interested in the abstract question of
finance and banking or not.
Mr. Stickney in a clear. forceful but
sueeinct manner, points out what he
deems the primary function of banks.
He contends that the province of the
banker is to swap" credits with the
merchant and the manufacturer. That
an increase of credit and not an increase
of coin of the realm makes good times.
In proof of this position he cites the
fact that since the panic, while it ap-
pears that the bank deposits have i'll
creased Sl,500, 000,000, the actual money
has increased only 500, coo COO. The diff
ference being the increase of credit which
appears on the bank books as deposits.
When A bOrrows 100000 of a bank. de-
posting his collateral as security, he
simply exchanges his credit of 100000 for
a credit at the bank for like amount.
The 100000 at once appears on the bank
books as that much increase in deposits.
As a result, when the banks cease to
lend money!. e. to swap credits with
the business man - the circulating
medium, which is credit and not coin, be-
gins TO contract. Not alone does it pinch
the merchant, who has goods which he
cannot sell. but the depression goes
Gown the line until it affects the Iaborer-
the great consumer. Business becomes
stagpated, because credit, which alone
does away with the necessity of barter,
is gone. Mr.. Stickney maintains that the
history of every financial panic proves
that it was due to p withdrawal of credit
and not to overproductfon or to a lack
OF circulating medium
Reviewing the history of banking. he
concluded that the trouble in America is
a lack of system. We have, he main
tains, no banking system Each bank
stands upon it's own bottom When a
strain comes to one, there is no assist
ance given by the general banking bust
ness of the country. Only in isolated in
stances have the banks of New York
stood by each other thus forming tenn
porary banking system
The remedy is in the Inauguration OF
q national banking system. with cen
tral bank, which shall hold the reserves
of all banks. The United States treas
Ury.with its surplus of gold, shall be abol-
ished, together with the subtreasur1es
and tie restrictions on the business of
The individual banks to do banking bust
ness removed. He advises the adoption
of the Scotch system, which not only CD
tains now in England but has been adopt
ed in every nation of Europe.
Mr.. Stielney goes briefly over the his
tory of the various panics In the United
States and Europe, showing that, while in
1857, 1871, 1873 and in 1893 there was a
wholesale failure of banks in the United
b states, not a bank failed in England and
Scotland. we are the only nation" says
Mr.. Stickney, (which has a treasury. -
Ii We wish to do the business of the
world we must be ready and able to fur
nish the worlds credit 1t will not do
70 raise the American flag over the stern
OF American merchantmen. That will not
build up our commerce Commerce goes
where the commercial credit of the ma
ton goes. Commerce will not follow the
flag, but will follow the routes of secure
commercial exchange.
The wares of commerce follow the
drafts of commerce, instead of the flag,
and the principal reason why Great Brit
ain is the market place of the worlds
commerce is not because the Union Jack
flies !, at the tail end of so many ships,
but because every banker and merchant
In every qrarter of the world knows,
within or per cent per annnm, the ex-
act value of draft for re-djscount in
London.
No more powerful appeal has ever been
made to the common sense of the bank
Ing world than this speech of the banker
railroad man.