The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-05-14
FOWLER BANKIllC BILL
Objections - the Measure Urged 9y7 f4r. r.
IA M rs S B.Walker. s.@ZSsa#.
3 Walker.

r@ s6# ~ :. ------4. =
Understanding that Mr.. Walker felt
very much opposed to the passage of the
Fowler banking bill, now before the
house, the editor Of he j ournal re-
quested him to.3eXpress his, views on the
subject for publication in Th g J o u r
l.; The following is his reply, writ
ten Monday: 81 Sees
AS am to leave the city Tuesday evening
for a business trip to the coast. and have
many things to look after before starting, l
will not be able to express my views as satis7
factorily as could with more time to devote
to It,.
The Fowler bill provides for retiring the
government greenbacks within the next seven
years and authorizing the national banks to
issue an amount of currency equal to the total
capital stocks OF the national banks then In
existence or that may be organized thereafter,
and to permit such banks to withdraw their
government bonds held as collateral security
for their present note issue and to rest the
security Of this enormous amount Of currency
upon, the bank assets and stockholders liza
bil1ty OF the banking associations without any
specific collateral security for the bills issued.
The history OF the banking and speculative
business methods heretofore prevailing in this
country ought to satisfy any thoughtful per-
son that currency scheme of this kind
would constitute a most hazardous and UNI
safe banking system-more so than any bank
ing laws that have been in operation in this
country or perhaps in any other. ;;
Not Sound. ,-ss b
To assume and presume that the develop
ments OF more recent years have placed this
country in a condition where banking law
of this kind can be safely ventured upon, is
a presumption in the line assumed by many
iysi dfcnty eQ~s
warranted by the practical demonstration Of
modern experience. ) To set in operation in
this country eight or ten thousand banks
with the privilege Of issuing unsecured cur
rency to the extent of their capital stock
many Of them handled by boards of directors
and officers who have little hnancis! expe-
:rience, and who, in many cases, in fact,
large numbers of them, would be. engaged in
speculative business of various kinds, and
who, in the language of Francis Walker, = are
SO deeply penetrated with the belief that
something can be made out Of nothing, and
much easily out of little, and who will not
bring themselves to submit to all the re-
straints of law and usage which in England,
France, Germany and Sweden reduce to the
minimum the dangers of paper issues" is not
sound business proposition. And yet, even in
these latter named countries, or in Canada, a
banking system like this, in operation among
these conservative commonW ealths, would be
an unsafe and hazardous departure. The ease
with which money could be manufactured
under this no direct-security plan, makes
the prospective profits too large and SO easily
handled that it would result in greater specu-
latiye ventures than would come from a more
conservative banking scheme ,N&$ &
II Some of the bank associations in the large
cities as well as in the smaller ones, would
be composed of men, some Or. MANY! OF, whom
would pay for their bank stock by borrowing
money, and who would be anxious to see
money plenty and to control an amount suf-
fcient to carry on speculations with all sorts
of mining schemes, townsites and other ven
lures Demand for customers to borrow
money would make the discount committees
examination of&assets of borrowers very SUI
perhcial New enterprises that will not stand
the pressure ~of%adyerse conditions would be
established on the money taken from the
bank, and soons a. large part of the capital
would be In theghands of men who must de-
pend upon prosperous Conditions and favor
able outcome in their speculations to repay
the bank 81 III sssas3gsrsB Sas S4s&&saz 80 d
These conditions would be known to The
public, and whenever q financial furry should
come, apprehension would rise in the minds
Of those who are not necessarily. over imid
but people of ordinary caution, II that many
of the banks, under forced collections, would
not be able to call in more than fraction Of
their Indebtedness to l<depositors and bill.
holders. And the depositors,, knowing thai
the bill-holders have the preference on al
the assets Of the bank and stockholders liz:
bility, would know that they would come ou
short in a settlement and liquidation Of the
bank. The bill-holders also would begir
deemed only common prudence and self-pro
lection to withdraw their: money from thu
bank The bill-holders. also would be cir
returning bank bills for gold. And this con.
dition would be so well known that conserva
tive business men who have always backed
the banks to the extent of their full capacity
to pass through financial difficulties wouIe
feel constrained to take care of themselves
by holding out currency and this in gold a!
financial storm was anticipated, and no on,
could seriously blame them for doing so
These unfavorable conditions would not pre-
+ vail to anything like the same extent whel
the. bank currency issues were directly Sc
| cured by convertible collateral, as now pre-
walls under the present banking law
The time has come when it is necessar,
| to take measures to increase the currenc,
for the future, as the government bonds viii
gradually be called in and paid and the ma
| tional bank issues reduced to an insufficient
| amount
, Wild Cat Currency. !
Mr.. Fowler, in his review Of the bankin,
| the old banking laws, from 1910 to 1860, til,
1 q ~