Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-07-05
BAD BANK SYSTEM
lmperfectionS Pointed Out at
Bankers Convention.
SCIENTIFIC NOTE NEEDED
vice President Vanderlip Talks About
the Currency.
CONDITIONS FAR FROM SETTLED
New York Should Take the Lead fox
the Betterment of Conditions,
Speaker Declares.

hhCfF POINT n. T. July 5-Frank A.
Nanderlip, vice president OF the National
Cl.y Bank OF New York. was one OF thu
principal speakers at the New York state
BANKERS Association today. His topic wns
Inc currency Mr.. VanderlIp said that
the currency problem in this country Is
far from settled, and he declared I, 10 ba
the duty of the New York association to
take the lead in a consistent movement for
the betterment Of conditions. Mr.. Wander.
lips address In full was as follows.
A comfortable man is ant TO be an ont,.
mist. A prosperous man is naturally sverse
to changes. Such man is likely to he we'll
satisfied with conditions as they exist He
iooks with skepticism upon suggestions that
would tend to bring into the situation new
factors or new conditions Bankers "a a
rule are regarded as the type Of comfort
able and prosperous citizens and perhaps
it is small wonder that they are slow to
recognize serious defects in the conditions
surrounding them At least, Il is a fact that
in the history of American finance unIess
spurred to action by some great and imme-
date necessity there has rarely been q
time when bankers have given effective con-
sideration to questions OF banking cur-
rency.
There are in our laws few important en-
actments in relation to money that have
not followed and IN large measure been the
Bank of the United States was rechartered
as a result of the monetary chaos in which
the country found itself at the end of the
war or 1872. The existing subtreasury sys-
tenn devised because state banks allow
ed their notes to depreciate that the
banks became unsafe repositories for public
funds. The civil war was responsible for
the greenback and for the national bank
note
High Rates for Money.
Periods of excessively high rates for
money, recurring seasons of stringency fol-
lowing each demand for funds with which
to move the crops. other periods of super
abundance, Of gorged bank vaults and In
terest rates falling to a point where the re-
turn on loan is hardly worth the expense
of making it-an those things are slgnif-
cant signs of our imperfect financial sys-
tenn. They point. believe. with absolute
certainty toward organic weakness. This :,
fundamental causes which lead at one time !
to manifestations OF high rates. at another
to abnormally low rates, that bring periods
of stringency followed almost in a day by
periods in which funds accumulate more
rapidly than they can be wisely employed
the fundamental causes of such changes are
dangerous to permanent prosperity.
Just as surely as temperature and pulse
beat may become physical danger signals
that the wise man should promptly recog-
nize, just so surely we are receiving period
ical warnings in the abnormal register OF
the pulse of Wall street money rates. and
in the alternating periods that may be OBJ
served at all the money centers of currency
Etringency and currency redundancy.
If we sit snugly by and say that we arc
satisfied with the measure of prosperity
which we are having, and that we think we
will go on very well with things as they
are then sooner or later we will come to
another period that is not satisfactory We
will come to another period sich as has
preceded the enactnlSnt OF most of the i'm
polrant existing financial legislation Then
we are likely In great haste and with little
consideration, to enact legislation which
might better be undertaken before the ne
cessity for it becomes painfully evident.
a Scientific Bank Note.
The thing l want to urge Is the Inn
portanee of providing a scientific bank-note
currency If we wish an indefinite contin-
uance of prosperity. and further to empha-
size the responsibility which rests partic-
uiarly upon the bankers Of New York in
presenting a plan for such a currency. The
plan may take one of half dozen forms.
Perhaps the best one were 1t politically
possible, would be the question of govern
ment bank having the power issue,
whose sole business would be in its relation
with other banks and whose chief opera
tions would be the rediscounting for other
banks. | do not mean that any existing IN
stituton could be metamorphosed into such
a central bank. It would have TO be freshly
organized from the beginning, its control
would need TO be largely in the hands OF
the government, and Its ownership widely
distributed among banking interests
throughout the country. The principles or
scientific asset currency could well be
worked out through the medium of such an
institution, the experience of Germany
eloquently testifies, but they can undoubt-
edly be worked out in some other way.