Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1907-11-27
STlCANEY TALKS ON BANKING
Great Western President Makes Pies
for European System,
CENTRAL INSTITUTION NEEDED
He Says Present FURRY IL Caused by
Small Independent Banks Hoard
inG Currency--@GhOst of
Andrew jackson.

Andrew jackson.
ST. PAUL, Nov. "a b. stckney,
president Of the Chicago, Great Western
Railway company, spoke of THE Cur
rency" at the banquet Of the Roosevelt
club tonight. He said, in part:
The prosperity Of production on the farm,
| in the mines and the factories requires
that the distribution of their products
through the channels of commerce shall
be continuous and such continuous dis
| tributlOn cannot be accomplished without
| the continuous production of bank credits,
which are an essential part of each com
| mercial transaction.
Hence the commerce of this country de-
mands taht the antiquated primary banks
now in use should be replaced by the mod
ern system of banks which can and will
issue every day in the year and every
| hour of the day all the credit which com
merce requires, exercising no repressiVe
measures to reduce the volume OF such
credits except by raising tile interest rate
so that every legitimate merchant throug h
out this vast country can feel assured that
! as long as he keeps his business solvent
| and entitled to credit he can obtain from
the bank credits the conduct of his ousi-
| ness requires by paying the interest rate.
system that Never Failed.
Such a system now exists in every COM
mercial nation except the United states
and has been tried and proven through
| all the commercial storms of the last CEN
tury and has never failed.
| The purpose Of the organization OF the
modern and most improved banking system
| is first, to economiZe in the use OF the
| gold required for reserve, because sold is
! expensive and difficult to obtain, and, sec
| ond, to mass II In such quantities and hold
It in such a way that every customer can
| know that the bank has IL and that II is
really Immediately available TO, meet all
| the demands for gold which will be made
| upon the banks
The banks of this country are not parts
OF whole plan connected in such man
npr to create chain OF mutual support,
| but they are local and independent instt-
tLtions In times Of ccmmercial crisis each
| must depend upon Itself and It is evident
that one bank without the cooperation of
| the other vanks cannot support the enor-
nous credits of commercial nation like
the United States, each begins to scramble
to increase It's cash reserve at the expense
of the other banks
Banks Hoard Money.
Such conditions now exist among the
| country banks Each country bank is
! boarding all the money it can get hold of,
which produces a shortness of money in
| circulation. Beyond question there is suf-
fcient circulating currency represented by
notes in this country IL allowed to circu-
merce and the present apparent shortage
is due entirely to the country banks hoard
ing II and refusing to allow 1t to circulate
| Unquestionably the money which usually
| circulates from bank to bank and from the
banks to the people and from the people
to the banks-the money which under nor
NAL conditions pays pay rolls and petty
bills, is now boarded in from ten to fifteen
| thousand country banks and relief from the
present stagnation will come only when
| the country banks return such money TO
circulation.
II they can get courage to return their
surplus money to circulation before con-
ditions get so bad as to alarm their own
depostors all will be we'll with them. But
! II, on the other hand they continue TO
| hold on until general distrust of all banks
4 is produced the, cogntryl banks which are
now hOarding the motley will be the first
to go TO the wall Such conditions would
| be impossible If the banks OF this country
We're a system of banks. .
The unseemly scramble after money to
] maintain reserves Is never witnessed in any
| other commercial nation, because all COM
mercial nations except the United States
have systems of banks so connected that
! each banw constitutes a mutual support to
| every other bank.
Example of England.
In England, where this system Of bank
| ing has been most high developed, the
! Bank of England holds the gold reserve OF
all the banks and of the nation itself. The
| reserves of the other banks are credits at
| the Bank of England. Under this system
| gold which is Withdrawn from any bank
| is obtained from the Bank of England and
| after circulating for short time In do
| nestle exchange Is returned in the course
| of business by some bank TO the Bank OF
England. Therefore practically the sole
| leakage Of the reserve is for expectation
| when the conditions of foreign commerce.
| are adverse. The duty of managing the
| foreign exchanges is delegated solely to
the Bank of England. The system knocks
out system of useless bank credits and
| therefore largely reduces the amount OF
! reserve required.
At the present time the gold reserves of
all the banks Of England and Scotland
| which support the vast credit necessary
| not only to effect the domestic exchanges
| but the International exchanges of the
| whole world are between $l5OOOc,OOO and
| SOO,0o0,O0O, held in one huge pile in the
| Bank of Egnland.
The gold in this country held in the
Of the banks, instead of being paltry
/ EbOVO,Ol0 to 500 CVJOOO. aggregates the
norn.o s sum of nearly CT q lite $1,000 100
and yet all the banks of the reserve cities
of the United States have been compelled
to suspend the payment Of money.
All Bank PRnics PreventRbIe.
! Would that I had ability to arouse the
| American people 70 the Importance OF a
banhing system. In panic after panic they
have suffered. but their minds seem to be
possessed with the fatalism of the Turk
not the will Of God that produces bank
panics History abundantly proves that
such panics as occurred in this country in
| 1887, 1851, 1913 and 1893 are preyen1abIe by
a known and proven system Of banking.
This system has been adopted by the
| countries Of continental Europe. The United
! States is the only nation in the world Of
| commercial Importance which mas not
adopted IT,. IL is remarkable fact that
during the last panic, while the commercial
| crisis was universal. there We're no bank
panics except in the United States. In no
! other country was the commercial Crisis
/ continued So long and in no otner country
! did the people distrust the solyency of their
/ banks and in no other country were there
/ bank failures.
/ This 81 stem has not been introduced into
this country because commerce and bank
ing are not free and our laws forbid it,
I What stands In the way of repeating these
/ laws! Nothing but the ghost of Andrew
1 Jackson.
| 4NuAes sislation whatever is required except
| 10 repeal the provisions Of the national
/ banking act, which prevent banks from
| doing business except alone as specified and
/ which prevent national banks from deposit
/ ing their reserves in another bank IN the
| same city, TO repeal the laws as to reserves
and the subtreasury laws and 20 direct me
/ tax collectors to remit directly to a dssig
| mated central reserve bank, the genius of
/ commerce inherent In the American people
! thus made free, will do the rest