Keowee courier. [volume] (Pickens Court House, S.C.) 1849-current, 1908-01-29
o o o o o
PANICs AND
IEGIsLATIoN.
Q Frederic j. Haskin, In Atlanta o
, Journal. o
o o .o o. o 40 o o o O


yuake some changes In the existing
financial laws at this session. FL
nancial legislation follows financial
panics as night the day. h When there
is no money trouble and business is
sailing along smoothly, any attempt
to change the financial laws, how
ever much that change may be need
ed, is met with determined opposi-
ton from almost .pyery quarter. But
let money get tight and the fear of
a general panic seize the people, and
then here is q unanimous demand
for new financial legislation.
8.tn s2ss H+
Many remedies are suggested and
many theories are presented. A.
central national bank .of issue; an
asset currency issued under heavy
tax to insure retireemnt when the
bank notes are no longer needed; a
system OF federation reserve banks
in each geographical section; q
credit currency under control of the
individual banks; guarantee Of the
integrity of deposits In national
banks, are some of the proposed
plans. All save the last mentioned
look to the establishment Of that
reform-an elastic cur
rency which Will expand and contract
automatically according to the needs
OF the country. The guarantee of
deposits looks toward the preven-
tlon of panics by removing the
cause for that psychological pbe-
nomenon, "a run on the bank"
80
The relation between financial pam
les and financial legislation Is as old
as money and law. The money lem
ders in Egypt caused financial strin-
gency by, the simple method Of
charging usury. Therefore. Egypt
ian law and Mosaic law condemn
the practice Of usury.
The Bank Of Amsterdam was the
first great financial institution. It
was established in 1909. Its pur-
rency instead of the verying coin
values OF the day. 1t received de-
posits of coin and bullion and issued
receipts of the weight of the depos-
tied metal. These receipts circulat-
ed as money, just as gold and silver
certificates now circulate In the
country with the exception that tie
bank money was better than coin,
| because 1t did not lose by abrasion.
Therefore, commanded premium.
For more than century this bank
1tuck to honest methods. Then it
entered into speculation and advanc-
ed the bullion, which it had pledged
to keep in its vaults, to the Dutch
East India Company. The govern
ment was a party to the enterprise
and there was no public inspection
Of the affairs of the institution. AT
| ter fifty years the true state Of af-
fairs was discovered and the great
| hank'c hnlnw
Since that failure every government
has in some fashion exercised the
right Of inspection of banks.
| The use Of credit made possible
by modern systems of banking was
not discovered until the latter part
of the seventeenth century. The
Bank of England was founded in
1894. on plans suggested by William
Paterson, Scotchman, and it grew
out of loan to the government Of
$6,000,000. Paterson afterwards
foated the ill-fated Darien scheme
and was the first victim claimed by
the frenzied finance OF the Isthmus
of Panama. The Bank of France
was organized a few years later, in
1716, by John Law, another Scotch
man. Law founded his bank on the
prospects of the millions to be made
In developing the Mississippi valley
and Canada. When the Mississippi
bubble burst the bank went with 1t,
after brief career of four years.
Legislation always following, the
laws of France would not permit
the establishment Of another bank
for nearly sixty years thereafter.
1t was after the collapse of the ill
fated schemes for exploiting the ter
ritory of the new world that govern
ments everywhere stepped in and
imposed conditions upon the baGE-
ing business for the benefit of the
public. The banking business never
has been entirely separated from the
government, and history shows that
constant vigilance on the part Of
governments Is necessary to protect
banks from bringing ruin upon them
selves and disaster upon the people.
The history Of American financial
legislation is history of panics and
their results. The issue Of almost
unlimited amounts Of paper money
during the Revolution caused q f.
nancial anarchy in the newly inde-
pendent Thirteen States. The erst
consideration of the governme:, un-
der the constitution was to p 'ovide
some remedy for existing financial
evils. Alexander Hamiltons plans
were approved and the national
credit was placed upon firm basis.
A charter was given to Bank Of
the United States which was eDtrust-
ed with all fiscal business of the
government. The charter expired In
1911, and was not renewed. The
approaching war with England soon
threw the country into panic and
Immediately after the severe strin-
pnnnu af LOLA the aacnnd Rank oR