Evening star. [volume] (Washington, D.C.) 1854-1972, 1909-11-07


tranches-first. with reference to note is
sues; second with reference to the or
sanization of credit or the requirements
of our banking system.
AT the beginning of our inquiry I had
the opinion. which j think is quite COM
mon that the question OF note issues was
the most important of the two. but fur-
my mind in this respect. l now regard
an efficient organization of the credit and
banking system of the country as much
more important.
in the past. notably during the last half
of the eighteenth century and the hrst
half of the nineteenth, the question OF
note issues-that is to say. who should
what conditions they should be issued and
the kind of security to be required-fur-
nshed the subject of most of the none
tary discussions of the time.
I'm these countries, with single ex-
ception at the present time all thought
full men. economists bankers. students OF
the subject from every standpoint. look
upon the proper manner and character
OF note issue as no longer an open cues
ton or one of paramount Importance. The
conclusion has been reached with unan-
unity that bank note issues should always
be made under governmental control. or
at least subject to strict governmental
restrictions and limitations. and that this
can only be successfully done through one
central and exclusive bank Of issue.
Character Of Credit Organization.
I'VE are not able at this time to put
into definite form the character Of q credit
organization we think desirable for the
United States; but we can agree upon
certain matters and provisions that must
be guarded against or eliminated from
any possible scheme.
- e.
tablish any credit organization that would
interfere with or control existing banks,
or whose resources or credit could be
used for speculative purposes; or that
could possibly be dominated by the imam.
cial men or institutions In one section OF
the country. We have many financial
centers of varying importance in the
United States between whom natural
rivalries exist. and whatever form our
organization might take, II is necessary
to guard against giving to one banking
community any advantage over another.
1T is entirely true that the difference
Of interest in this respect between diff
ferent sections of the country is likely
to be greatly magnifed. In a broad and
general way policy which gives pros
perity to the country as a whole gives
prosperity to every section. and adversely
in one section is felt throughout the
whole
II am aware that 1t would be dif1cult
to establish this philosophic proposition
in the face of the strong local feeling
which naturally pervades every commun-
to clearly establish the fact that any
form of Organization which may be Gre
ated should serve alike the whole coun-
try and every section. and that II could
not possibly be used to the upbuilding OF
one locality in preference to another.
Second. 1t Is Of equal. II not greater,
importance that any plan which should be
agreed upon should not have or be likely
to acquire any partisan or political CHAR
acter or bias. I know how dinicuit II 10
in a country like ours. with q government
by parties, to keep subjects of govern
mental policy free from the suspicion OF
partisanship. 1t is not necessary that l
should recall to you the number Of none
tary problems whose solution. has been
hopelessly delayed by being dragged into
the political arena.
Bad Precedents Of No Value.
LET us hope that the American people
have become more sensible. and that the
bad presidents which have been estab-
lished in this respect in the past may
have been forgotten. There is nothing
in existing conditions that should give
to these precedents any value.
For instance, the second Bank of the
United States, after having been sup
ported in turn by all parties. was finally
destroyed as a matter OF party policy. 1t
necessary
one Is thinking Of adopting the first or
second Bank OF the United States as a
model. No institution of similar con-
struction or methods in management
could possibly receive the approval of
the people Of the United States at this
time.
If, however. it should be found desir-
able to adopt some of the more impor-
tant features of systems which have been
successful In other countries. I have too
In no m
judgment and intelligence OF our country
men to believe that the dead political is
sues OF three-quarters OF a century ago
could be revived, or that the ghost OF
Andrew jackson could be summoned to
prevent a consummation which would be
advantageous to all.
Branch Banking Plan.
Third Whatever may be the advan-
tages OF a system of branch banking In
other countries. I do not think IL is pos
sible to adapt 1t to existing conditions in
the United States The $500 banks now
In existence are largely independent in
situations. whose managers are familiar
with the wants and requirements of the
communities I'm which they are located.
The great mass OF the people who use
banking facilities. either as depositors or
borrowers. would be unwilling to give UP
the advantage of that intimate personal
knowledge OF the local Ddnk Objects anu
managers which they believe to be es-
sential to their interests.
1T would be difficult. for instance, to
convince borrowers and depositors in q
small town in Illinois that q man who
had always lived in the same community
would not have a clearer and more SYM
pathetic appreciation Of their needs and
credit than an agent sent from one OF
the large banks in New York, whose
principal ambition might be to earn the
largest possible amount Of money for his
institution rather than to develop the
prosperity of the community to which he
was assigned.
II realize of course, that in the United
States as i'm Germany, there IL ten
dency on the part of the large banks In
the reserve and central reserve cities to
establish q rather close community OF in
terest with correspondents whose bust
ness and organization are more or less
aff1liated with the central institution.
This arrangement has many of the ad-
vantages Of branch banks without being
subject to the positive objections which
exist with reference to the latter plan.
No Delay, But Deliberate Action.
In the statement that We were not yet
able to adopt definite plan for the
United States. / did not intend TO be
understood as committing the commission
~ policy Of hesitancy or delay. As
soon as the preliminary studies and con-
ferences to which ! have alluded can be
hal the commission will at once enter
q TTEtr Inn NIaA