The San Francisco call., 1909-12-11
THINKS FINANCIAL
PANICS AVOIDABLE
Financier Argues That National
Government Should Main
tain Closer Relationship
By F. E. BECK.
Assistant Cashier the Anglo and
LOndon-ParIs National Bank

Z
| LOnden-Paris National Bank
IL there be any wisdom in the say
ing that "an ounce of prevention is
worth pound of cure let us by all
means, and with the greatest possible
celerity. invest in IAN ounce Of preven-
tion" in the form of central bank
strictly under government control.
I Since the close of our civil war there
has been no Justification for financial
panics. and yet we have had several OF
more or less severity. causing needless
| losses of billions of dollars. inhicting
untold suffering on countless thousands
Of Innocent people. and greatly retard-
/ ing our national growth. all of which
might have been avoided had our fan
eial system been erected on the solid
basis Of confidence. the mother Of
credit.
FINANCIAL STRINGENCY
Financial stringency should in no
manner be confused with panic. for
under proper conditions they are in no
wise related. the one being the natural
result of the rise and fall of our com
mercial tide, while the other is due to
the irrelasticity of our currency system.
which fails TO give us the requisite ex-
/ pansion in the hour of need. whereby
confidence may be maintained and dan
ger averted.
/ 1t is unreasonable TO assert that
I there is any lack OF sufficient actual
money in circulation in normal times
wherewith to meet our commercial re-
quirements. Money does not dissolve
! nor decrease in amount. On the con-
trary, each succeeding year brings with
I II added wealth from our mines: our
{ exports TO other countries in one form
or another considerably exceed our i'm
/ ports. resulting in large trade balances
/ in our favor, all of which serves to
make US one of the richest nations on
earth This being the case. where. then.
! is the trouble?
CREDIT BASED on CONFIDENCE
1t is a well known fact that actual
money represents very small percent
age of the volume of business trans
acted in the world-credit based on
{ confidence being the actual capital en-
{ ployed, money merely serving a s a me-
dium for the adjustment of balances.
An illustration of this is found in the
fact that the latest published report OF
/ the department of commerce and
finance gives the total amount of
money in circulation in the United
States as sS,115O5S.6O1. while the total
( 5ank elearings for the year 1903
amounted TO s12623S.6 .694.39S.
These figures clearly Indicate how
/ utterly impossible it is at any time to
readjust our existing credit system and
place it at once upon a cash basis. and
yet this is what unthinking people.
/ controlled by fear. at times attempt to
Z do. and as a result succeed only in
bringing on panics.
THE REMEDY SUGGESTED
/ The question which naturalIy pre-
/ sents itself is. How shall we remedy
| this evil? The answer is by displacing
/ fear and substituting confidence in the
solvency of our financial Institutions
which at all times hold billions of dol
\ lars in assets OF the highest possible
character. but which. for obvious rea-
sons. can not be converted into cash at
T a moments notice.
/ The next query is. How shall we in
spire such confidence There is but
one correct solution of the difficulty.
/ and that is by the organization of a
central bank strictly under control of
/ the government acting as a balance
wheel between the banks of the coun-
{ try and the government Such bank
would hold the money which is now
uselessly locked up in the United States
treasury Its capital. TO. any amount
I required. would be oversubscribed by
/ the banks and people of the country.
Safeguards of the most stringent char
/ acter could protect 1T in every possible
way gainst loss or misuse and at the
same time give the needed elasticity TO
+ our currency system. which would for
/ ever make panics thing of the past.
NO FEAR OF WALL STREET
1t is absurd 70 say that Wall street
would or could use It's power to prosti-
I tute such an institution. or that it is
/ American. As well say that our
United States supreme court is corrupt:
that our government is dishonest and
that we ourselves are 'un-American.''
For many years past England.
] France and Germany, as well as other
foreign countries. have operated sue
+ cessfully along these lines. and there
( is absolutely no reason why we, who
/ are said TO be "the most progressive
4 nation on EARTH" should not do like
/ wise; more particularly as we are.
i comparatively speaking, a young ma
ton. not yet developed to our fullest
capacity. our needs. therefore. being
/ greater in this direction than are those
/ of our older foreign sisters.
During the present year. up to Sep
tember so. the revenue OF the govern
ment from customs duties alone ex-
I ceeded $500. 00O while on the date
mentioned government deposits in ma
tional banks amounted to but $S5,226.-
912-
1t is true that during the period
/ stated government disbursements have
! exceeded its revenue but it is also true
/ that the commerce Of the country. rep
resented by its banks, has made this
revenue possible
GOVERNMENT AND RANKS
1t is Justly claimed that the govern
ment should stand in the same relative
position to the banks of the country.
/ as the banks stand to the mercantile
interests. by assisting. with IT'S capital
and credit. the development of our vast
resources. thereby sustaining and stim-
ulatIng commerce and producing great
er national wealth.
/ The earnest desire of the government
to so cooperate is evident by the fact
that there is now government com
mission investi eating the situa tion,
/ with view To the enactment of laws
necessary to bring about the desired
results "A contamination devoutly TO
be wished"