New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1909-11-25
ON CENTRAL BANK
MOR4UETZ OPPOSED.
Tells y. VI. {. Il. 1t Is I'M
practicable an United States.

Victor Morawetz formerly chairman Of
the executive committee OF the Atchison.
Topeka Il Santa Fs Railroad. in an ADDRESS
at the first regular session Of the Finance
Forum at the West Side Young Isn $
Christian Association. last night. said:
Our present banking system has served as
we'll In normal times. Undsr this system w.
have prOsyered beyond ail Osler ndliOns,
and therefore this system gadss nave some
merit. IL cannot bs wholly bad as some
times has been asserted. However, perio0i-
cally our present system has Tallsd 10
serve the needs OF industry and commerce.
and sometimes 10 has broken down cuui-
pietely. with disastrous consequences 10 TOE
whole country. such system Is as uilsaIS
as ship that can sail only IN fair weather
and that Is likely To founder during the
first storm We need a system OF BANKING
and currency that always VIII be saie ana
that always will serve the needs ~ lndus-
try and commerce. Foreign countries nave
such safe and seTyicsable systems. why
cannot we have such a. system n tho
United States?
The underlying defect Of our present sys-
tenn is that il makes no provision Tor tne
fluctuations. There are to-day twenty I've
thousand independent banks and trust COM
panies nm the United states .Each OF tntSo
institutions carries on business fOr rs iiv I
Vidual interest alone. independently u thS
others. and each at all times seeks 70 le,'u
its credit to the liruit permitted by law as
long as N can make profit by SO uolnS-
The result Is that bank credits are eNPdilI
ed, speculation Is enGOAIdst1 anu
operations are extended 10 the utmost lLIll Ii
I'm normal times, while no reserve u heII
beck for use in time when an e&Seps ~. Io IA
amount OF currency IS Withdrawn from TIC
banks reserve for use as "A CirculatihG me
dium. or when an eXcepfiOnat dlilooAe - -
bank credit Is needed: The rope, % n.citv
having been stretched to It's ful eSIps sS,ls,
I'm normal times breaks when an additioi'ai
strain Is put upon H. II. Tor
What. then, should be me Ieu..e' ,,,,st
this situation2 Obviously, t"o thiiisS mus
be provided for, namely.
First. provision must be maze 80 ',at -.
formal times a sufficient amount % SeI1
rency and of credit power shall De neIi
back as "A reserve to be used only III tuhes
when an exceptional amount OF currencs
or Of bank credit IS needed. anu 80 . .nH,
the extra amount of currency or 81 creu l.1
shall again be taken up as soon as tis Heeu
for II shall have passed
Second. provision must Be MADE so lnaS
the fluctuations OF bank reserves ca,-std
by the fuctuatiOn Of the amount OF cur
roncy Withdrawn from the banks Tor use
as circulation medium may oe COM
pensated by a corresponding increase OF re
duction OF the outstanding bankuote CIR
In ali civilized countries OF the world
except the United States 1t has been recOz-
nized that no safe system OF banking =
possible without central regulation ana
control over the aggregate expansion OF
bank credits. I'm every country or Europe
the machinery for providing for TINS cen
trail regulation and control has been pro-
vided by the establishment OF a central
responsibility and the GUty OF controlling
and regulating the aggregate expansion or
bank credit and OF protecting the finances
OF the country. The banking and currency
systems adopted by the leading commercial
nations differ in various particulars mn All
have IA common this one feature large
central bank vested with the power as
we'll as the duty OF controlling the agSre-
gate expansion Of bank credits
By reason Of the great area OF the nited
States and the violent fluctuations in the
amount OF currency needed a circu-
latinS medium and OF the amount OF bank
credit needed TO carry on the industry and
enterprise OF the country. the only effective
way of regulating and controlling the ag-
gregate expansion OF bank credit and of
protecting the general credit situation
would be by diminishing or increasing the
volume Of outstanding bauknOte currency.
However. conditions in the United States
are so different from those existing In
European countries that the central banks
of Europe cannot fairly be considered pre-
Cedents for the creation or similar bank
In the United states. In Europe each cOun-
try has established its own central bank,
but no one country Of Europe can be COM
Jared with the whole United states. The
territorial cXpanse OF the United states
Europe combined only a central bank for
the whole Of Europe would furnish fitting
precedent for central bank for the whole
of the United States.
In order 10 establish in the United states
a central bank on the European plan t.
would be necessary TO create bank or
this bank a considerable portion of tine
banking power OF TIE entire country. Fur
thermore. II would be necessary 10 take
away from the existing national banks
their power 10 issue notes and 10 vest A
monopoly Of this power I'm the central
bank: and IL would be necessary. either
by system Of branch banks, or by e-tab-
fishing closer relations with the local banks
throughout the country. 10 confer on this
central bank d large measure OF control
over financial conditions throughout the
country. To establish such "A bank I'm the
United states. in my judgment. would not
be practicable or desirable The business