The Washington herald., 1910-06-13
BANK BILL FAULTY
Writer Sees Mischief Before
Election in 1912.
G. 0. P. NEEDS FINANCE ACT
james C. HaiIock, Lifelong Repub-
Iican, Says RooseveIt's Admins
tration, Like Jackson's, Ended in
Money Panic-Measures should Be
Taken to Avoid Repetition.

I Republicans see the need Of some finan-
cial legislation before the next election,
q as they did n 1913. When toe emergency
currency law was enacted. In both houses
of Congress they have passed postal say
ings bills. This law, in whichever form
enacted. may do much mischief, If not
before next November. possibly before
! the Presidential election in 1872
a lifelong Republican WILL I hope. be
allowed to speak plainly. Roosevelt's ad-
s ministration, like Jackson's. ended in a
8 financial panic. The present administra-
s ton should bear that incident in mind
and take measures to avoid its repetition.
( Congress can aid materially. The prob
lem is localized. The Jackson panic of
3 1887 started in New York City like the
8 Roosevelt panic Of 1907. as we'll as those
OF 1857, 1873. and 1893.
start In wall Street.
History teaches that no great panic in
the United States has ever started out
side of Wall street. Such panies AFFECT
: the whole country more or less dis
s >astrously for longer or shorter periods.
8 Their prevention would be a universal
benefit. Prevent them in New York and
the problem is solved
New York. my native city and home.
is financial center whose banks and
8 trust companies owe the public over
g, GOO. 600 OF deposits, payable on de-
mand In times of financial uncertainty
the interior banks draw down their New
York balances simultaneously, and may
call upon New York banks TO ship hun
dred millions OF currency to the East,
West, North, and South. Congress can
easily make It possible for New York
banks to pay IN currency all demands
that banks in Ohio, Iowa, Missouri,
Texas, and any other state in the Union
make upon them.
Congress can bestow this common bene-
1T upon practically all the banking insti-
tutions Of the whole American people by
adding few words 10 the Vreeland-Ald-
rich emergency currency act Of MAY 80
1903, making it useful, effective meas
ure. that every national bank directly
and other banks indirectly can employ In
case of emergency In the main, the acI
may be LETT al X is, so that any national
bank can take out emergency currency
under its present provisions only section
] requires amendment. To it there should
be added provisions that will permit ma
tional banks everywhere TO obtain addi-
tional circulation in times OF emergency
through the clearing house association
or a central reserve city.
Circulation I'm Emergency.
Then every national bank desiring ad-
iSsrtional circulation Ia an emergency
could, at its option. obtain the notes
either by becoming member OF the local
national currency association and pro-
ceeding under the existing law. or by ar
lranging for their issue through the clear
ing house association of New York Chi
cago. or ST. Louis, such clearing house
association acting as a national currency
association under the proposed amend
ment OF the act
BY this arrangement New York banks
could obtain sufficient currency 10 supply
ali demands that Out-of-town banks
wouN make upon them. So could Chicago
and St. Louis banks. But to prevent a
great panic. it is. In general only neces-
sary TO keep New York supplied with a
sufficiency OF notes for shipment into the
interior. Neither Chicago nor St. Louis
can give birth to panics.
These views are not mere surnises. but
the result OF prolonged instruction. study, |
and observation. The jackson panic of /
1881, which eliminated at the beginning /
or Van Burens administration, so i'm |
pressed its lesson upon my father, who !
at the time was young business man in |
New York, that fifteen years later. know |
Ing there was a clearing house in Lon |
don, he entered into movement to es-
stablish one on this side OF the Atlantic |
In 1883, by inventing and promoting a |
simple but most ingenious plan. he /
brought about the organization of the |
4New York Clearing House, was appointed |
9 its assistant manager, and was formally /
addressed as the originator of the clear |
: ing house in America. In 1851. at the /
outbreak Of the civil war. he began to |
instruct me in such matters, and con- |
tinued his instruction for twenty-feur /
years. till his death in 1855. I have spent |
most Of my life studying such ideas and |
trying to carry them out
Introduced Check Clearing.
In 1893 I succeeded in bringing about |
the clearing Of out-of-town checks at the /
Boston Clearing House. Thus nv father
and myself have introduced into the
United States the collection OF checks |
Through clearing houses, he city and I /
country checks. Next year, 1911. shall |
have completed fifty years, devoted for /
the most part uninterruptedly to the |
zstudy of clearing houses and fiscal i'm |
zprovement. No other American. prob /
s ably no other human being. has given. or /
lis likely ever to give, so much of his life |
Slime to the contemplation and develop /
mert of clearing houses
s Hence / am somewhat in position to /
Aknow how completely a financial panic /
could be averted in New York during this /
administration. II the emergency currency |
act were amended as here proposed. and. |
IN addition. the Secretary OF the Treas
Ssry-the first real merchant to hold that
bfice-did his duty by applying business
JAMES c. HALL0CR.