The Pacific commercial advertiser. [volume] (Honolulu, Hawaiian Islands) 1885-1921, 1910-10-09
BANKER SUMS UP DESIRED LEGAL CHANGES

returning passenger on one of the
week S vessel, brought with him an ad-
vance copy of the address to be de-
livered by Frank b. Anderson, the pres
ident of the Bank of California, before
the annual convention of the American
Bankers Association. This convent on
was to be held in Los Angeles between
October and Z, and the address has
probably already been given. It erys-
tallize the rapidly growing sentiment
among the bankers of the country for
a reform of the banking laws and is
reprinted herewith:
| have been asked to talk to you on
the Pacific Coast S need for banking
and currency reform.
Our need of better banking and cur
rency system is as keen as that of the
rest of the country-in some respects
we feel the need more keenly than
those of you who have your strain dur
ing the fall months, for the reason that
we are called upon to finance moving
crops throughout the entire year
Stri kes. delays in transportation and
other causes often complicate the sit
uatlOn serlously-One crop getting IN
:he way of another. in spite of the ut
most ingenuity the banks are capable of
exercising under the present banking
system. The crops must be moved, con-
sequentlv the merchants and other
clients must at times be curbed in the
exercise of their legitimate business,
whilst the banker worries and wonders
| over system which turns what should
be his most liquid assets drafts against
moving products, sold and on their way
to market) into fixed assets-as firmly
fixed. for the time being. as though he
had loaned the money on real estate.
Your cotton bill of lading situation is
threatening to turn a liquid asset into
a fixed one and is causing the same
anxiety that we patiently struggle I'M.
der in connection with the movement
of products to domestic points. You
are moving heaven and earth to retain
the liquid nature of your cotton drafts,
but apparently fail to see that we can
provide machinery to use our products,
which are sold and moving within our
borders, in Just as intelligent man
ner The cotton shipper can sell his
drafts because of the discount system
in London. not by reason of any note.
issuing power of the Bank of England.
there was something radically wrong
with our banking system, and your as
ISOLATION from time to time, has APP
pointed committees to evolve some plan
which would make the system more re-
sponsive to the demands of business,
and better able to exercise controlling
influence on those demands so as to
curb imitation before it reached crisis.
For one reason and another, none of
the suggested plans has been adopted,
and we have drifted along with the old
system. periodically getting into
trouble and invariably abandoning the
system when the crisis came. In des-
peration, with nothing on the statute
books to Justify us, we have turned
our clearinghouses into crude central
banks and saved the situation. It is
true that we have forced ruinous liqui-
dation and allowed many solvent clients
to fail say solvent for the reason
that MANY of us can call to mind con-
Germs which have had to suspend. re-
Stunning after the crisis had passed, and
paving dividends within six months or
year There is no question, however.
that by THROWING our restrictive bank
ing system overheard and adopting an
expansive one. we have restored con-
idenco. put an end to the competition
between the banks and the public. in
which each had been trying to see
which could lock up the most money
the one in its vaults and the other
in the safe deposit boxes-and we have
done so by supplying circulating me-
dunn to replace that which has been
locked up, and by giving ourselves the
ability and courage to respond to the
absolutely necessary demands of our
clients.
As far as I know no one has suffered
any loss from these so-called clearing
house certificates; they have been used
between the banks and by the public,
have performed their work and been
returned TO be Cancelled in a very few
months Perhaps the very fact that
here was nothing on the statute books
authoriz NC their existence has been
their strongest safeguard. as that fact
has driven them home the minute their
work was done.
I am satisfied that we have 4 suf
fcient circulating medium as long as
we have confidence. and we have con-
fdence until we are forced to stop loan
ing to our clients. Our circulating
medium is unquestionahlv improper, be
cause it does not respond to the de
mands Of business, and too large a pro
portion Of If is based on debt. with no
reserve of gold back of it. It is true