The Washington herald., 1910-11-13

the United States, a number OF gentle
men who are now living at public expense
might be successfully conducting their
banks. This danger is quite as real as
the danger OF misuse of the powers which
We delegate. II is true that the Comp
troller OF the Currency has the theoretic a
power TO prevent unsound banking, but
IL is most difficult for him TO detect i'm
proper methods in time.
Cheek on Expansion.
1.-THE natural optimism OF the people of
the United States. perhaps our greatest
asset, is another reason why we should
delegate TO some OF our best minds power
10 check expansion when IT has gone far
enough II we create an automatic sys-
tenn which will permit each bank TO issue
currency 10. say, 100 per cent OF IT'S capt.
tai stock, there are many who will con-
slider this as a recognized part of their
assets and will expand their operations
as recklessly to this limit as to those
which are now provided. and we will find
that nc safety check has been created.
The Uncontrolled System.
I'VE are against an uncontrolled sys-
tenn, also for the reason that such meth
DDS are as yet untried by any great ma
ton. The only example OF any impor-
tance OF such system is that of Canada
to-day. Canada has a population of about
100000. It's problems OF international
finance are nothing as compared with
those Of this country. and in times OF
financial stress It has both England and
the United States To fail back upon
I'VE object 10 an uncontrolled system
again because 1t provides no medium for
the protection OF our gold reserve
through dealings In gold and foreign ex-
change. The power TO safeguard this
point Is absolutely essential. and Il re-
quires in an emergency the exercise OF
our best banking and business Judgment
I'VE are against an uncontrolled system
because we recognize that had rules 10
govern our financial operations been
adopted fifty years ago. based upon con-
ditions as they then existed. they would
be outgrown and hopelessly inadequate
to-day, and we do not believe Il Is pos
sible for the present generation to pro-
vide regulations which VIII meet the IN
known development Of the future.
Educate the Public.
II now come 10 my second point, which
is. how shall We create a more general
knowledge OF this most important sub
1ect? AS / look back upon the speeches
which I have made, and remember the
addresses 10 which / have listened. Il
seems 10 me that all OF US, when discuss
ing this subject before a lay audience,
make a profound impression upon our
selves. but leave those who have been
patient enough 20 listen with the impress
sion that the subject is intensely COM
pick and beyond their understanding.
This is unfortunate. because in reality
the underlying principles are simple and
readily understood
''One OF the most essential features 10
the successful operation OF either the
bank which Is 20 help the merchant
directly. or the central bank which helps
the merchant through the medium of
another bank. IS that an intelligent con-
troll be exercised by somebody 20 say
when expansion must be checked.
Control OF Expansion.
Many business men know that they
have been tided over critical conditions
by their banker. with the understanding
that the assistance is temporary, and
that they must curtail their operations TO
an amount in proper proportion TO their
capital. The merchant is saved, and is
- 1tAAfA NAAAt' W AF'0AANAA 1AA ms uuNlnEeS
upon safe lines. Without this advice and
assistance he would have been forced to
the wall.
In the same way bank which has
been attempting 10 carry an amount of
business out Of proportion to/ts avail
able capital may tide over an emergency.
but conditions insisted upon which viii
avoid its recurrence. II you wifi consider
the problem from this standpoint many
Illustrations viii occur to you. and / be-
lieve that the greatest good can be done
if we start out TO correct the impression
that the problem Is complicated and be-
yone the understanding OF the average
individual, and undertake a plan 10 bring
this discussion down 10 the level OF I'M
derstanding Of those who conduct the
most simple industries Of the country"