The Hawaiian gazette. [volume] (Honolulu [Oahu, Hawaii]) 1865-1918, 1910-10-14

vance copy Of the address to be de.
Iivered by Frank B. Anderson, the pres.
ident of the Bank Of California, before
the ANIMAL convention OF the American
Bankers Association. This convention
was TO be held in Los Angeles between
October 3 and 7, and the address has
probably already been given. it crys-
tallize the rapidly growing sentiment
among the bankers of the country for
reform of the banking laws and is
| reprinted herewith:
l have been asked to talk to you on
/ the Pacific Coast's need for banking
and currency reform.
Our need Of a 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
Strikes, delays in transportation and
other causes often complicate the sit
uation seriously-one crop getting in
the 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-
sequently the merchants and other
clients must at times be curbed in the
exercise of their Legitimate business.
whilst the banker worries and wonders
over a system which turns what should
he 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 q LIQUID asset into
a fixed one and is causing the same
anxiety that we patiently struggle un.
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 a 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.
For years we have been aware that
there was something radically wrong
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 a crisis.
For one reason and another, none of
the suggested plans has been adopted,
4 - Ill 10 4
system, periodically getting into
trouble, and invariably abandoning the
system when the crisis came. In des-
l.peration, with nothing on the statute
books 70 Justify us. we have turned
our clearinghouse into crude central
banks and saved the situation. 1t is
true that we have forced ruinous liqui-
dation and allowed many solvent clients
to fail say solvent for the reason
that manv of us can call to mind con-
Germs which have had to suspend, re-
suming after the crisis had passed and
paying 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-
fidence, put an end to the competition
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 n circulating me,
iium 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 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
there was nothing on the statute books
authorizing their existence has been
their strongest safeguard, as that fact
has driven them home the minute their
work was done.
7 am satisfied that we have suf-
deient circulating medium as long as
we have confidence. and we have con
fidence until we are forced to stop loan
ing to our clients. Our circulating
medium is unquestionahly improper, be-
cause il does not respond to the de-
MINUS VI Duhlnthss anu lOu large n
portion of 1t is based on debt. with no
rnserve of gold back of it. II is true
that the government is pledged TO keen
all forms of money on a par with gold,
but it is also true that the great in
crease in National Bank note circula-
tion win jeopardize the governments
ability to redeem this pledge in any
great international crisis, if indeed it
has not already done So If the Ma
tional Bank notes sought redemption
when the strain of the fall demand
throughout the country was over. they
would cease to be menace, but the
banks take out the notes because it Is
profitable to do so. The margin of
profit is very narrow, and can be made
only when the notes are kept in eireu-
lation, consequently every ingenuity Of
she executive officers is employed TO
keen them from heing redeemed.
Elasticity In National Bank eircu-
lation can be accomplished but the
result would be- further shrinkage In
the value OF United States bonds. en-
failing great loss on the National
Banks. and these hanks have already
been called upon TO assume loss OF
many millions on their holdings