The Detroit times., 1911-12-08

We should have none OF tilis doctrine,
i I could give you s-itst-cf \ dozen out
OF the long list OF stocks dealt In on
\ the New York exchange whose market
value IL a half billion below the race
and whose book value L. a good DIT
lower. Can IL be maintained that IN
hation and the consequent shrlnkage
| do not leave lasting damage behindy
once asked the promoter OF an eleYat-
ed railroad In Brooklyn why he stock
\ 600 a mile TO build for $3.50. 900 n mile
and could not earn dividends. he said
ne was merely anticipating the future.
4 That is "A national business habit. IL
ought 10 stop Until IL does stop we
viii have no stability and no fiscal
| safety. no matter how many laws are
passed 10 license" or TO regulate"
| ... same Imitation Tits.
| Six or seven years ago a friend OF
mine bought property Tor 800 geo, IL
| had a good reputation but made no
| money. In two years ne had IL earning
$3.50. 600 "A year Wishing to embalm
| his wealth In greengoods. he capital
| ized" his business for $1,000 Then
he felt that consolidation would be a
good thing and he joined In with a
81 ! 100000 watering cart and raised
his end to SO. 500. 600 to "eaualize." This
sam would be considered a good divi-
DEM on s1O6, 000 IL Is pretty feeble.
| though, in tackling ss.5oo.ooo.
But to get back 10 the dollar and
it's conservation. How can u be done
We can stop imitation by the simple
process OF being honest. each to tho
other and capitalize assets instead OF
earning power privileges, protection
and dreams. But how can we protect
the dollar once earned and put into
storage: strong campaign Is under
way to put through the Aldrich plan.
We are 10 make money more fluid"
Alas That is the trouble now IL Is
too fluid, IL runs away like spilled
mercury. but fails TO amalgamate again
N n NO
~ figure out fairly the loss OF hard
earned cash. but dare say Il IS as
horrible as the shrinking in stock
values. the loss by FIRE or any other re-
suit OF human rascality or neglect II
say let money be less fluid" not more
SO and instead OF this Aldrich plan
with it's Capitalization and great de-
peudenoe on the human equation. let
us substitute something automatic and
honest beyond the reach OF cunning
This - the plan l have devised myself
criticism of my banker friends except
as TO where do we come inn" They
don't come In. There is no reason why
mine and ought TO be as = surely pro-
tected as your tree Is protected from
the axes of others. Money is a utility
as well as property and. Of course, as
brief:
There are now two forms OF bank
ing. There should be three. The saw
ings banks. after many years abuse
and after terrible losses to depositors
through the dereliction OF directors
and speculation OF managers. has been
made by law the soundest and best OF
financial reservoirs. The basis of this
is the real estate mortgage loan or the
ownership OF legally approved securi-
cities or certain safely organized rail-
roads
Opposed TO the savings bank we have
three sorts OF banks-the state. the
national and the trust company. These
diner only In organization. powers and
the extent TO which they are subjected
TO governmental supervision Not one
OF these offers any substantial secur-
ity TO the depositor beyond the char
acter Of its management. In the case
OF the national bank the government
secures the circulation. but the depos-
itor Is no better on than with the state
banks or trust companies. The latter
pay interest on deposits and have wide
They do banking bust
ness without banking safeguards
They tempt, money by paying, inter
est when applied TO daily or monthly
bslances They underwrfte speculative
enterprises and can loan on anything
ability TO make money from the use OF
peoples money.
-. should he Limited.
All three sorts should be limited TO
doing DISCOUNT business ,suhdsr !, re-
strictions as close as can consistently
and ae eredias csii loans shoui net be
permitted Nor should these banks be
allowed TO do clearing for their Gus
toners. That is to say. they should
ingB banks. which viii not honor
checks and which can require a long
notice from the depositor or his inten-
ton toEwfthdraw. This would lend an
nfa N ~ IN "a ha
depositor and the borrower, who would
not be subject TO the fluctuations OF a
stock market or the caprice of the
nor would he further be
in the peril OF having his security be-
come a football In the stock market
through the knowledge on the part OF
some insider that he was being loaned
turbances have been created In New
York because OF this Is a fact that can
not be disputed The banks are an |
a business that has nothing whatever
10 do with legitimate commercial un-
dertakings. although the latter are al |
ways in danger from it's prosecution.
A third form of bank should be es-
tablished to do nothing but check /
and clearing business. requiring but
small capital and charging q fractional |
fee for collecting checks and making |
clearings. This would enforce stabii- |
lily and protect the working accounts |
OF depositors. The funds could not be |
used except as needed TO. cash checks
and balance .clearings. They would !
not be invested, but would always be |
In the Golfers OF the institution.
II would be much more economical |
for the depositor were he to pay a tax |
OF one-tenth of one per cent on his |
clearings and have his spare money |
receive adequate interest from the |
bank OF deposit than II is now. when |
he receives little or no interest and has |
his funds subject to the fluctuations
n -