The Waxahachie daily light. [volume] (Waxahachie, Tex.) 1894-current, 1911-08-05
RESERVE ASSOCIATION
REMEDY FOR PAN|CS
TRY MOULD BE HELPED
BN ORGANIZATION.
Frank T. Nauderlip says Banks
Would BE Enabled to Finance
Trade of the World-Bcn-
fetal TO All Glasses.
Associated Press Special

Associated Press Special
| Chautauqua, n. Y, August o.
| Speaking at the Chautauqua Assem-
bly, today on the subject of Safe
guards Against Panics" Frank A.
| Vanderlip, president of the National
| City Bank of New York, said
| The panic of 1907 afforded a con-
vinciug demonstration of the in
| he ent weakness of the banking Or
| ganization in the United States, and
awakened for the first time gen
| eral interest in proposals for cur
rency reform. The panic of 1898
had occasioned some agitation of
| the subject and the American Ban
| kers' Association, meeting at Baltl-
more in 1894, adopted recommen-
dations looking to more llberal
system of bank issues What was
| knwon as the Baltimore plan con-
| templated issues by all the national
| banks against their general assets
instead of against government bon ia
or other specified security In all
! the later discussion of the subject
| this class of issues has been known
as asset currency The silver
agitation which came about that
time postponed the bank note ques-
ton and little progress was made
for ten years more.
With the organization of the Ma
tional Reserve Association or one
performing substantially these func-
lions there is little risk in saying
that another suspension of cash pay
ments will never be experienced in
this country This in itself is Of
great importance 1t would be OF
inestimable value to all classes and
all interests to have protection
against a repetition of the expert
ences of 1907 But that is not all,
or even the chief of benefits.
Fourteen years interviewed between
the panic of 1893 and 1907, but in
every year of that time the facili-
ties which the Reserve Association
will afford would have been helpful
in many parts of the country, par
ticularly in the crop-raising season,
They will help every community to
use the credit which it is entitled to
use and do it under such restric-
lions and supervision that the bank
| ing business of the whole country
win be in better condition than it
| has ever been heretofore. They
will enlarge the credit facilities of
the local banks for all special and
temporary needs, protect the money
markets from extreme fluctuations,
and make credit conditions more
stable and uniform throughout the
country
Money in all the ordinary uses OF
trade is simply a means OF transfer
ring cherdits or settling balances,
The great bulk of the business oil
the world is done without 1t, EXCEPT
as it serves in bank reserves as tho
tombstone of value and as margin
Of liquid capital that is quickly
transferable and available anywhere
The essential and fundamentaPtruth
upon which all business relations
are based is the fact that the eX-
changes offset and balance them
selves. The bookkeeping function,
| the service Of arranging the offsets,
disposes of much the greater part of
all the payments that are to be
made. This service is performed by
the banks and the fact that so large
a proportion of the payments can
| be settled in this manner and with
out the use of money, enables the
banks to finance the trade OF the
world so largely upon credit
Bank credit is based upon the
credit of the business public. The
banks examine and verify and class
ify the credit of their customers and
with a margin for error are able by
the law of averages to create upon
this basis higher and more liquid
form of credit which is placee at the
service of the business community
And as the credit of one bank Is
usually better than that of is indi'
vidual customers so the credit Of a
group Of banks, by the law of aver
ages, is DelltT imam tHdt ol an lAAl-
vidual member of the group, and
the credit OF a system which includ-
ed all or the larger part of the banks
Of a country like the United states
would be the highest form OF credit
in the world
The vital difference between bank
credit and individual credit is in the
fact that bank credit is treated as
cash The banks so arrange the
maturing obligations Of their custo'
mers that they can agree to pay all
their own obligations on demand
and they make good on the promise
so uniformly that their promises
are accepted as cash Their credit
therefore, Is buying power. Ii Is
paying power 1t does everything
that money can cen do. II is more
liquid and transferable than money
itself When it is understood that
the chief function OF banking Il
dealing in credit not mon
ey that the banks lend the old fear
that the banks viii control the vol