The Fairmont West Virginian. (Fairmont, W. Va.) 1904-1914, 1911-11-18
.PAN|G INSURANCE
IRgEl8E CARNEGIE

UnbEB 6h1aEhlE
SOUND BANKING sYsTE @ I'M.
PEReTivE NEED TO PREVENT
ANOTHER PANIC LIKE 1907.
NEW YORK Nov. Money pan
les don't hurt the rich said Andrew
Carnegie to-day when asked why he
thought the United States had gthe
worst banlting system in the world.n
.tPapIcs hurt the working man. The
rich can manage TO get through pan
ic like that OF 1907 without suffering;
II Is The people who depend upon the
daily earnings for their daily bread
who feel. the cruel burdens Of panics.
The rich do not suffer for lack OF food
or clothing or shelter because hun.
sdreds OF thousands Of American work
ers are thrown ont Of employment as
they were in 1907 and as they were
iins the pos and In the EOS.
Mr., Carnegie said that while SO
great industrial country could insure
Itself against occasional periods Of
business depression following over.
expansion and 5 transportation the
experience OF Europe showed conclus
lively that money panlcs could be pre-
Vented even in time OF war.
isn't It "a humilluting thing" said
he sthat this great rich country OF
ours Is the only civilized country in
which money panics occur? We don't
sneed 10 have 4panics any more than
We need to hayethe plague We sun
iser from them because We have a
banking and currency. system that
breeds panlcs.
Before ] came home from abroad
this fail Germany was Just giving an
illuminating lessons.of how "a sound
! banking system prevents panics. The
same conditions in New York that
existed In Berlin a .fe~ weeks ago
wpuld8haye precipitsted.a--panic like
i that q 1907.
Il England, France, and Germany are
safely secured against panics. When
a crisis comes, II is promptly con.
trolledt and made comparatively harm.
less. How? BY using the reserve
banking power. Central banking In
stitutions always stand ready to re.
discount good business paper, and
give legal tender notes in exchange,
thus enamblIng the banks to loan the
business community all the funds IL
needs, In one week in September the
Reiehsbank stopped the impending
3 Berlin; war panic by increasing It's
( loans s145 900, 900. and increasing It's
bank note Issue by s154pOOo.QO0.
InS this couttry, in such crisis,
the whole machinery Of credit stops,
and Gin runs riot throughout the
:S5nsinHss world,nsrl5iice a.y.,Is
81 BIN impatient at the folly. yes,
: the cffme, OF allowing our whole cred
z 1t structure to be exposed to disaster
4 ms ii now is, simply because we have
4 neglected to follow the EexampleEot
other nations. by adding to our bank
Ing system what other civilized. ma;
stions ghrye; viz, means Of calling
3 upon the reserves Of banks by allow
Ing a cooperative association Of the
banks to lssue-legal tender currency
in times OF stress ] believe thereris
{ not another duty so imperatiyelyI de-
mandsd as the prompt creation OF
This reserve power. 1t can only be
done tby the demand Of the people
expressed through legislation in Con.
Z Sgress.S
d 1--WE spend our time discussing trif,
ing political issues, leaving the entire
structure. of credit open to disastrous
panic, which could easily be obviated
y were Jour banking system provided
is.with. reserve power always ready for
action.
eve sacrificed sound banking In
the Civil War to sustain the public
credit, when We began Issuing cur.
rency based on Government bonds
z But today our public credit certainly
{ needs no such support. IL Is time We
corrected the evil OF half q century
ago. Other countries have an enor
nous advantage over u.s. because
their hank currency, is based on com
mercial paper arising out Of day.to
day business transactions. When
business expands, there Is more CON
mercfal paper created, and the cur
rencyE automatically expands; when
bushes contracts, commercial paper
,isiretlred. and the currency contracts
The business community always has
the currency 1t needs and no more
Every working man and woman In
America should have the equivalent
u Of nm insurance policy against dire
disastersf from, financial panics. A co
operative banking reserve will give
this insurance" q,
ANDREW CARNEGIE.