The weekly chieftain. [volume] (Vinita, Craig County, Okla.) 1905-1913, 1911-11-17
PANIC INSURANCE
URGED BY CARNEGIE
Pleads For Central Reserve That Will
Support Banks in Time of
Financial Stress.

New York, Nov. Money panics
don't hurt the rich" said Andrew Car
negie today, when asked why he
thought the United States had "the
worst banking system in the world.
"Panics hurt the working man. The
rich can manage to get through a
panic like that of 1907 without suffer
ing; it is the people who depend upon
daily carr lgs for their daily bread
who feel the cruel burdens of panics.
The rich d. not suffer for lack of food
or clothing, or shelter because hun
dreds of thousands of American work
ers are thrown out of employment, as
they were in 1907, and as they were
in the 90's and in the zoe"
Mr.. Carnegie said that while no great
industrial country could insure itself
against occasional periods of business
depression following over-expansion
and over-speculation the experience of
Europe showed conclusively that
money panics could be prevented even
in time of war.
Isn't it a humiliating thing" said
he, "that this great rch country of ours
is the only civilized country in which
money panics occur? We don't need
to have panics any more than we need
to have the plague. We suffer from
them because we have banking and
currency system that breeds panics.
Before I came home from abroad
this fall, Germany was just giving an
Illuminating lesson of how sound
banking system prevents panics. The
same canditions in New York that ex-
listed in Berlin a few weeks ago would
have precipated a panic like that of
1907.
England, France and Germany are
safely secured against panics. When
crisis comes, it is promptly controlled
and made comparatively harmless.
How? By using the reserve banking
power. Central banking, institutions
always stand ready to re-discount good
business paper, and give legal tender
notes in exchange, thus enabling the
banks to loan the business community
all the funds it needs. In one week
in September the Reichsbank stopped
the impending Berlin war panic by in
creasing it's loans $145, 100000, and in
creasing its bank note issue by $154,
100000
'In this country, in such crisis, the
whole machinery of credit stops, and
ruin runs riot throughout the business
world.
81 am impatient at the folly, yes, the
crime, of allowing our whole credit
structure to be exposed to disaster, as
it now is, simply because we have ne
elected to follow the example of other
nations, by adding to our banking sys-
tenn what other civilized nations have;
viz, means of calling upon the re-
serves of banks by allowing cooper
atiye association of the banks to issue
legal tender currency in times of stress.
| believe there is not another duty so
imperatively demanded as the prompt
creation of this reserve power. 1t can
only be done by the demand of the peo-
pie expressed through legislation in
congress.
eve spend our time discussing trif-
ling political issues, leaving the entire
structure of credit open to disastrous
panic, which could easily be obviated
were our banking system provided with
reserve power always ready for action.
1--WE sacrificed sound banking in the
Civil War to sustain the public credit,
when we began issuing currency based
on government bonds. But today our
public credit certainly needs no such
support. 1t is time we corrected the
evil of half century ago. Other
countries have an enormous advantage
over us, because their bank currency
is based on commercial paper arising
out of day-to-day business transactions
When business expands, there is more
commercial paper created, and the cur
rency automatically expands; when
business contracts, commercial paper
is retired, and the currency contracts.
The business community always has
the currency it needs and no more.
Every working man and woman in
America should have the equivalent of
an insurance policy against dire dis
aster from financial panics. A coop
erative banking reserve will give this
insurance"
School of instruction.