The Fargo forum and daily republican. [volume] (Fargo, N.D.) 1894-1957, 1911-11-24

/ ever. these banks or garrisons are at
present lacking a general. 1t is a
| case Of each one for itself and help
from the garrisons OF other posts In
times OF trouble Is dinacult to obtain
So great an authority on matters of
finance as Prof. J. Laurence Laughlin
OF the University OF Chicago has
pointed out that the one thing now
most needed IL we are to shake of
the curse OF money panics is CO. oper-
alton In France, Germany and Eng
land this policy has long been in
force and so successfully that money
panics In those countries are UNI
known To make clear his point
Professor Laughlin gives the following
illustration.
If military force of 1000 men on
the frontier" says he. were scattered
in twenty blockhouses, each contain
ing fifty men, then a small body which
could capture one blockhouse could
successfully destroy the whole num-
Der of garrisons. Such bad military
strategy could be obviated by uniting
all the garrisons with connected de-
lenses, so that any attack could be
met at one point by the whole force
under command. Our present bang
ing system is like the scheme Of de-
tached blockhouses. From the point
of view Of the borrower and the busl-
ness man, II might be called the block
head system. What we need In union
and cooperation In the face Of dan
ger"
The actual working out OF this plan
from both points Of view is illustrated
by the panic of 1907 in this country
and a recent situation in Germany. In
the case of the United States the panic
was essentially one of money which
might readily have been averted had
there been some cooperative means
at hand by which the gold and. of
course the issues based upon II, could
have been put to work most effective
ly. In it's beginning the panic was
confined to New York city, and q
comparatively small amount of as
sistance from banks in the other parts
OF the country which were not affected
would, had 1t been promptly forth
coming, have averted the panic. But
banks all over the country fearing that
the panic might spread instead of
sending aid to the weak point began a
struggle, each to strengthen itself, and
as q result the panic did spread from
ocean to ocean with results which are
still sorrowfuily remembered.
Recently in Germany there develop
ed factors which under our banking
system undoubtedly would haya
brought about a panic similar to ours.
The war scare in Africa caused an
enormous withdrawal of French gold
from Berlin In two weeks the Inn
perial bank had to increase it's loans
by more than 32o0,o000oo. Had the
same conditions arisen here a panic
would have been the result. In Ger
many, however, the matter caused
practically no comment or disturbance
because OF the existence Of q system
OF cooperation.
1t is not surprising that business
men the country over are at last de-
mandtng such changes In our banking
system as will enable our gold to work
as effectively toward the prevention Of
panics and maintenance OF credit as
does that OF France, Germany and
England. Money panics are expensive
luxuries in which Uncle Sam is about
the only remaining regular indulger.
In addition plan OF cooperation
such as a national reserve to unite
the strength of all banks for the de-
tense Of any and thus eliminate panics
and preserve credit would contain an
other feature which will doubtless re-
ceive unqualified welcome-that is the
freeing Of the money market from the
influence Of wall Street. From the
sentimental point OF view, 1t would
relieve our gold from the charge If
laziness, quality not supposed to be
consistent with American institutions.
In more concrete terms the plan az
uniting the banks OF the country
through a cooperative organization
whose motto might well be zone for all
and all for one" instead of every one
for himself as is now the case, should
bring about the elimination Of panics
the safeguarding Of the money mar
ket from Wall Street, and the stabiliz-
alton of credit-all Of which simply
means greater security for every bust
ness man and laborer throughout the
country in the task of getting steady
living.