The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1911-11-17
CARNEGIE FAv0RES
! PANIC INSURANCE
H.
Iron Master Says American
Banking System Is the
= Worst in the World.
National News Association)

NEW YORK, Nov. 17-"Money pan
les don't hurt the rich," said Andrew
Carnegie 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 panic
like that of 1907 without suffering; it
10 the people who depend upon 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 hundreds
OF thousands of American workers are
were in 1907, and as they were in the
'9O's."
Mr.. Carnegie said that while no
great industrial country could insure
itself against occasional periods OF
business depression following over-ex-
pansion and misrepresentation. the ex.
perience of Europe showed conclusive
" that money panics could be pre-
vented even in time Of war.
II 10 HumiIiating.
isn't 1t a humiliating thing" said
he, that this great rich 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 a banking
and currency system that breeds
panics.
Before l came home from abroad
this fall, Germany was just giving an
Illuminating lesson of how a sound
banking system prevents panics. The
same conditions in New York that ex-
listed in Berlin a few weeks ago would
have precipitated a panic like that of
1907.
England, France and Germany are
safely secured against panics. When
q crisis comes, it Is promptly controll-
ed 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 enabl-
ing the banks to loan the business
community all the funds it needs. In
one week in September the Reichs-
bank stopped the impending Berlin
war panic by increasing its loans
$l45, 100000, and increasing its bank
note issue by $154,00O,0OO.
I'm this country, in such crisis, the
whole machinery of credit stops, and
ruin runs riot throughout the business
world.
impatient at Folly.
Il am impatient at the folly, yes, the
crime Of allowing our whole credit
structure to be exposed to disaster. as
II now is, simply because we have
neglected to follow the example OF
other nations. by adding to our bank
ing system what other civilized ma
lions have. viz; a means Of calling up
on the reserves of banks by allowing
q cooperative association of the banks
to issue legal tender currency in times
of stress. believe there is not anoth
er duty SO imperatively demanded as
the prompt creation Of this reserve
power. 1t can only be done by the
demand of the people expressed
through legislation in Congress.
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
were our banking system provided
with reserve power always ready for
action.
I'VE 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
iSsbased on commercial paper arising
out of day.to-day business transac-