Ashland tidings. [volume] (Ashland, Or.) 1876-1919, 1912-09-16
PANICS ARE NEEDLESS
Member of Monetary Commission
SAYS Present System Is Unsound
-ReSerYeS Not Effective.


of the American Bankers Associa-
tion. which began here today,
brought to Detroit between two and
three thousand delegates from vari-
Gus parts of the United States, its
territories and Canada.
After the convention had heard
several addresses of welcome at the
opening session. it listened to an ad-
dress on Banking and Currency Re-
form" by Robert W. Bonynge of
Denver, member of the National
Monetary Commission, who declared
that the banking and currency sys-
TEN of the nation was essentially un-
sound The problem, he said, was es-
sentially one OF economics and busi-
ness.
The defects in the existing sys-
tenn" he continued, that must be
remedied, no matter which party is
charged with the responsibility OF
framing the legislation, are: Our
unscientific treatment of bank re-
serves. the rigidity of our entire cred
it system and the lack of cO-opera-
tion between our independent banks.
Scattered Reserves Ineffective.
Our present reserve system re-
stricts the lending power of banks
at times when reserves should be
freely used and credit literally eX
tended to solvent business men and
thereby intensifies if it does not act
ually produce panics. Our scattered
reserves are wholly ineffective for
use in emergencies. Our bank notes
do not fluctuate in response to busi-
ness needs. Even the commercial pa
par held by the banks is not truly
LIQUID asset with us. Each separate
bank in times of stress is concerned
only in strengthening its reserves.
The sole method available for that
purpose is the calling of loans. The
portion of the reserves held in the
vaults of our thousands of indepen-
dent banks is for all practical pur-
poses a dead asset. Indeed, rightly
stamps itself upon our entire credit
organization.
I'VE have only local banks They
furnish banking facilities to their
own communities. They are indis-
pensable. But it must be obvious
that these strictly local institutions
cannot look after or provide for the
general credit conditions of the coun-
try at large
Units Must BE Independent.
LAS it was found necessary to or
ganize the federal government to
guard our national interests and to
legislate on those subjects affecting
us as nation, so we must have
some national federation of banks
60
independence of the units must be
absolutely preserved. The powers
given to the federation of the banks
must be strictly limited to those that
are national in character. The form
of organization must be such as to
insure it's operation in the interests
of and as a support to all Legitimate
business and must be wholly free
from sectional political or selfish
financial control.
when thus organized it must be
empowered to act as custodian fol
the reserves of the banks, to redis
count their short-time commercial pa
per, to provide a safe and sound bank
not currency that will automatically
adjust itself to the constant changes
in business requirements, to act a!
the governments fiscal agent and tt
represent us in all national and al
international financial affairs.
Experience proves that currenc!
issued by a government or by a gov
ernment-owned institution alway
lacks the essential element of elias
ITCHY. It's amount is determined b,
the governments needs and fixed b.
-NDt ,s.,sa III,
speedily altered to meet changing
conditions. The government issue
money, and may and should in th
interest of the public regulate tn
agency or agencies which may, in ac
cordance with certain general princi
pies that it establishes, issue credi
redeemable in lawful money. 1t /
for these reasons that the issuance o
bank note currency should be in
trusted to the federation of banks
under regulations to be prescribed b.
statute and strict government super
vision through its own officers.
Panics Would Cease.
with a cooperative federation o
our banks established, having tn
necessary powers to protect our gen
eral credit conditions, banking pan
les and money stringencies would n
longer plague us. Each Independent
bank would know that it could safel
extend at some price such assistanc
as might be required to any solven
business man, because it would kno'
that If the occasion arose 1t could re
discount the commercial paper of II
solvent customer at a branch of tn
federation of banks. We would hav
safe custodian for the reserves c
the banks. They would be mobi
lied and could be put to effectiy
nse whenever needed.
"A plan to accomplish these puI
poses has been before the COUNT
for nearly year. 1t is containe
in the unanimous report made
congress by the National Monetai
Commission recommending the e
tablishment of the National Reser'
Association. A solution for it mu
be found. Shall we say that we a
unequal to the task? Shall it
said that this powerful nation aloi
of all the nations of the earth is II
able to devise banking system sui
ed to its needs?"