The Richmond Virginian. (Richmond, Va.) 1910-1920, 1912-05-27
BANNING REFORM.
Rx Charles Ferguson.

AS things stand in this country. the
chief trouble with business is not
monetary bat moral. The main
trouble with our banking Ia not
currency question. but question OF
the abuse of credit.
IT is regrettable that so many hank
ers refuse to consider the organic dis
eases of our finance and strive to fix
public attention on mere heat rashes
and skin lotions. II IL Impossible to
believe that they are both sincere and
scientific when they Insist that a So
ciaI cataclysm like that Of i90T was
a mere money panic. thai II MAS
due to nothing but the bad currency
laws To which the banking fraternity
was heiplesslv and inn0cently ex-
posed
on that occasion Il was very clearly
shown that under modern CONNER
cial conditions anything is money that
Will GO through the clearing house:
and that sufficient medium Of ex-
change can he improVised II neces-
sary-even, at last resort. In the shape
Of clearing house certificates
our panics are not money panics,
ard they cannot be cured by passing
now currency Jaws They are credit
panfcs They are due To the failure
Of credit Credit falls and business
stops, because credit has been given
where II ought not To have been given,
and because business has thereby
been put on false basis,
The chief ca tse of tho failure ~
credit In 1907 was the vast growth Of
years During those years the banks
issued an enormous volume Of credits
based on the predatory power Of
thcse m0nopolies, or. in some cases,
upon the vain hope that they would
achieve such power.
4 trust that capitaiizes its power Of
extsrtion robs the public. A trust that
overca pitali2es this power s~indles its
stockholders. The credit that rests
upon robbery in the market place IL
self destructive and cannot last. The
credit that rests upon the, swtndltne
Of investors is baseless fabr!e--a
premonirory wrath or commercial
=aap bic
To capitalize q predatory power IS
AXE ,cePMal!ztag she business OF bur.
glary, Credits issued on such "a foot
ing cannot possibly 10 made ~ talls
straight In the day OF reckoning. To
ca pitalize false hopes Of winning pre-
datory powers is TO put the investment
market to moral and mental confusion
and prepare the way for wide-sweep-
ing disaster
The predatory power OF monopoly
Is the power to levy private taxes upon
tha community this, in the last
analysis. amounts to nothing less than
the power TO compel the mass of the
ineopie to lower, temporarily at least,
their customary standard of living
THIS lowering of the living standard
lie. of course, the same thing rs the
shrinking of the purchasing power OF
tho people. Thus monopoly spoils the
market for the products of field and
factory, and tends, by longer or
shorter course. 10 bring business TO a
stardstill--pending the time when the
! people shall have adjusted their
! Business can then so forward on the
new basis.
Such is the true description OF what
| happened in I907 and in the proceed
| ing and following years. But the peo-
| pie of the United States are not willing
| to accept as irremediahle the lower
standard of living that has been thrus,
| non them by the capitalization OF
predatory moropoiies-
| What Is now demanded by a dis
contented public is banking reform
that shall go somewhere near the root
| Of the economic difficulty. 1t is be-
ginning to be understood that the
! banking problem cannot be solved
save in conjunction with the political
! and economic problem. 1t Is impos-
| stbie TO have sound banking 80 long
as credits are given where they OF ght
| not to be given.
So long as II continues to be legal
to capitalize private taxing power,
! II is perhaps too much to expect that
bankers will - through sheer respect
| for the self-virdicating moral laws of
economics-refuse to do 1t. Yet 1t Is
| hardly excessive 10 hone that the bet
| ter sort OF bankers will lend their In
| f'eenee TO the current movement of
political and legal reform which aims
| to cancel the legality OF private mon
| opoly and so create the conditions that
shall make sound banking possible.
The fundamental need IS of new and
| ircisive legal definitions of financial
and commercial crime - laws that
shall cut out the cancer of fictitious
credit We must quit banking on lar
ceny and fraud.