Evening star., 1912-03-17
IN BANKING
Pointed Out by President Cox
of Second National Bank.
WRITES SPECIAL ARTICLE
Current Number of Moody's Maya
zine Also Offers Remedies by
Washingtonian.

1 The current number of Moody's Maya
zine contains an article on Defects i'm
Our Banking System and Remedies
Therefor" The article is written by Will
liam Van Zandt Cox, president of the
Second National Bank of this city. and
is one of two articles solicited by the
editors Of the magazine and designed, to
give both sides of the question presented
by the National Reserve Association plan
for reorganizing the financial system of
| the United States. Mr.. CoX's article fol-
| lows:
| 1T is only possible in short paper to
1 point out a few of the defects in the
| present banking system of the United
States and refer to a few remedies sug-
gested by the national monetary commits
| sion.
The most glaring defect in the pres
| ent American banking system is general
~ admitted to be the inability to control
| reserve money. If the recommendations
| OF the monetary commission in it's plan
submitted to Congress on January last
document 24O are carried out bank cash
| reserves now helplessy scattered will
| be concentrated. and when trade requires
or occasion demands will be mobilized to
| meet business requirements or to pre-
| vent financial crises, so destructive in
| the past
The lending power of the banks will
more flexible, in that it will automatical-
| ly supply the normal and abnormal needs
| of the country, responding to the de-
mands of trade by contracting when not
| required, and expanding when there is
demand. The reverse of this takes place
under the present law, currency expand
ing WIN it should contract, and con-
| tracing when it should expand, causing
money stringency.
Commercial paper of a high grade will
| be available for bank investments, sup
| plying a need in the development of
| agriculture and the industries of the
country.
Plan of the Association.
THE National Reserve Association plan
is an evolution of the clearing house plan,
| making it possible for the banks of the
| country to cooperate in certain well
defined ways. 1t is acknowledged to be
fundamentally correct and drawn on sci
entific lines. 1t is a patriotic non-politi-
cal business proposition. It's provisions
are unanimously recommended by both
democrats and republicans of the COM
mission, wisely drawn and carefully
guarded in every detail, SO that there is
small probability Of imitation and little
opportunity for a money trust
'The plan is unique and feasible. and
was adopted after careful study of the
systems of the world and after trying
out hundreds of schemes suggested by
home talent
"The reserve association plan favors
no single interest and protects no one
class. 1t will be a benefit to all classes
and protect them from all but imaginary
| sensational abuses If adopted promptly,
the country will be saved from sense
less panics and our merchants will be
able to compete with those of the ma
tiOns of the earth for the commerce of
the world.
THE members of the monetary COM
mission deserve the thanks of the Amer
ican people for performing stupendous
work intelligently and well. In produc-
ing its constructive plan it has assembled
the most important collection of banking
literature ever gotten together. the prod
uct Of the most eminent among econo
mists and financial authorities.
Credit to Currency Commission.
Credit should also be given the men,
bers of the currency commission Of the
American Bankers Association for their
work for currency reform and the part
they took in securing from Congress the
appointment of the monetary commission.
1T ought not to be difficult now, with
the wonderful collection of financial
papers, for Congress to enact practical
financial legislation.
with each other in securing the passage
Of wise and efficient financial measure,
but there is little hope, l regret to say,
of this being done in a presidential year,
when sensational politics occupies the
center of the stage, notwithstanding the
fact that constructive financial legislation
is by far the most important question be-
fore the American people.
"The advocates of currency reform will
not, however, become discouraged be-
cause progress in financial education is
slow. 1t could hardly be otherwise, when
democrats have grown up in the Andrew
Jackson school of finance and republi-
cans have always been devout pupils of
an inelastic bond-secured currency
Should Provide for Loans.
There should be some means, as Prof
J. l.. Laughlin well says, which will en-
able banks to make loans to clients who
can thereby be saved from failure and
| from hasty and ruinous liquidation.
Surely our lawmakers will not require
| more panics. unknown in other civilized
countries, to further demonstrate the ne
cessity for remedial legislation.
Banking is in pathological condition.
| Specialists have agreed on the nature of
| the disease and have suggested the re-
\ moval Of useless financial appendix as
| the remedy. Congress is the doctor. The
| operation is simple and should be imme-
| diately performed There will be no dan
| ger il antiseptics are generously used to
prevent the feeble patient being inocu-
/ lated with some other dangerous virus
| Delays are dangerous. Will the doctors
i vyfl1 To