The Birmingham age-herald., 1912-12-15

HARRY A. WHEELER
 ssss.s.sss...sss...s.ss...s ...s.".ssss".s,.s..s..ss tory; he must have funds to buy his leather and other materials, and to pay all the various running expenses of his plant. Neither can those who handle the shoes from the time they leave New England until they are finally pur- chased by the ultimate consumers wait for their payment until the money is paid over the counter in the stores.
 Wonderful Machinery of Credit
 It is the banking system that pro- vides the credit machinery whereby the long interval between the production and consumption of goods is bridged.
 A Kansas farmer raises crop of wheat In the summer. He sells his wheat to country elevator at the nearby railway station. The country elevator sells the wheat to q big Chi cago elevator. The Chicago elevator sells 1t to a Minneapolis miller. The miller ships the flour abroad to 8 job ber who sells 1t to a baker The baker sells his loaves. to the London house. wives. Through the wonderful machin- cry of credit, it is quite possible that the five pence a London housewife pays for loaf of bread made from the Kansas wheat is the only money that passes from hand to hand in the whole series of transactions. If the London housewife keeps a bank account and pays her baker by check, no money is used in the transactions But all the agents of production in this transfor nation of Kansas wheat into food for ar English family get paid for their work through the credit machinery
 When the machinery of credit breaks down, as it has broken down in this coun- try repeatedly, because of various serious evils in our banking system, the industry of the country is strangled The great commercial nations of Europe, realizing how vital to the conduct of commerce is the smooth running of the machinery of credit, have so perfected their banking systems that they are able to keep the machinery running in good times and in bad times. In England, France and Ger many, business has it's ups and downs just as it has here they have industrial booms and industrial expressions; but the credit machinery is so adjusted to the needs of business that it keeps right on running.
 A Fair Weather Banking System
 We have a fair weather banking sys- tenn. It works all right in good times but 1t breaks down just at the time when it is most needed-in a period of imam cal distress. We need only go back to 1907 for d striking example of the weak ness of our banking system. The eoun- try was prosperous in that year: We had had, in fact, nearly a decade of the most wonderful commercial prospedity ever seen in the world But in the course of a few days in the fall of that year the whole commerce of the country was turned upside down, with enormous loss to all classes of people, and especially to the millions of working people. because the banking system broke down. It is d humlliating fact that this is the only great commercial nation in the world In which such thing could happen. That panics will continue to occur in thls coun- try so long as we refuse to reform our banking system is not to be questioned. The older countries of Europe have in- sured themselves against money panlcs We can do the same.
 The reform of our panic breaking bank ing system is surely not a question that should enter into party politics. The question is now before Congress. It is the duty of Congress to discuss this re- form without passion and without prej- udice, and it is the duty of every patriotic citizen to inform himself as to the merits of the proposed legislation
 A Non-Partisan Question
 Banking reform has been delayed Tor years. It has been our misfortune in this country that problems relating to banking and currency have been made the football of party politics. The fight for sound money was a bitter partisan struggle. That fight was won because the wage-earners and wage payers of the country, realizing the vital importance of squaring our money standard with that of the rest of the world, stood together for the gold standard. Now that we have sound money it is just us essential that we have sound credit. 1 believe 1hur we can provide. sound credit systems with out letting the discussion get into partisan politics. The nationwide discussion of the need of banking and currency reform is most encouraging indication that the people of this country are more and more coming to believe that legislation affect ing business should be discussed in q business-lille way.
 Certain basic principles must under lie any plan for reforming our banking and currency system. The first principle is cooperation. Tn the panic of 1907 the 2S,000 banks all fought against each other. each trying to save itself in ths storm. This is Just the reverse of whar
 
 should be so reguia ted that in d time of financial distress or industrial depres- sion, all of the banks of the country will unite for the common good. If is therefore proposed that the banks form cooperative association We need system whereby a sound bank can al- ways use its sound assets to provide it. self with currency. We should have an association of all the banks that will stand ready at all times to rediscount for tho banks their good commercial Taper based on the legitimate day-to- day business of the country
 Idle Funds Drift to Wall Street
 One of the worst faults of our Ameri- can banking system is that we have neglected to develop d market for com mercial papes After every harvest a great flood of money pours into the banks and finds It's way to New York, where now the final banking reserves of the nation are hesd The New York bankers must put inls money at work They must put 1t wiiere it can be re- called on short notice. when it Is again needed by the restvof inc country. The only big call loan market New York bank CTS have for lending money is the stock exchange. The result of this is that there has developed dangerous system of loaning a large part of the surplus cash reserves of the nation on t T.. Al. g.f..