The Birmingham age-herald., 1913-08-25
Mere Legislation Cannot
Prevent Money Seeking
It's Normal Levels
GENERALIZATION is
OFTEN IMPORTANT
Emergencies Arise Where 1t Is of
Great Importance to Pour in
Money to Meet Critical
Situations
By HOLLAND


New York, August 24.-(Special.) 1.-The
address recently delivered by George M.
Reynolds. president OF the largest national
bank of Chicago an office which he pre-
ferred to that of Secretary of the Treas
pry. has been read and reread in this
city especially with the view Of getting
at the meaning of some of the remarks
made by this very able banker The inti-
nation runs through portions OF the ad-
+ dress that however sincere Congress and
the administration at Washington may
be in their desire to furnish the United
States with satisfactory and adequate
banking system. nevertheless there are
some features of the bill now before Con-
gress which. uneonsciously perhaps, re-
fleets desire to interfere with the FORMAL
and even fundamental laws which control
the movements of money.
President Reynolds is plainly of the onin-
Ion that there is no possible legislation
short of that which is absolutely de-
sructivc which can prevent the normal
movement of money. Money, like water,
VIII find its natural level. If obstruc-
tions are raised by law or artificially to
impede the natural course or current OF
ma It's way around the obstruction or
else, like water again. will be impounded
into reservoir like great dam
Apparently President Reynolds thinks
that this country is too vast to make It
possible for legislation to interfere for
any length of time with the normal move
ment CT currents of money. and that to
a considerable extent is also true with
respect to credit
In the summer preceding the panic of
1897, one of the leading international bank
ers stated that i'm this day II Is absolute
ly impracticable for any man or any group
OF men to MASTER excepting possibly for "A
day. the money market through manipula-
tion. There are several reasons why, in
his opinion, this is so. In the first place.
the amount of capital at the command of
any one man or any group of men is too
small to make it serviceable in manipu-
lating the money market. AT the time of
the civil war Commodore Vanderbilt and
Daniel Drew could master the money mar
ket long enough to serve their purposes
and yet the fortune of each of these men
was less than the yearly income of An
thony N Brady, probably much less than
the yearly income of Henry c. Frlck GER
tainly far less than the yearly income
of Andrew Carnegie. In the next place
the wonderful mastery of the forces OF
nature by which instantaneous commun-
feation of Intelligence IS made possible
would prevent any successful manipula-
tlon of the money market in the interest
of one man or of a small group Of men.
In 1907. upon the day of the outbreak
of the panic. when specie payments were
practically suspended, and 1t was inevit-
able that there be appeal to the clearing
house associations for the employment of
their latent powers so that Instruments
of credit could be provided, two or three
of the banks of this city, and certainly
one of the international banking houses,
began to offset the harmful influence oe-
easioned by the panic and the practical
suspension of specie payments of their
banks through the utilization of the ocean
cable. Within an hour messages were
sent back and forth which caused on
immediate expectation of gold of approx
imately $10,Oo0000
The st. Louis Panic
The emergencies occasioned by the great
Baltimore fire, the disasters which 1t was
feared would follow the annihilation of
San Francisco by fire and earthquake-all
were relieved within a few hours time
by means of the telephone and telegraph
IT frequently happens that the government
transfers millions in gold from New York
to San Francisco, or the other way, SIM
ply by the utilization of the telegraph and
by appropriate bookkeeping.
Where Law Is Intellectual
If it were the purpose to pass a law
by which the instantaneous movement of
money toward some great financial center
would be prevented. that law would prob
ably be found ineffective. Even one of
the monarchs of Europe discovered that
the death penalty did not prevent the de-
probation of paper money. since those
who received paper money would accept it
only upon the basis of the depreciation,
although the monarch declared that any
one who in this way assisted depreciation
should be put to death.
Concentration of Reserves
President Reynolds intimates that there
may be danger of impairment OF the de-
velopment OF our national resources
should the currency bill now before Con-
gress become a law in its present form.
Laws may be passed making obligatory
the accumulation of hundreds of mill
Hons of reserves in various scattered
regional reserve sections. That there may
be great advantages in system of this
kind is unquestioned. But while reserves
can thus be lawfully distributed and the
concentration of them in a single finan-
cial center impaired, If not wholly pre-
vented, nevertheless there do come times