The Richmond Virginian. (Richmond, Va.) 1910-1920, 1913-01-08
SomeQuestions Incentive
to Thought on Banking

Editor OF The virginian:
Sir'-To what are due the more or less
constant stringency or scarcity of money for
industrial purposes in the country Rener .lIy
outside OF a few centers and the regularly
recurring inability difficulty of the banks
10 PROVIDE the money necessary for move
me ,T OF erops7 Is it not principally If not
entirely. due to the accumulation OF too large
proportion OF the money OF the country
at few financial centers, where 1t is ac-
cuinulated, retained and used for specua-
tive purposes?
Is not this speculation the principal cause
ana motive OF the accumulation of a dis
proportionate part OF the money of the coun-
Wy at rev centers? If IL not legisa-
ton adequate to the destruction OF such specu-
iaton, or preferably a new banking system
pased upon principles that Will prevent It,
prime necessity
Can any system OF banking In which the
money OF the country liz In the hands and
cont1ol OF the few who are supposed to con-
'utute the money power be expected to pre-
tion7 "a 'P0ua
Can those to whom large volumes Of money
are necessary for their speculative and fota-
uon purposes be expected to adopt or sane
uon any banking system policy that will
prevent the accumulation OF money in cen
ters where they can control Hf
Is 1t not then necessary for independent
Eninkers Investigating, studous. thought
tul minds, ceasing to regard banking as pri-
vate business conducted for private rgoht
but recognizing II as essentially q pubic
activity to be conducted and directed SOLELY
tor the public good 70 devise a system of
banking In which the control OF the money
or the country will be taken out OF the hands
OK the few who accumulate 1t at centers a nd
use 1t for their own purposes OF speculation
or otis owners, or their Representatives who
viii conduct the banking activity as a pub
nc function for the sole benefit of the pub
lic7
WIN not any banking system In which the
clement OF private individual profit (proht to
the stocknoider, to the bank as such and
~ Gyalm
trolling element OF conduct and policy In
eVitably result in the control and use or the
money OF the country by few men at the
expense of the great body OF ths peopieY
Is not elimination OF the element OF pri-
Vate profit accruing 10 stockholders from the
money Of depositors prerequisite to the es-
tablishment of banking system that will be
truly a public function conducted for the
benefit Of the public?
In view OF the fact that ninety per cent, or
more of the active capital of the banks con-
sists of the money OF depositors, 10 there any
fnnoamental reason or necessity for the ac-
tivity OF banking to be conducted for the
private oroHt Of stockholders who furnish
only one~tenth of tho capital? In there anv
principle of justice, any necessity inherent
In the nature OF banking, that entities the
stockhoider to the profit derived from the
depositcrs money. that requires the ap-
preparation of such profit to the stakeholder
Is there any real necessity for capital stock
and stockholders In banks?
IL the capital. or working money, of banks
consisted only of the money of depositors lin
ciudlng the goVernmsnD so safeguarded az
to satisfy depositors OF the safety OF their
money under all conditions just as they are
satisfied of the ability and strength OF the
government would not the working capital
OF the banks be practically the same in amount
es II is now, since, II the profits were divided
among the depositors. the money now in. ~sted
in bank stocks would be In the banks in the
form OF deposits, instead Of capital stock GER
fainly until more remunerative investments for
1t could be found, is the case with the
larger proportion OF time deposits on certf-
cate?
Is not the confidence Of the depositor In the
bank having capital stock due largely 10
recognition eff the fact that the stocknofder
Is IN the same boat with himself, and would
not some other responsibility, equally as
worthy, more worthy of confidence induce
the same or greater faith in the depositor?
Are not two OF the greatest desiderata in
banking and finance elasticity Of currency and
reasonable control of credits?
Since the profits OF banks arise from loans,
and private greed pushes to the limit OF elias.
ITCHY, can any currency bs made permanently
flexible and elastic In banking system con-
Quoted strictly for private proft7
In order that currency may be perma-
nentiy elastic at least in system conducted
for private profit Ia II not necessary that there
shall be some central authority uninhuenced
by considerations OF proht, having complete
control of the volume OF credits in ell parts
of the country thus making II practicable TO
prevent or limit general and local imitation OF
VIII not such control over credits by pre-
venting initiation. at the same time prevent
corresponding INDUSTRIAL depression and panic ?
In connection with control over the volume
of credits .should not the same authority
! have power to designate and define the classes
IT, securities 10. be taken hJ1 banks .ag col
lateral for loans. the circumstances under
which they may be taken. the character OF
ownership to render them acceptable as ool-
lateral. and the general values at which they
are TO be taken?
Should control over the volume of
credits. and over the classes or securities 10
be taken. be in the hands with control
over the issue and retirement OF currency?
! the power quickly and readily 10 transfer
! there MAY be abundance. TO another part,
a power impart elasticity to the currency :?
Would it not in fact constitute elasticity?
Can these powers of issue and retirement
( Of currency, control credits and secur-
! ties therefor and transfer OF money from sec
! ton 10 section be exercised with certainty
and safety by any authority except the gov
I eminent?
! In banking system operated by the gov
! crnment or by the government ala. depositors
/ Jointly. with the responsibility of the govern
| ment absolutely behind It, would not deposits
! be deemed safe long the people nave
confidence In the stability OF the government i?
| In banking system In which depositorr'
! money II safe, and known to be safe Ia there
| snything In the nature Of banking itself which
| requires assots always to be quickly converti-
/ ble?
! IN a banking system operated Jointly by the
! governments and the depositors or their repre-
sentettves conducted public function for