Evening star., 1914-08-07

can be prevented, or. at least, its effects
minimized by the proper Organization
and control OF a country's banking sys-
tenn
No such premium upon money or such
general collapse Of credit has taken
place In any Of the leading countries OF
Europe during the last 100 years as that
witnessed in the United States in No
periods of war and social revolution.
for a similar disastrous condition Of
money and credits in England one must
go back to the time Of the wars Of Ma
currence has taken place since the foun-
dation Of the empire France has shown
such a banking condition but once In the
last several generations. and that was
after her defeat at the hands OF Prussia,
the payment Of her billion-dollar war
indemnity and bitter internal troubles
There have been suspensions of banks
and great failures Of business and bank
ing houses in
Failures Abroad Not these countries
as Heavy as Here. ~ ,uS' tho tho same 15s,.as as
States, yet these disasters have not (as
SO often has been the case here) been al
lowed to paralyze the credit Of the coun-
try. In Great Britain, the powerful firm
Of Overend Gurney failed In 1885, the
Bank of Glasgow in 1873 and the house
OF Barring Bros. in 1890. Yet, on each oc-
casion, the trouble was confined and no
national financial convulsion followed.
In France the same ability to avert
financial panic was shown upon the fail
ure OF such great banking institutions as
the Union Generate in 1882 and the
Compton d. Escempte in 1889: while IN
Germany the failure Of the famous Leip-
Tiger Bank in 1901 is another example.
Yet, in the United States, the suspension
Of payments by the New York banks has
been followed by distress from Maine to
California.
Although banking reform had been de-
manded for number of years, 1t took
the panic Of 1907 to insure a thorough
prosecution Of the task. Minor changes
in our banking laws had been made from
time to time. but the great prosperity Of
the country caused Congress to shrink
from the responsibility of undertaking
any extensive reconstruction of the laws
under which business had attained to
such mighty proportions.
X X
In 1900 Congress passed a currency act
for the better support OF the greenbacks
the Treasury
Better Support of notes of 1880
Greenbacks by Law. ao'1a,s aon the s',ver arter
the panic of 1907 the Aldrich-Vreeland
act was promulgated. which provided
that the national banks might organize
themselves into national currency asso-
Citations, and that a member bank, with
outstanding note circulation secured by
United States bonds equal to 40 per cent
of its capital. might extend its note issues
upon other classes Of securities until the
total was equal to the sum of its capital
and surplus. This act was intended only
to be An emergency measure, and was
enacted to expire by limitation June
10. 1914. The provision for fncrea sing
their note issue up to the present has
not been taken advantage of by the
banks The act has been extended to
June 10. 1915.
Further. following the panic, the ma
tionai monetary commission was estab-
lished, for the purpose of investigating
means for improving credit ARRANGEMENTS
in this country. Members OF this COM
mission visited England. France and Ger
many. and made thorough studies of the
banking systems in vogue in these coun-
tries. The banking arrangements of
Canada. Scotland. Belgium, Sweden
Switzerland, Italy. Russia, Mexico and
Japan were also investigated. The find
ings Of the commission were published in
forty volumes. which form q good re-
view Of the worlds banking business.
Out of these studies grew proposals for
the establishment Of National Reserve
Association. representative association
of all the banks. the units Of which were
to be the clearing house associations
which the banks Of each city now main
tain. The democratic Congress rejected
this plan in favor Of the federal reserve
act, whose provisions, wisely enforced,
will probably be found better suited to
the needs of the country than would have
been any one among the numberless plans
which have been proposed.