The Richmond Virginian. (Richmond, Va.) 1910-1920, 1915-01-03
CHANGES GOING ON IN :.
COMMERCIAL BANKING
Their Necessity and the Results of Such Changes Set Forth
Establishment of the Automatic Federal Reserve System
Makes Violent Fluctuations n Thing ofain Past
BY OLIVER J. SANDS,
President American National Bank

Thy. ct1,.t.ofue or trade of country.
that thiae which stands far the move
nent or exchange of goods from one
person to another. has been since the
beginning OF time one of the most
important problems Of all people. and
II Is So CLOSELY related Io the com
fort and welfare of the people that
IL becomes. IN its various phases. enc,
III not the most important matter, with
whieh all governments have "a con
tend
la thc beginning harter or trade
vas carried ou hl 3Hs exchange Of one
eosnmodltE for another, eud she CIR
eulasing mcdtltq assumed various
forms Even down to comparatively
recent times. WaInpum beads were
traded io ihe Indians soy fuTs and
other cemIo ODDITIES passed as money.
In fact great amount Of our com
rnerce to-day is carried on Ia Its larger
sense through the exchange ~ com
sncdities. aHd only differences. or bal
Races Of trade. are settled ln moneY
In order, however. &c settle and make
easy the carrying on 81 business and
the transferring Of funds to care Tor
or clear these balances between one
nation ana another. oBe section of fhe
neuntry aqd another and In fact he-
tween individuals ID the same COM
snunity barking houses are necessary
For years private commercial banking
houses net on}t performed the fuue-
tions bove. named. but wcrc in position
70 make Rf@ances or extend credit upon
Various e3uraodittes 90 dealers $50 that
pending the time Of producing man
ufaeturinS marketing ard convert
3ng into actual cash. these comgnodt-
ties were represented By loans or
advances. or credits isued, by tno
bankers Large priNat" banking
houses grew out Of THIS necessity and
some oil the greatest aggreeatious Of
capital known in She world are still
represented by these commercial bank
Ing houses
Private Ranking before war
In this country prior Ia the Wan BE.
tween ibe states private banking Was
quite genera and great muuy char
tered State hanks wefe IN operation
Up Ia that time banks did compare
lively little deposit business The de
,selopment Of the country, the limita-
lions put upon currency issued bv
hanks brought about the necessity for
more money. or circplattuA medium. 70
care for the growing business OF the
country. Banks began to receive and
solicit the deposits uf the idle funds
OF the general public. placing their
Knitting the Withdraw al Of these funds
at any time
During aud after the War Between
the States. the finances Of this country
were so disturbed that the National
Government felt greatly concerned for
the commerce of The country, and was
anxious for business and commerce. to
be re-estabilsbed and pursue an or
DERBY course. therefore with the idea
af creating q system Of commercial
banks, and incidentally providing a
market tor government bonds, which
bends represented the enormous debt
which had been created on account uf
The war. the government brought into
being the National Ranking system 1,
seemed TO have been the idea oil
the trainers of he act that national
banks would he ia n position to take
care OF the commercial needs of the
country and that these banks would
expand and contract the currency
supply, go that the needs of commerce
wcmid be- uared fer, The law, however
was very rigid In many Of its provi
tioDs and limitations, and Il was soon
niscowered that the issuance of cur
renny upon government bonds had no
relation whatever to the needs OF com.
Fnerce and the natural fluctuations of
business. The system proved to have
many advantages, however, over that
which had generally prevailed prior
to ITS institution. ia that the currency