The New York herald., 1922-10-05
ENGLAND WILL PAY UP,
DON'T FORCE GERMANY,
is McKENNA,S MESSAGE
Former Exchequer Head Sees
GraDe Peril in Pressing
for Repdrations.

Reginald McKenna, former Chancel-
lor of the British Exchequer. yester-
day told the American Bankers Asso-
citation that England will pay her war
debt TO the United States and pay it
in full. that Germany can pay now
only in limited amounts and that the
status of the other nations owing this
country Is hard to tell. The speaker
voiced a strong warning against bring
ing heavy pressure upon Germany.
The address was as follows:
when / received the honor OF your
invitation, which I greatly appreciated,
/ must confess had many mlsgivings.
i knew 1t would not be light task to
address an audience whose collective
Importance in the world of finance is
unrivaled. I remembered. however. the
cordial friendship which has always ex-
listed between American and British
bankers. and as l realized that your
invitation was a further evidence of
this friendship my hesitation gave way
and gladly decided to come.
Let me begin with an explanation Of
my choice of subject. / thought at first
that some professional topic should be
selected. but soon came across seri-
GUS difficulty. There Is a much greater
difference between the law and practice
of banking In America and England than
is generally supposed, and / felt that
should be liable to be misunderstood un-
less this difference was constantly borne
In mind This very meeting will IL
lustrate the point. I understand there
are over thirty thousand separate banks
in the United States, large number of
which are represented here. In the
whole of Britain we have only thirty
nine But with us the branch system Is
so highly developed that these few banks
have no less than nine thousand six
hundred and fifty branches. of which
| six thousand eight hundred belong to
five banks alone.
THE main distinction is that our
| banks are regarded by the Legislature
as ordinary corporations or companies,
while yours are subject to special legis-
lation In regard to nearly all their ac-
tivities. You have a limit prescribed to
the amount of a loan to any one GUS
toner Certain loans are prohibited and
| others are restricted. Your investments
are regulated. You are subject to limi-
tations in mourning contingent liabili-
ties and you are bound to maintain
! minimum cash reserves. We have none
| of these restrictions. Alone among
deposit banking countries the United
states protects depositors. some OF the
| States going so far as to prescribe a
system of guaranty. We differ also In
our central bank policy.
"You have adopted the Federal
Reserve system. under which there are
| twelve Federal Reserve Banks in
twelve districts. In England we have
a single central bank of issue. a joint
stock corporation which deals with
| private customers as we'll as with the
| Government and the banks. Your
Federal Reserve notes are issued
against gold and seif-liquidating com
mercial paper. Our Bank OF England
notes are issued against gold only, with
a fduciary issue of f1s,450,0o0.
1.-THE principles of sound banking are
the same everywhere, but our countries
Giverge in law and practice. This is
natural: British social and political
conditions differ so much from yours
that the same banking system could
hardly be appropriate to both. Perhaps
we have each something to learn from
the other. but / am sure any hasty at
tempt to establish a common procedure
In the two countries would be unwise.
AS our development has progressed
each nation has adapted itself to its
environment. and such changes as we
may make in the future must conform
to the habits and traditions of our
peoples.
with these thoughts in mind I found
IL very difficult to select technical
banking subject for discussion to-day.
However careful I might be / felt that
unless accompanied by much tedious
explanation, my language. associated
with ideas related to English practice
would be liable 10 be misunderstood by
you whose associated ideas are so
different. l resolved. therefore, to pass
over professional banking topics and
to look for a subject of general interest
to the business community.
What should this be? In their report
to the Reparation Commission the
bankers committee. which sat carly this
summer in Paris, laid stress upon the
need to resume normal trade conditions
between countries and to stabilize ex-
changes, and they came to the conclu-
sion that neither of these aims could be
accomplished without definite settle
ment OF the reparation and other inter-
national debts. Here. then. II seemed to
me, was a subject for my address. There
will be general agreement that there Is
no matter of more deep concern to the
world trade at the present time than
reparation payments and international
debts. and I trust. therefore, you will
not deem IL out OF place that have
chosen this subject for discussion to-
day.
There are two preliminary observa-
tions which ! must make. The first Is
that I speak as n banker expressing my
personal Views. have nothing to do
with politics and do not appear here
Continued on Page Nine.