[Volume XXV
THE CHICAGO BANKER
28
Alexander Gilbert, President of the New York Clearing House, Tells When Business Will Revive
is so high that banks will find no inducement to take it out when it is needed.
2d. That an asset currency convertible into gold at the option of the holder with a guaranty fund, a 25 per cent reserve, and adequate redemption facilities is as safe as a currency secured by gold, and safer and more economical than a currency secured by bonds.
3d■ That a commission composed of members of Congress, bankers, and business men well selected (not too large) could formulate and agree upon a plan for a central bank that could be operated in harmony with our present banking system, which would provide safeguards and betterments now lacking in our present system, and which during the lifetime of the United States 2 per cent bonds now held as security for our bank circulation could gradually introduce a new currency system better adapted to the business needs of the country.
In the meantime we shall have to struggle along with the Aldrich-Vreeland bill with a patient spirit—if it does not break down when the first crop moving pressure for currency arrives, let us be thankful. I fear, however, that it will. It does not seem to me that bankers will pay 6 2-3 per cent for money and loan it for 6 unless the direct necessity for so doing exists. That is what it would cost to keep it out for ninety days. In order to make the bill as serviceable as possible, it would in my judgment be wise to amend it, by making the tax 3 per cent for the first three months, to be followed by a monthly increase. The demand for crop moving currency seldom lasts longer than three months. The currency would then cost the banks 5)4 per cent, giving them just a little bit of profit and a little bit of inducement to issue it.
It is to be hoped that the currency commission appointed by Congress will apply itself with intelligence and fidelity to the solution of this great question, and as a result give to the country a system that will at least put us on a par with the nations of the Old World.
volume that prior to 1906 would have been considered satisfactory. We shall probably elect a safe man to the presidency which will be a guarantee to the people of the continuance of a wise administration of public affairs. Given these premises, and a proper adjustment of wage and commodity prices to changed conditions, and laying aside for a time our get-rich-quick notions, it will not take us long to clear away the wreckage, nor to find the true road to business prosperity. Nothing can hold us back but our own excesses• We shall not spend as freely for luxuries nor mortgage our houses to buy automobiles, as we were doing in 1906 and 1907, for some time to come.
The panic of 1907 was not an unexpected event ; it did not come like a bolt out of a clear sky. Bankers had talked about it eighteen months before it happened. A bank is a good place to discover the evidence of overtrading and the growth of speculation, and every wideawake banker saw the handwriting on the wall and shaped his course accordingly.
The American banking bill is the product of intelligent thought. It provides for a natural well-regulated limited issue of bank notes, when emergency requires it. It provides against the danger of inflation and loss, by an ample guaranty fund, large coin reserves, and a tax sufficiently high to make the issue unlikely except in emergencies. The bill could possibly be improved by provision for additional redemption facilities. I suggest this to meet the only criticism I ever heard against the bill, viz. : the danger of inflation.
It will not do to let the movement for currency reform stop, it must be kept up until the pressure of the people upon Congress grows irresistible. All great reforms are brought about in this way.
There are just a few simple, common sense propositions that we must put before the people in language so simple that they can easily understand them :
1st• That the country can have no relief from a currency measure the tax upon which
The one question most frequently asked of bankers during these summer days of business dullness and reflection is this: When in your judgment will business revive?
As this is a question which interests every business man in the country, it may be ■well to indicate how it is viewed from a banker’s standpoint. Whilst it is true that the bank clearings of the country which show quite accurately the extent of business activity do not compare favorably with previous years, and that the monthly returns of railroad earnings continue quite discouraging, the business of the country is very far removed from utter prostration. We still see about us many lingering reminders of the recent panic, idle plants, idle men, idle cars, and idle money and business failures, and merchants being helped along by their creditors or by their banks because of large stocks of goods laid in before the panic at high prices and consequent expanded liabilities. We find ourselves in possession of a business equipment unduly inflated during two years of great business excess, and now that the excess has been checked and trade reaction has set in, business doubt and fear prevails because of our inability to put into immediate operation the inflated portion of our equipment. This is the pessimistic side of the picture. There is another side, however—the optimistic side—which I have created out of my own past panic experience.
Only few, comparatively, were killed or wounded in the great business wreck of last October, and many of the wounded are on the road to recovery. The great mass of business men and business enterprises of the country are still sound and prosperous. Our great resources are unimpaired. The legitimate requirement of our people for the material things of life is the basis of a business future that cannot be taken from us.
We shall probably have this year bounteous harvests, with increased prosperity for our farmers, and increased business for our railroads and for our industrial and mercantile classes. We shall probably have a business
Granville G. Bennett on Probate Problems
ered. This would give the additional security of state supervision and control, provided the public examiner of the state were a man of integrity and competency.
Again the question frequently arises as to the deposit in banks of funds coming into the hands of administrators and guardians. This they can do at their own risk, but they sometimes ask the court for an order for their protection. I have generally declined to enter an order to that effect, except in cases where prudence and safety seemed to demand it, and then only for the protection of the bondsmen. When this has been done it has been at my own peril. In cases of the failure of the bank (and banks do sometimes fail) my order might protect the administrator or guardian, but might leave me personally liable for the reason that I had entered an order unauthorized by law. Therefore one of two things becomes necessary if these trust funds are to be so deposited under an order of the court. Either the enactment of a law authorizing and empowering the county court to enter an order requiring such funds to be deposited in a bank to be designated in such order, or some provision making the depositor absolutely secure.
lease him but an irresistible superhuman cause, or the act of public enemies of the state or the United States.
The conservation of estates is a most serious matter with every conscientious judge of a probate court. He is sometimes led to distrust either the honesty or competency of those whom the statute has authorized and I might say peremptorily directed him to appoint in the absence of any showing why the appointment should not be made.
These considerations suggest the following problems:
A law creating in this state the office of public administrator. This would not prevent those now designated from applying for letters, but in many cases where there are no near relatives nor creditors who would care to appl}־׳, it would serve a very convenient purpose, especially in matters requiring special and summary administration. This would or should insure honesty, efficiency and expedition in the administration of estates.
This, in my judgment, could be best accomplished through or by trust companies incorporated under the laws of the state or state banks thereunto duly authorized and empow-
In addressing the South Dakota bankers at Deadwood, Attorney Bennett said in part:
It has been said perhaps with some degree of exaggeration, that all the private property passes through the probate courts once in every seven years. If but once in every ten or twenty years, it emphasizes the very great importance of the execution and administration of the probate laws. Few persons depart this life without leaving, not only a legacy of sorrow, but one of care and responsibility, which too frequentlj¡' must be assumed by those having little or no experience in financial or business affairs.
The statute designates those who are entitled to letters of administration and guardianship, and unless the petition is contested, the court has but little discretion in the matter, and is not infrequently embarrassed in his desire and effort to protect the estate.
Administrators and guardians, like you gentlemen, are trustees, and there is nothing w'hich the law holds more sacred than a trust fund. The voluntary trustee is not only held to the rule of reasonable care and diligence, but to the absolute liability of a common carrier and insurer, from which nothing will re-