24	THE CHICAGO BANKER	[Volume XXVIJ
Marshall & Ilsley Bank
Milwaukee, Wis.
ESTABLISHED 1847
Capital $500,000 Surplus $370,000
Oldest Bank in the Northwest Conservative Progressive
We take pleasure in placing our facilities at your disposal and should be pleased to have you write us if you are contemplating opening either an active or a reserve account in Milwaukee.
OFFICERS AND DIRECTORS
JAMES K. ILSLEY, President
JOHN CAMPBELL, Vice-President HARRY J. PAINE, Asst. Cashier JOHN H. PUELICHER, Cashier	G. A. REUSS, Mir. South Side Branch
SAMUEL H. MARSHALL	J. H. TWEEDY, Jr.
ROBERT N. McMYNN	C. C. YAWKEY
GUSTAV REUSS
The Audit Company of Illinois
1439-42 First National Bank Building, Chicago
Specialists sia Ataciifeig&f| and atteii&fi Public Sendee Corporations
C. W. KNISELY, C. P. A.
President—Manager REFERENCES:
Leading Bond Houses dealing in Gas, Electric and Railway Securities
Edward B. Vreeland at Bedford Springs
much so that many of our people accept a panic as inevitable once every ten or fifteen years. But we have the example of the other great commercial countries to show that periods of prosperity and expansion do not necessarily result in money panics. They may be avoided by better banking and currency methods. Other countries run their horse up the hill of high interest and gradually slacken his speed instead of running him into a stone fence. The greatest defect in our currency system is its lack of response to the needs of business. We need this element of elasticity in our volume of money more than any other great nation. The agricultural crops of this great country are valued at eight billions of dollars. They are harvested in the late summer and in the fall. This means that 'we need a much larger amount of money during the fall than during the spring months. For years prior to 1907 we had trouble in furnishing money to move our crops in the fall, resulting in high rates of interest and great strain upon money centers. Fortunately, the treasury of the United States had a surplus with which to relieve the pressure. When the crops were moved and vast sums of money piled up in the money centers the results were equally injurious. Great movements of stock speculation would begin and gold, upon which our currency is based, would go abroad.
Note Circulation
Redundancy of money is fully as injurious as scarcity. In all other great countries bank notes furnish the elasticity and flexibility in their money systems. It should be so with us. Gold should be merely the basis, the reserve upon which it is issued. Under our system we are likely to have an expansion of bank notes when not needed and shrinkage in the value of bank notes when they are most needed. A year after the panic of 1907, when the business of the country was prostrate, the amount of our bank note circulation was actually $75,000.000 more than it was during the panic.
Why is this ? It is because United States bonds must be purchased as a basis for the issue of bank notes and their issue depends more upon the price of government bonds than it does upon the needs of business. These notes are issued by 700 national banks, little and big, throughout the United States. Each bank figures upon its own profits as to whether the volume of its note
The chairman of the House Committee on Currency and Banking delivers a strong address before the Pennsylvania bankers — Disclaimed speaking
for the National Monetary Commission, of which he is a member
circumstances our monetary system broke down, banks generally suspended payment and business was paralyzed and incalculable losses resulted to the people of the country. It then began to dawn upon the people of the United States that these money panics, these runs upon banks, were preventable, and that they were due to defective banking and currency laws. I think to-day the people and the congress of the United States are convinced that the American Bankers Association has been right for years past, in urging that we have at least outgrown our banking and currency system and that it needs radical changes in order to safely perform the enormous and growing business of the people of the United States.
The Aldrich-Vreeland Bill
During the winter following the panic of 1907 congress passed a bill known as the Aldrich-Vreeland bill. It was felt by the majority in congress that we had neither the information nor the time to pass a comprehensive banking and currency bill, nor had the subject been sufficiently discussed by the people generally to obtain such a consensus of opinion as would be necessary to place it upon the statute books. That act, as you bankers know, is not a system of currency. It simply endeavors to cure a defect in the existing system until we can make a better one. It simply means that we endeavored to fix a hole in the roof of the house to prevent the floods coming in and destroying all the property in the house until we could build a new and better house. The great work of reforming our currency is still before us. In the mean time, that law stands upon the statute books as an insurance against the return of such a money famine as we had in October, 1907.
Defects in our Banking and Currency System
Panics are merely the culmination of long continued disease. The defects in our system are such that a period of great prosperity and expansion almost certainly results in panic. So
I am a member of the National Monetary Commission but I in no wise speak for that body. That commission has not attempted to formulate any conclusions. It is engaged in collecting as thoroughly and exhaustively as possible the banking and currency experiences of all the great commercial nations, including our own. It is obtaining articles and opinions from the best economists and financiers of other countries and our own. At a later period it will give extended hearings, in the principal cities of the United States.
I have accepted invitations to speak to bankers' conventions and commercial bodies because I believe that the more interest and discussion that can be aroused upon these subjects the better prepared we will be to devise a satisfactory banking and currency system.
Money Panics
The panic of 1907 has awakened a majority of the people to the fact that our banking and currency system is defective and needs radical changes. The United States is the only one of the great commercial nations which has these money panics and wide spread runs upon solvent banks. Other nations have less money in which the people have confidence than has the United States; other countries have business depressions and failures of crops, much oftener, perhaps, than the United States. The people of Europe have cause for alarm from rumors of war and revolution from which this country is happily exempt. But none of these conditions seem to be followed by a loss of confidence in their banking institutions. The panic of 1893 was considered by the people as a commercial panic due to proposed changes in our tariff policy, and to the silver purchasing act. I think the people generally consider that the repeal of the silver purchasing act and the adoption of the gold standard as the result of a great campaign covered all necessary legislation relating to our monetary system. The panic of 1907 has changed all this. It came as a result, not of adversity, but of prosperity. The railroads were unable to carry the freight that was brought to them. The factories were unable to keep up with the consuming needs of the people. Labor was everywhere employed at high wages. We had more money per capita than any other nation in the world except one. We had vastly more gold than any other nation. Under such