THE CHICAGO
Founded in 1898
Volume xxvii	CHICAGO, OCTOBER 16, 1909	Number 16
President James McKinney at Decatur Convention
While I believe that our recent troubles were attributable to general distrust rather than to defects in our currency system, yet during the stress of that time we found that positive defects existed. How unwise it would be to build a ship prepared to encounter fair seas only. Our currency system, unelastic and unresponsive, seems to have been constructed along such lines. Our national bank notes are absolutely safe and are sufficient in volume to take care of the steady, every day requirements of ordinary times. But when suspicion has been aroused through popular clamor, we have no provision through which to meet sudden widespread demands for currency.
This radical defect was never more clearly shown than in 1907. After that severe experience, it was generally desired that the first session of the sixtieth congress, beginning in December of that year, should be largely devoted to currency problems. Many currency bills were introduced at the beginning of that session; bills providing for national bank guaranteed credit notes, for issues secured by government bonds with additional issues protected by a guaranty fund, also providing for issues of currency to national, state, and savings banks and trust companies in the form of loans made by the treasury.
Such bills originating in the house were referred to the committee on banking and currency. That committee began its work promptly and consumed weeks and even months in its deliberations. Well known financiers, men of large affairs from all parts of the country, came before the committee to express their views both as to certain proposed measures and also, generally, as to what should be done to improve conditions.
During those hearings the committee listened to “many men of many minds.” However, general support was not found for any proposed line of action. Not only were the members of the committee divided in their ideas, but the financiers, the experts called into council, differed widely in their recommendations. May not this fact account for one of the dilemmas which confront legislators when they undertake currency reforms ?
My distinguished predecessor, Mr. Blum, in his address last year, very aptly said: “A crisis like the one of 1907 is a complex affair. The doctors do not agree in their diagnosis; some say it was due to insufficient circulation; others regard it as the result of an overdose of strenuos-ity; others maintain that industrial vertigo was the cause of the malady. The truth is that a number of conditions affecting the entire system worked toward the consummation of the catastrophe.”
Within the brief time to which this address must be limited I can make only casual reference to some of the propositions considered at that time by the banking and currency committee.
First in importance perhaps, because it received more attention than any other measure, was the Fowler Bill, with the features of which all are doubtless familiar. Backed as it was by the chairman of the committee, the eloquent member from New Jersey whose name it bore, its provisions received the endorsement of many men of great prominence. However, in the opinion of a large number of bankers and conservative business men, the measure sought, in one legislative act, to do too much. The opinion generally prevailed that if it's various provisions are
The popular Illinois congressman and member of the House Committee on Currency and Banking takes up “The Problem of Today” in a keynote address to Illinois bankers
doubt the strength of the foundations upon which our commercial and financial structures were builded.
After the storm had subsided there followed a period of depression and uncertainty. The damage done to our faith in our home methods and home institutions had been severe and disheartening. But a reaction came, a re-awakening, a time of re-adjustment.
Then began corrective treatment for our finan-
james McKinney
Aledo
cial ills. In administering this our executive, legislative and judicial forces took part. Strong-remedies were applied to bring about early relief from acute disorder, with the promise of radical cures to follow later. A hasty but comprehensive scrutiny showed that only in occasional and unrelated places was our financial structure weakened. The general publicity given to attempted manipulation and wrong-doing in high places, while arousing distrust, had in turn produced a state of watchfulness that precluded• further impairment.
Then followed months of waiting during which were noted spasmodic efforts toward advance-men, and at length, timidly at first, but with increasing assurance, came a return of public confidence.
It is natural for 11s to seek the cause of our troubles, whether physical or financial, in order to prevent a recurrence of them. Experience is a dear teacher and we can not afford to learn expensive lessons more than once. Therefore we must proceed carefully and intelligently in our effort to determine the causes which led to our recent business misfortunes. While we are now seeking a remedy we must decline to accept quack nostrums should any be offered to us.
After two years dominated by a feeling of uncertainty, we have apparently entered upon another period of great prosperity. General conditions to-day are unusually favorable. The value of all farm products for this year has been estimated at about eight and one-half billions of dollars, being the largest returns from that source ever achieved in any year. Our railroads are scarcely able to handle the business offered to them although most of them have been supplied with large additional equipment. The deposits in the banks have reached the highest total known in our history. The general business of the country is again upon a highly satisfactory basis and our working men find ready employment at remunerative wages. Building operations of all kinds were never carried on more extensively than at present. New enterprises are springing up on every hand and our natural resources are being developed in every quarter of our domain. In short, the country has again taken up its glorious march of progress after a prolonged halt which was found to be necessary in order to inspect and readjust our affairs.
In reviewing the recent past we are led to wonder whether temporary periods of stagnation and paralysis in the business of a country are really necessary and inevitable. If inevitable, may not the frequency of such visitations be greatly lessened? It is true that our brief history discloses a more or less regular sequence of stringent times. But thoughtful men are beginning to believe that under better laws and better business regulations, many of those unfortunate periods might have been avoided and that the disastrous effects of all of them might have been measurably reduced.
During the decade ending in midsummer 1907 our country flourished and waxed rich and prosperous to a degree before unknown in its history. There was a general increase in the value of both property and products. Our business, domestic and foreign, grew and expanded until our commercial supremacy was no longer disputed. There seemed to be opening before us an era of increasing abundance and plenty.
But during the latter part of that eventful time the fact was demonstrated that no test that can be applied to an individual or to a nation is so severe and hard to meet as continued prosperity. When it was found that nearly every business venture was successful, and that profits were limited only by the size of transactions, men formerly prudent and conservative, became money-mad and care and prudence were thrown to the winds. The wild race for wealth which followed speedily ran its course to its legitimate and inevitable conclusion.
Then came the uneasiness, the lack of confidence caused by the exposure of the methods used by certain leaders of high finance. Not only the value, but the stability of many great properties was seriously jeopardized. Institutions of character and standing were invaded by the plungers and the stock jobbers as the merchant ships of old were attacked by freebooters.
The revelation of these things produced widespread suspicion and distrust. General trade suffered and money, withdrawn from investment, went into hiding. For a time business in all lines was paralyzed. With the maximum amount, to that date, of money in circulation per capita, we were suddenly confronted by a currency famine. Confidence was badly shaken and we began to