[Volume XXVII
THE CHICAGO BANKER
100 YEARS OLD IN 1910
This is the oldest bank in the United States west of the Alleghany Mountains. In February, 1910, it will be 100 years old, having been in continuous existence since 1810. It has passed through four wars and the many severe financial panics of this country, and has never failed to protect its depositors. *J It conducts a general banking business; makes loans and receives deposits, issues letters of credit and makes collections on all parts of the world. *I It desires to extend its connections with banks in all parts of the United States, and invites propositions for the collection of its business. <1 It offers its services to banks and bankers as a collection Agent and Reserve Depositary.	^ _ ___________ _
Capital and Surplus $5,400,000.00
O F FJsC EIR S
WILSON A. SHAW President	W. F.lBICKEL.DCashier	J.IIM.*'RUSSELL, Assistant Cashier	J. D. AYRES, Assistant Cashier
HARRISON NESBIT, Vice-Pres.	Tt\e	GEO•F־WRIGHT•Auditor
Rank of Pittsburgh
!״״/National JLAssociation w
States Bank would in time probably become the financial support of administrations rather than the bulwark of the nation. It was claimed that the government itself should regulate and control our currency and that this could be done more safely and surely under a department of the treasury than by an institution burdened also with the responsibilities attending the making of loans and the repayment of deposits. It was said that in seeking a model, we did not need to pattern after the commercial side of the Bank of England but rather to study its department of issue and redemption which is a separate and distinct feature.
While there was a strong desire to enact some form of currency legislation in addition to the creation of a monetary commission, it was found to be exceedingly difficult to bring it about. There was too great a difference of opinion, both in congress and throughout the country generally, as to what ought to be. done. The work, however, was continued and finally, in the closing days of the session, the Vreeland Bill was brought forward as a compromise measure.
That action was determined upon at a caucus of the majority party of the house, at which meeting, a tentative plan submitted by Mr. Vreeland was discussed and a committee of five appointed to draw a bill along the lines of the plan proposed. The bill as reconstructed by the committee of five, was passed by the house and also by the senate after incorporating in it certain features of the so-called Aldrich Bill, which were agreed to in conference. And thus the Aldrich-Vreeland Bill became a law.
As is well known, that measure was intended only to afford temporary relief, but the effect of its passage was shown at once to be salutary. The $500,000,000 of notes provided for by it, have never been called for by the banks, but can be drawn upon when needed and now lie in the vaults of the government, ready for issue on demand.
I have recalled those experiences in currency legislation to show how difficult it is even in the face of strong popular demand, to secure wise and satisfactory laws to regulate our currency. And the same perplexities surround other classes of legislation where a crystalized sentiment does not exist.
While the outcome of the1 first session of the sixtieth congress was not all that was hoped for, it was far from being barren of results. Beside the provision for additional currency made in the Aldrich-Vreeland Bill, there was created a national monetary commission which has devoted many months to a systematic study of the currency systems of the world. The commission is still engaged in its great task and may reasonably be expected, in the near future, to bring forward in concrete form, a bill to remedy the defects of our present system. The report of the commission has not as yet been foreshadowed.
It may be that the central bank idea will be favored. If so, I trust the bank that is recommended may be central not only in name but also in its purposes and in its location and may be so constructed and so regulated as to be entirely discontinued on page 30)
the bankers’ plan provided for a safe and sane preliminary trial of a currency secured both by an adequate guaranty fund and by a first lien on the assets of the bank of issue.
However, in the confusion caused by the introduction and consideration of new and strange propositions, the bankers’ plan was ignored although the feasibility and the safety of its provisions were generally admitted.
Much time was consumed in discussing the advisability of appointing a monetary commission. Some of the members of the committee and many members of the house on both sides contended that no other action was necessary at that time. They argued that our financial troubles were over for the present and that the people could afford to wait until a full investigation had been made by a commission before attempting any currency legislation. So they were opposed to the passage, at that time, of any measure which sought to bring about a change in the existing currency system.
Advocates of a central bank were also in evidence. They were confident and sought to prove in their arguments that such an institution, properly empowered and regulated, would afford adequate relief at all times. On the other hand it developed that there was a strong' prejudice in congress and throughout the country against the central bank idea. It was generally believed that a great bank with enormous capital and with authority to issue and retire the currency of the nation, should not be permitted to become a competitor for the banking business of the country*; that the possession of the great power that such a bank should have would almost inevitably lead, on occasion, to its wrong exercise. The prediction was made that if such a bank was created, history would repeat itself and a new United
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ever to be enacted into law, they must be taken up and adopted by successive stages.
The Fowler Bill provided, through radical and startling changes in the existing system, an ingenious currency plan which sought to accomplish reforms not heretofore undertaken. And these were to be brought about through untried provisions only theoretically sufficient for their accomplishment. Among these changes might be mentioned the removal of all government bond security from national bank notes, and the redemption of such notes in gold, the guaranteeing of deposits, the retirement of the greenbacks, the establishment of bank note redemption agencies and the practical abolition of our subtreasury system.
After long discussion the Fowler Bill was' finally reported out but without a pledge of support being given it by a majority of the committee, each member reserving the right to_ oppose or amend any of its previous as he might deem best. It was never called up for consideration in the house because it was known that a majority vote could not be secured for it in either the house or the senate.
It is hardly necessary to more than refer to the Williams Bill introduced by the minority leader of the house, because it received but scant support, being regarded as neither reasonable nor feasible. This measure was overwhelmingly defeated in the house when offered later as a substitute for the Aldrich-Vreeland Bill. Although it was a party measure, very few of the members of the minority party voted for it even though one of its features was a general guaranteeing of deposits. In fact, the guaranty idea did not meet with general approval in either branch of congress.
The plan adopted at Chicago on January !8, 1908, by a committee of fifteen appointed by the American Bankers Association, was also presented in what was known as the Bankers’ Bill. In my opinion, that bill proposed the best and wisest currency plan brought forward at that time, because it provided for a ready response to actual conditions in both the issue and retirement of our currency, and still maintained the absolute integrity of our bank note issues.
Three objections were raised to the Bankers' Bill. First: that it provided for too large a percentage of government bond secured currency and not enough of bank guaranteed notes. Second : that its provisions for the retirement of the guaranteed part of its currency was not sufficient to bring about prompt relief from the tax imposed on such notes. Third: that the limit of notes to be issued by any national bank should be made equal to the combined amount of its capital and surplus.
These objections, however, involved mere matters of detail which might easily have been adjusted. The plan itself was sound in principle and conducive to a sound currency. It did not permit the complete withdrawal at one time, of all government bonds as security for our national bank notes and, in my opinion, that change from an absolute security to which the people have become accustomed should not be undertaken abruptly and by one sweeping act. In addition,