[Volume XXVII
THE CHICAGO BANKER
6
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. Cjj It conducts a general banking business; makes loans and receives deposits, issues letters of credit and makes collections on all parts of the world. Cf It desires to extend its connections with banks in all parts of the United States, and invites propositions for the collection of its business. €J It offers its services to banks and bankers as a collection Agent and Reserve Depositary.
Capital and Surplus $5,400,000.00
OFFICE Rl S
W. F. BICKEL, Cashier	J. M RUSSELL, Assistant Cashier	J. D. AYRES, Assistant Cashier
GEO. F. WRIGHT, Auditor
Rank of Pittsburgh
LAiN at ion. al JLA>s>sociation. w
WILSON A. SHAW, Pre.ident HARRISON NES BIT, Vice-Pres.
and its redemption must be available in all the large money centers without cost to the holder.
The conviction is being forced that a currency issue open to all banks alike, both large and small, would not meet these conditions, but would again result in unwise inflation. A system of issue by the clearing houses of the reserve centers, which was suggested by the “John Smith” currency of panic days, appears to be too cumbersome, and open to the same criticism of lack of regulation, which is urged against the system of the general bank note issue. By a system of rejection of other proposed plans, we are finally brought face to face with the old idea of a central bank of issue again. The weight of opinion among the bankers of the large cities is now drifting largely in favor of the central bank idea. It is proposed to make the central bank a bank of banks, with large capital, owned principally by the banks, and controlled by them in connection with trustees appointed by the government. This bank would pay no interest on deposits, would not compete with the other banks for commercial business, and might or might not assume any of the functions now assumed by the treasury department. The central bank would have the power to lend money to the other banks, upon the security of commercial paper, and would have the power to issue its own notes. It would be the custodian of the final reserves of the banks, and would be the medium through which the much talked of “emergency circulation” would filter into the channels of trade when needed, and prove the needed bulwark against any currency famines.
The Vreeland bill was admittedly a makeshift bill. It was born to die, for the very statute that gave it birth limited the duration of its operation. The provision for the issue of currency by clearing house associations was an attempt to legalize the “John Smith” checks so recently retired. The cumbersome machinery provided in the bill, however, proved so little to the liking of the banks, that only one association has been formed, and it is pretty dear that no more will be formed unless under the stress of dire necessity. In other words, the bill is applicable to panic conditions only, and in this respect is wrongly conceived. We need some governing power to regulate our currency, workable in fair weather as well as foul. We want a civil power strong enough and intelligent enough to preserve order at all times, rather than a military power which takes no cognizance of the drift of events until disorder reigns supreme, when it shall come in and declare martial law.
I have no sympathy with the views of those country bankers who criticised the attitude of the banks of the reserve cities who stopped shipping currency in 1907. These critics condemned loudly the action of the city banks, and at the same time limited payments of cash at their own counters without feeling any degree of responsibility on their own part for the existing conditions. We have no branch bank system, and the country bank rests under just as strong obligation to pay cash on demand as does the city banker. The fact that his reserves were largely (Continued on page 30)
it works now, it creates an artificial demand for government bonds, and in consequence keeps them out of the hands of the people, who might otherwise, when lacking in confidence in anything else mundane, invest their savings in government bonds, instead of hoarding it while waiting for the establishment of the much heralded postal savings banks. It is a rigid currency, based not upon commercial requirements, but upon price oi government bonds and the exigencies ot the treasury department. It has too often tended to contract when business operations demanded an increased volume of currency, and when once issued its tendency is to remain an inert mass, incapable of redemption, forcing the export of gold, and by the inflation it produces, stimulating undue expansion in the securities market. Resources which should be conserved for commercial wants, become tied up in stock market operations during the periods of “cheap money,” brought on by currency inflation, and only become available ofttimes after drastic liquidation.
We have already assimilated, a little unwillingly, through our greenback issues and our silver experiments, as much unredeemable token money as our financial system will readily absorb. We do not stand in need of excessive issues of bank notes, for such excessive issues would only serve to displace an equal volume of gold, and thus still further dilute a currency which is thin enough already. What we do need, however, is a bank note which is really redeemable, in fact and not in theory. One which is issued in response to business needs, and does not require the impounding of an equal volume of money to be invested in bonds as a preliminary to its issue. It must have a coin redemption fund back of it,
MAUSOLEUM
The above mausoleum is one ot our simple, well constructed designs which can be erected at a comparatively low cost with six to eight crypts. How much less barbarous this method is than burying in the ground.
Write for free booklet on “Monuments” to
CHAS. G. BLAKE & CO.
The Old and Reliable Makers of Mausoleums and Monuments 782 Woman’s Temple TeL 115 Main Chicago, 111.
fected his nerves. It has rendered him timid about expressing his opinion on currency matters at all, or worse, has sometimes caused him, chameleon like, to take his color from his surroundings, and join with his neighbors in opposing proposed remedial legislation, as nostrums put out by the Eastern money power, in some manner inimical to the interests of the West.
I am convinced that a positive attitude on the part of the banking fraternity, declared boldly, and supported by sound argument as it can be, in favor of a sound and scientific currency, would arouse the business sentiment of the country, and have more weight with congress than any argument which has yet been presented. It is necessary, however, that the bankers should get together, with courage and patriotism, and unite upon a plan which all can endorse and defend. There is no room for sectionalism in the discussion of this important question, nor can _ the bankers afford to look at it from a partisan standpoint.
I am not here with any new currency plan, nor have I a pet plan of another’s making to urge upon you. I am here to insist, however,_ that currency legislation of some sort is certain of adoption in the near future, and this legislation will be of vital interest to the banks. Currency legislation tinkers with the very tools of their daily trade. The banker is under a standing obligation to convert the book credits due the public into cash on demand. He even rests under the implied obligation to convert the growing crops and grazing herds into cash as they mature. What if there be no cash, as in 1907? Will we then have renewed demands for bank guaranty, and for government ownership of banks? And why? Because even though the people have doubted the wisdom of the bankers’ interference in currency discussions, they yet feel deep down in their hearts that the currency problem is really a banking problem, and they instinctively hold the banks responsible for its final settlement. If the banks accept this responsibility, and unite in their demands for proper legislation, their efforts will prove of the very greatest value in shaping congressional sentiment in favor of sound, economic legislation. On the other hand, if the bankers are silent and supine, measures even more crude and impractical than those of which we now complain, may be enacted, and the retracement of our steps will only be more difficult.
While I do not wish to present to you any currency system for adoption, some general remarks on the subject are in order, and some general principles may be argued, which must be agreed upon before any headway can be made in currency discussion. The opinion is growing more and more prevalent, that our present bond-secured system of bank note currency is wrong in principle. We are the only nation of the world to cling to this currency idea. The bank note with us was not called into use to supply a currency need, but to provide a market for the bonds which the government must needs sell to preserve its very existence. It served that need, and like other little systems, has had its day. As