8	THE CHICAGO BANKER	[Volume XXVII
			
STATE BANK OF CHICAGO			THE FARMERS' AND MECHANICS' NATIONAL BANK OF PHILADELPHIA, PA. 427 CHESTNUT STREET Capital - $2,000,000.00 Surplus and Profits 1,369,000.00 ORGANIZED JANUARY 17, 1807 Dividends Paid - $12,917,000.00 OFFICERS Howard W. Lewis, President Henry B. Bartow, Cashier John Mason, Transfer Officer Oscar E. Weiss, Assistant Cashier ACCOUNTS OF INDIVIDUALS, FIRMS, AND CORPORATIONS SOLICITED PRESENT NUMBER OF STOCKHOLDERS 930
ESTABLISHED 1879 S. E. Corner La Salle and Washington Streets Capital - - - $1,500,000 Surplus and profits (earned) 1,500,000 Deposits over - - 20,000,000 OFFICERS L. A. GODDARD, President FRANK I. PACKARD, Asst Cashier JOHN R. LINDGREN, Vice-President C. EDWARD CARLSON, Asst. Cashier HENRY A. HAUGAN, Vice-President SAMUEL E. KNECHT, Secretary HENRY S. HENSCHEN, Cashier WILLIAM C. MILLER, Asst. Secretary			
YOUR CHICAGO BUSINESS RESPECTFULLY INVITED			
			
JL, IN CINCINNATI A, With Resources of TWENTY-ONE MILLION DOLLARS And every facility for the satisfactory handling of Bank Accounts CORRESPONDENCE INVITED			
E. L. Meyer on a National Clearing House Bank
en by the above banks in Germany and England. The independent banks have no centralization of financial responsibility, so that in times of dangerous expansion we are powerless to check speculation. A national clearing house bank would be in position to control speculation most effectively and in case of distress would supply elastic currency which would flow automatically with the business needs of the country. Every national bank in the United States is compelled to purchase United States Bonds before it is authorized to do business, and these bonds become a fixed asset and part of its capital. Have we not enough wisdom in Washington, D. C., to so distribute the stock of a national clearing house bank that every national bank in the United States would be a stockholder in this bank and entitled to a vote in its management and election of its officers and to provide that all surplus earnings over 6 per cent per annum should accrue to the government This would make the government an interested partner.
It is well understood that the central authorities of finances, both in France and England, are united in regarding speculative Wall Street as an increased menace to all sober financial centers, and that the European people have no confidence in banks that make speculative loans through the stock exchanges, and such class of loans would never be accepted by a commercial bank in Europe. Who does not daily watch the changes in the interest rates of England and Germany ? The financial markets of our country are governed by these bank rates which regulate the flow of money from one country to the other. This is an absolute fact, well known to the business world. The power given the banks of England, Germany and France to issue emergency currency (a term I use to more clearly express the system of commercial bills used in Europe) is the' governing and safety-valves of these nations. They stop commercial disasters and panics by issuing credits when the country most needs. In our country, we had more gold in the United States
The Hutchinson, Kansas, banker believes that not all the West is opposed to a central bank, and that it is willing to be convinced —Group 5, Kansas Bankers at McPherson.
ous and successful, and it is my private opinion that their business is more profitable and the stockholders get larger dividends than the banks of Chicago and New York. Therefore, it is my observation that you must faithfully and fairly consider the possibilities for good to the government and to the bankers of the United States in the establishment of a “National Clearing House Bank.”
The rise to 5 per cent in the Bank of England rate recently reflected anxiety of the bank’s managers and would be understood in this country as meaning to put a check on speculation, although the gold reserve of this bank is 47 per cent of its liability. Compare this with 26 per cent reserve reported by the New York banks. Showing that the German Bank is also influenced by this movement, their rates were lately advanced to 6 per cent, and you all recognize that there has been a general advance in rates of interest in this country. The clearing house bank would have this power to curb the tendency to speculation and undue expansion by the control of its interest rates and its issue of notes. It would be able to exert this great influence on the money market concurrent with the action tak-
HORNBLOWER & WEEKS
®Bankers and 5Brokers
Members of New York and Boston Stock Exchanges EDWARD CLIFFORD, Resident Manager 3rd FLOOR, 152 MONROE ST. - CHICAGO
When Secretary Bowman invited me to write an address upon the “Central Bank,” I wonder if he did not realize that there is an old Spanish gun captured on the Island of Cuba, now on exhibition in some park in every congressional district of the United States, charged with smokeless powder and ready to be fired at the name “Central Bank.” The name seems to be offensive at present. For this reason, I would like to christen this article “A National Clearing House Bank.”
The proposition that this country needs a large central bank clothed with authority to issue currency, a system that will expand and contract currency, its currency based on gold and silver, supervised and controlled by the government, will be the foundation stone upon which all banks will unite. We have now at Washington, central bank conditions in embryo state, which properly shaped and the machinery adjusted, would be a great central bank. It is now lacke ing in proper equipment to expedite the business of the country and so hindered by useless laws that it fails to respond promptly to the needs of the nation. The government issues our currency, issues bills against deposits of gold in its vaults, and congress authorized the government, after our last panic, to issue emergency currency, copying after the admirable system of the banks of Europe. This is only a temporary expedient preliminary to something permanent. The action of a central bank is a governor which sustains values of the nation’s product and checks depreciation and depressions, similar to those which so frequently occur in our own country.
In some countries, the central banks are in no wise a competitor of the general banks of the country; but, to the contrary, are a fortress of strength to the independent banks. These great banks of banks are the hearts of the financial systems. Their circulating notes are what the blood is to the human being. These central banks pay no interest on deposits, yet the independent banks of Europe are extremely prosper-