[Volume XXVII
THE CHICAGO BANKER
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STATE BANK OF CHICAGO			THE FARMERS’ AHD MECHANICS' NATIONAL BANK OF PHILADELPHIA, PA. 427 CHESTNUT STREET Capital $2,000,000.00 ־ ־ ־ Surplus and Prolits 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			
			
_A_ IN CINCINNATI AIk With Resources of TWENTY-ONE MILLION DOLLARS And every facility for the satisfactory handling of Bank Accounts sQKr CO RUES PON DENCE INVITE□			
the banks. The people did not need their money any more in the fall of 1907 than they need it now. Convince the people that their money is ready for them, and they do not want it. In 1907 an abundance of credit would have restored confidence.
The object of a central bank is to provide means whereby at certain periods of the year smaller banks can realize on their assets, principally their loans, and obtain money for crop moving.
But is such a bank necessary? Can we not accomplish the same thing through our clearing houses and subtreasuries? As stated before, have the government issue the currency through an act of congress authorizing the creasurer of the United States to issue a certain amount of such currency, to be paid to the banks through the subtreasuries on clearing house certificates. Incorporate your clearing houses, and the banks then have a means for obtaining money when needed and where needed.
The cotton planter of the South, the wheat farmer of the Northwest, or the fruit grower of the Pacific coast, will know that the money is available to move his crops.
The clearing house certificates should be issued for not more than 60 per cent of the collateral accepted, and at not more than 6 per cent interest.
The fall of 1907 saw banks in California group themselves together and issue scrip. There were such groups around Stockton, Sacramento, and Santa Rosa. The clearing houses of San Francisco and Los Angeles also resorted to the expedient. A bank offered its securities, usually its loans; these were passed upon by a committee who were expert judges of credit and values. Only the best were accepted and a credit of not more than 60 per cent of the value granted to the bank in the form of clearing house certificates bearing interest. These clearing house certificates were available for settlement of balances between banks in the clearing house, or could be used in the purchase of scrip. This scrip was read-
About eighteen months ago there was passed the Aldrich-Vreeland bill; we still have it; what good is it? Its chief proviso was that in times of stress any national bank, by putting up certain named securities with the government, could take out currency against them.
It is estimated that there are twenty-five thousand banks in the United States, of which seven thousand are national. It is a safe statement that not ten national banks had then or have now the required securities so that they would be justified in taking advantage of the law. Just think of it! A relief measure, and not over ten banks out of twenty-five thousand could contribute relief.
What is needed is not a panic measure but something that will prevent panics; something that will not arouse suspicion or create distrust the moment it is put into operation. We should have a measure which by its frequent use would cause no comment. The culmination of all panics is from the same cause—lack of confidence.
The remarkable prosperity prior to 1907 brought on expansion in all lines of business, an expenditure of millions for this or that improvement, until people began to ask whether there would be money enough to go around, and answering their own question in the negative, they began to hoard the money they had on hand and withdraw that that they had in
Cutter, May & Company
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The Rookery	CHICAGO
Telephone, Harrison 7660
Bank Examiner on Central Bank
By John W. Wilson.
Examiner Los Angeles Clearing House Association.
All the banking journals and even the daily papers are devoting space to the discussion of a central bank. The discussion is developing into a campaign of education, and, while a year ago the verdict would have been nearly unanimous for a central bank, an attempt to make it fit all sections of this great country of ours tends to magnify its defects. A year ago the ardent advocates pointed with pride to the Bank of England, the Bank of Germany, and the Bank of France. Probably the most cosmopolitan of what might be termed the central banks of Europe is the Bank of France, a bank with many branches, and this alone would preclude its adoption in this country.
Just suggest a central bank with branches and see what a howl will go up.
There are many reasons why the establishment of a central bank will be opposed—fear that it will become a political machine; that it will be dominated by the power of Wall Street; that when its money has once been issued no attempt will be made to retire it, thus leading to inflation. The strongest reason of all is that the note issuing power should not go out of the hands of the government. Every one has confidence that money issued by this government, call it “emergency currency,“ “asset currency,” or by whatever name you will, is good.
Already the question has been raised as to the location of a central bank. Place it in the center, and it is a long way to the Atlantic coast or the Pacific coast.
Have the government issue and put out this money, and the question of distance is overcome because it can be done through the subtreasuries.