Imágenes de páginas
PDF
EPUB

lantic, when we see the same gold shipped to Europe, then shipped back to America within a few days after reaching its destination, without being unpacked, because sudden intervening changes in the rates of exchange make it profitable for the former gold exporting country to import the metal. Such wasteful shilly-shally procedure would be likely to excite mirth in opera bouffe; but bankers who ship gold are very serious about it, and seem to be without enough perception of the ludicrous to see anything funny in its coming and going, although they feel the shoe pinch in its costliness in both time and money. As the world's gold production increases, the urgent need of this over-sea change will become more and more conspicuous and its adoption will accord with the generally progressive spirit and methods of our telegraphic and telephonic age.

Had such an international gold clearing house existed, the sagacious but unprecedented action of the Secretary of the Treasury, to relieve the money market by making deposits, as secured loans, in certain banks, to encourage and cover their prospective gold importation from Europe, the same to be returned on the arrival of the gold, would have been unnecessary. While this expedient has well served a temporary purpose, it is not to be relied upon as a permanent source of relief during monetary stress, and it involves a stretch of authority under the law that is open to grave objection. But, as it happened, the Secretary's action, which was taken just before the San Francisco disaster occurred, proved particularly fortunate, and probably prevented a very serious aggravation of the stringency in the money market, owing to the heavy remittances to California. It was a piece of good luck that seemed almost providential, and the end justified the means. But it should always be regarded as only a fortuitous circumstance and a temporary expedient, not as a permanent source of relief; and it emphasizes our need of a new international gold transfer system. Moreover, the benefit Europe would derive from it would be equal

to our own.

The Secretary, under the circumstances, acted wisely in also increasing the treasury deposits in the national banks while the government's receipts were largely in excess of its disbursements, so as to offset, as far as possible, this preponderance of receipts,

and lessen the drain of money into the sub-treasuries. But this method of relief is, too, only a temporary expedient, to remedy the evils of the sub-treasury system. While the sub-treasury system lasts, Congress should authorize the Secretary to deposit customs, as well as internal revenue receipts, in the national bank depositories, in times of stringency, when the government's receipts exceed its disbursements and it has more than a sufficient working balance. The government should, as a compensation to it, require the banks to pay interest at, say, 22 or 3 per cent. per annum on such deposits, these not to exceed in amount 25 per cent. of their paid-up and unimpaired capital, and to be returnable on demand, but without requiring these special deposits to be secured. They should, however, be made a first lien upon the assets of the banks.

If the changes above suggested were made, I am sanguine that they would prove to be remedies for the evils and disadvantages under which we now labor, and thus increase the stability of our money market, and improve and fortify the machinery of the whole monetary system, while giving more elasticity to the currency.

PENDING FINANCIAL LEGISLATION

ADDRESS DELIVERED BY CHARLES N. FOWLER, CHAIRMAN OF THE COMMITTEE ON BANKING AND CURRENCY IN THE HOUSE OF REPRESENTATIVES, BEFORE THE AMERICAN BANKERS' ASSOCIATION, AT ST. LOUIS, OCTOBER, 1906.

You will pardon me one or two personal experiences; since they furnish whatever of confidence and assurance I have that in the end the wisest thing will be done, even though it may come as the result of bitter trials and frightful losses.

When Representative E. J. Hill came to Washington in 1894, we were both appointed to the Banking and Currency Committee, and he was at once my most assiduous and powerful opponent. But his absolute intellectual honesty, his great ability, his determination to know the truth, made him a thorough and reliable student. Coming from the Connecticut State Convention, in the spring of 1896, he showed me a resolution passed there to the effect that the

Republicans of Connecticut were utterly opposed to any kind of currency except such as was secured by government bonds.

He asked me what I thought of it.

I replied that it only marked a degree of ignorance, not of intelligence.

Six months later, he told me that he was ready for at least fifty per cent. of credit currency.

I replied that if he took six months for study and reflection he would be ready for another fifty per cent of credit currency.

Again, Hon. Lyman J. Gage told me soon after he came to Washington that he knew absolutely nothing about the subject; but his years of study brought him to the same conclusion.

Only a few days ago, while sitting at luncheon with the officers of one of the great banks of New York, I remarked that I had never known a man who had made a study of credit currency with an open mind, who did not come out exactly at this same point. One of the officers, himself a great student and an acknowledged leading financier, replied, "That is literally true.”

Cleanliness is next to godliness; therefore, let us fight to make our money as clean as it is good. And let me say right here that you will get nothing in the way of legislation unless you-I mean you men who are sitting before me, you bankers, as bankers, not merely as men-interest yourselves in demanding that your representatives vote for the things you want. Let us understand this once for all; and, as we proceed to discuss the pending legislation and agree upon certain principles, let it become a part of your daily life, a duty of every hour, to secure their adoption. Otherwise, if you make them only one of a hundred recollections, it were as well that we had never come here.

First, then, let us here and now resolve that we will have clean money; and pledge ourselves to one another that we will not stop until we have secured such legislation as will bring this end about. Such a law is now pending before the Banking and Currency Committee. It will become a law, if you demand it and work for it.

A bill has been favorably reported by the Banking and Currency Committee, and is now pending before the House of Representatives, providing for the issuance of $5 and $10 gold certificates, as well as the present denominations. The purpose of this bill is

twofold. First, it would enable the Secretary of the Treasury to supplant a portion of the $300,000,000 of five-dollar silver certificates with gold certificates of the same denomination, and thus make it possible to increase largely the one and two-dollar silver certificates, which are so much needed in the trade of the country. Of this you are more fully aware than any other class. Will you pledge yourselves here and now to fight for this change; or go on forever as at present with the demand for small notes constantly increasing because of additional population and doubling trade, but with nothing out of which to make them?

The second object of this measure is to broaden the basis of the standard of value, increase the quantity of gold in the country, and make it possible to distribute it among the mass of people, thereby generalizing its use, as well as strengthening our reserves. These objects justify your active and insistent co-operation.

From the establishment of the first sub-treasury, sixty years ago, the practice of hoarding or locking up money has been a disturbing factor and a curse to business. Now, jumping over all the past, and taking up the situation precisely as it presents itself to-day, what shall we do; go on as before, or like intelligent men treat this Government's business just as you would treat it were it your own, making only such distinctions as a due regard for the people's interests, from a national point of view, demands?

The fiscal operations of our Government are such that, the coming year, we may have a surplus of fifty or possibly seventy-five millions. Indeed, we may again have the same excess of revenue we had from 1888 to 1892, when we lowered our bonded debt from $1,021,000,000 to $585,000,000, a decrease of $435,000,000. What shall be the conduct of the Treasury? Should it not be such as in no way to interfere with the commercial interests?

If we should repeat this record, we could pay off $435,000,000 of our debt, and leave it at $490,000,000, or $25,000,000 less than the amount now deposited to secure our bank-notes, which aggregate $517,000,000. If our excess should not be applied to the reduction of our debt, it would have to be deposited from time to time in our national banks, and the banking capital of the country would be reduced by the cost of the bonds required to secure such deposits. Our banking capital is now depleted more than $150,000,000 by this

ancient and inane procedure; and, though the Government has control of this money, it is paying two per cent. upon it; for the interest paid on the bonds held by the Government goes to the banks that have put up the bonds to secure the deposits.

The available cash balance, July 1, 1906, was $222,000,000. In other words, at the very season of the year when there was a constantly growing need of money, and panic prices for its use, the Government has been engaged in withdrawing it from the channels of trade at the rate of $15,000,000 every month, or $47,000,000 for the months of July, August, and September. It may be asked whether the Secretary of the Treasury has not redeposited the money so withdrawn. Yes; but only on condition that the banks would purchase and put up specified bonds amounting to more than $50,000,000; so that the banking capital of the country has been depleted during these three months by that amount. As a result, credits have been displaced, business seriously disturbed, and no good whatever has come to counterbalance the loss and havoc. Why should not the Government do just what you are doing deposit its money with national banks and get two per cent. on its daily balances?

On September 4, 1906, the National banks had on deposit with national banks over $830,000,000, or seven times as much as the Government had; and were undoubtedly getting 2 per cent. interest upon it. The state banks and bankers had on deposit with the national banks more than $381,000,000, and were undoubtedly getting 2 per cent. interest upon it. The trust companies and savings banks had on deposit with the national banks upwards of $346,000,000, and were undoubtedly getting their 2 per cent. interest. In other words, the banking institutions of the country had on deposit with our national banks more than $1,500,000,000, or more than ten times as much as the Government had; and yet the Government by its practices would have us believe that although it has the power of supervising and knowing all about the management of every national bank in the country, it cannot safely do what probably every banking institution in the country is doing without any special information at all.

Let the Government deposit its receipts from day to day precisely as our municipalities and great business interests do. If it

« AnteriorContinuar »