As I believe, Mr. Chairman, the reform of banking and currency in these United States is of greater interest to business men, it is of greater interest to the thousands of laboring men in our factories, who work upon our streets, than it is to the bankers of the United States. Bankers conduct their business with a close organization. It can be quickly limited. They can shut off loans and call in loans, they can accumulate their cash, they can take in sail when they see a storm coming. They were not, however, so much injured by the panic of 1907 as the business men of the United States, although most of them, I admit -and I include myself among the number-were nearly frightened to death. The business men cannot do that, and especially the manufacturer. The manufacturer, for instance, may have to contract for his material a year ahead; he has to make it up depending on future markets. He cannot take in sail quickly. What does it avail for a business man to carefully preserve his credit and to conserve it provided he finds when the test comes that the banks through which he must use it are unable to grant him facilities?

Mr. Chairman, the system of every other great commercial country, our rivals for the business of the world, has been revolutionized during the last fifty years or more. In the United States, the greatest commercial nation on the globe, doing the greatest business upon the globe, we alone continue to use the system which was adopted in the middle of the Civil War, about half a century ago.

Panics are the nightmare of American business life, not only among banks, but among business men. You who are bankers-how differently you could shape your course if you were not afraid of these periodical panics that have come on an average of about every ten years throughout the existence of the nation. How much more freely you. could give credit to the business men who need it, how different it would be to the business men in shaping their business, were it not for the fear of these panics and the stopping of credit and the stopping of business.

Mr. Chairman, I stand here to say that these destructive business convulsions which we call panics in the United States, which have brought us more misery and suffering except loss of life than the wars in which we have been engaged and that is a strong statement-are entirely preventable. I say they are entirely due to a defective system of banking and currency.

That is a broad statement to make, Mr. Chairman, and yet am I not justified in making that statement when we turn to the other great commercial nations of the earth. across the sea and find that with their longer experience and with their modern systems of banking and currency they have put these money panics behind them more than half a century? Then, if no other great nation of the earth has money panics and runs upon banks and destruction of credit, why should we alone-greatest in our resources, greatest in richness of our country-suffer from these destructive business convulsions? In my judgment it is entirely due to a defective system of banking and currency.

The American people have not always believed this. During the life of our present national banking system we had panics-in 1873, due, it was said, to too rapid expansion in building, followed by runs upon banks, destruction of credit, people thrown out of employment; in 1884, in 1893 and in 1907. Many reasons were assigned for these panics. In 1893 the people believed it was due to prospective changes in our tariff system. Others believed it was due to the purchase of silver. Whatever the cause, it was followed by runs upon banks, from one end of the country to the other, the calling of loans, the throwing of stocks upon the exchanges, factories closing, railroads in the hands of receivers, millions of people out of employment.

It was not until the panic of 1907 that the American people as a whole became convinced that these panics of ours were due to a defective banking and currency system, and that panic came, Mr. Chairman, to most of

the people in the United States, as a bolt from a clear sky. Business was never better in this country; factories were unable to fill their orders, railroads were unable to carry the freight that was offered to them; everywhere our people were employed at high wages. It is true that business was distended, but it was the business of building up, it was the progress of the business of the country, the increase of purchasing power, due to the great crops we were raising. Like a bolt out of the clear sky, the panic of 1907 came upon the people with all of its familiar features. It is true that we may say it started because speculators got into possession of some of the great banks of New York; but, Mr. Chairman, so long as the rivers run to the sea, speculators will get into positions of importance in the business of the world. They say that we were progressing too fast along the lines of business, that we were expanding too fast; but should we not have a system that will give warning to the business world by raising rates of interest when we are going too fast, in order that we may modify our speed and not be obliged in the end to run our team into a stone wall and wreck the equipage and injure the occupants? [Applause.]

Then, I think we may safely say, Mr. Chairman, as the belief of those who have studied the question in the United States, that these great business convulsions of ours are due entirely to a defective system of banking and currency, and they will continue to visit with disastrous effects the people of the United States until we frame a system that will stand these incidents, that will give warning of danger in advance, so that business men will be able to take in sail and protect themselves.

In many respects, in my judgment, the banking system of the United States is the best that could be adopted for our use. What is it? We have about seven thousand national banks chartered by the national government. Under certain limitations they have the right to issue currency which circulates as money. Then we have about eighteen thousand State banks, chartered under State

authority. So, together, we have over twenty-four thousand individual banks in the United States, more individual banks than exist in all the other countries of the world put together. We have a system under which the reputable men of any community can put together their capital and start a bank, which exists primarily for the benefit of that community. It gathers together the money of that community. It is to be used for the benefit of the business of that community. If they have a surplus of money, it probably goes to centres where it may be distributed to other sections of the country where it may be needed. In my judgment this free banking system of ours, this system whereby every city and every town may supply its own. banking facilities, may put up its own capital, has been one of the great means of building up this country. It is a splendid system in that respect. Nobody would seek to destroy it or tear it down.

As against that system there is a banking system which prevails in almost all of the other countries of the world. I do not believe it is necessary to waste any time talking about the branch bank system, because whatever its merits -and there are many-it is impossible at this stage of our history to adopt branch banking by law in the United States.

If we were starting a new system, building it up from the bottom, many arguments could be urged in favor of a system of branch banking. Its economy of operation is one. I think it is true that no system of banks can live and compete side by side with a system in which branch banking is permitted. In my judgment, if we should authorize it by law we would follow the course of other countries in the concentration of our banking business in one or two of the great centres of the country. Our people would not stand for that. It is useless to talk it or to urge it, because it is impossible. Under this process Great Britain has about forty great stock banks, only two of which are outside of the city of London. Besides the Bank of France, France has only three great commercial

banks, covering the country with their branches. And so on, in the countries of the world, where branch banks are operated, the tendency is to concentrate in the hands of a few institutions covering the country with their branches. Branch banking with us would be like a railroad running across the country in which the local agents would work for the company and not for the community, seeking to advance themselves to more profitable employment by looking after the interests of the company rather than the interests of the community in which they lived. The American people will not accept branch banks. The American people are so constituted that they like to walk into the office of the man who has the say as to whether they can have a loan or not, and they like to look in the eye the man who has final word in regard to it. They would not submit to having to send to Chicago or New York an application for a loan and wait until word could be received from that distant quarter. [Applause.]

Splendid as our system is in many respects, it has one fatal defect. It falls apart in time of trouble. It is a splendid fair-weather system, when the sun shines and all is well. And yet we must remember that in 1907 it was unable to bear the weight even of our prosperity, and a system which will not stand up in time of prosperity, what would we do with it in time of war? None of us would like to go to sea in a steamship that was built to sail only when the sun shone and the waves were calm. We want, rather, when we go to sea to be on a vessel that will stand the wind and the storm and the waves, that will ride safely in spite of the elements, a vessel that we can trust to carry us safely to our port.

In the time I am to occupy I cannot, of course, touch upon many of the defects in our present system, nor is it necessary in this presence, besides they have all been gone over in other papers. But I will refer briefly to some of the defects that, in my opinion, are more important.

I put first the lack of leadership in our system. We need leadership in our financial system more than any