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It provides for note issues absolutely irresponsive to business requirements, bringing about alternation of inflation and stringency; All of which defects tend to destroy confidence and generate crises; and
WHEREAS, This convention is convinced that it is practicable to create a central bank system for the United States, free from political or sectional control, by means of which these defects can be remedied; an instrument, not of monopoly, but for strengthening, and preserving the independence of, the individual banks; an institution designed primarily for public service and not for profit; not to compete with existing banks, but to assist all of them to serve the business communities more efficiently; now therefore, be it
Resolved, That this convention unequivocally declares in favor of the creation for the United States of a central banking organization, based upon the following general principles :—
First. That such central organization be a corporation endowed with a large stock capital and not merely an association of banks.
Second. That its stock capital be owned by incorporated banking institutions, whether under National or State charter, willing to assume equal duties as a basis for equal privileges.
Third. That its administration be divided between the Government, the member-banks and the commercial classes, in a manner which will safeguard against individual, sectional or political domination.
Fourth. That its business be limited to transactions with the Government and with the incorporated banking institutions which become stockholders, i. e., member-banks, except as provided in paragraph nine, clause b.
Fifth. That dividends on its stock be limited to a fixed moderate return and profits in excess of such dividends, after providing for a reasonable surplus and emergency fund, be turned over to the Gov
Sixth. That its business be conducted through branches, to be established in the banking districts into which the country shall be divided, the member-banks of the several districts constituting joint associations and sharing in the administration of the branches.
Seventh. That it shall, free of charge, receive and disburse all moneys of the United States Government in places where it shall have offices.
Eighth. That it shall not allow interest on deposits.
Ninth. That it shall have power:
(a.) To issue circulating notes payable in gold, to be secured by gold and negotiable paper, and, if necessary, eventually to retire the
present bond-secured bank notes, to a limited amount by Government bonds;
(b.)-For the regulation of its gold reserve to buy and sell bullion, and to contract for loans of gold, and under proper restrictions to deal and invest in foreign bills of exchange;
(c.)—To require the member-banks to keep with it a portion of their reserves prescribed by law;
(d.) To rediscount, only for member-banks, commercial paper under regulations prescribing the limit of amount for each memberbank, the maximum time to run, and determining the degree of guarantee to be provided by the joint associations of member-banks of each district;
(e.)-Under careful and proper restrictions to discount approved American bank acceptances;
(f.)—To transfer funds standing to the credit of a member-bank, to the credit of any other member-bank at any of its branches. (g.)-To buy and sell the bonds and treasury notes of the United States.
Tenth. That the central organization is ultimately to become the sole note-issuing power.
Resolved, Furthermore, that copies of this resolution be sent to the President of the United States, to the members of the National Monetary Commission and to each Senator and Representative in Congress.
The PRESIDING OFFICER.-May I suggest that that last resolution which you read, to the effect that copies of this resolution be sent to the President of the United States, etc., might properly come in later, if there are any other resolutions to be considered. I infer that that was simply the first resolution you were reporting. Is that the whole action?
Mr. WARBURG.-No; but I think the second resolution will not be sent to Congress. So I do not see any objection to carrying this out as it is proposed. If there is any objection, we might vote on them separately.
I had the intention at first to say a few words in explanation of this resolution, especially as I believe Mr. ACKER will want to present his views as to why he did not, to our great regret, vote with us. I think, after the splendid argument made by the Hon. Mr. VREELAND, that it is entirely unnecessary for me to waste any of your time. I have very
little to add to what Mr. VREELAND has said so splendidly.
There is possibly one point I would like to emphasize which Mr. VREELAND did not bring out fully, and that is the centralization of banking power. Not only would there be no monopoly, the scattered directorships which belong to every section of the country preventing that, but quite the contrary; a central banking institution will break monopoly if it exists, or, as Mr. VREELAND says, as it exists.
A central banking institution has been in all countries the breaker of monopolies, the breaker of despotic power, inasmuch as by creating safe conditions, a central bank renders the small banks independent and they have no necessity at all any more to go to the big institution or to the Treasury to ask favors. In Europe it has been shown everywhere that the central banks are the strongest backbone for the independent banks in their fight against the branch banking system, which is threatening the independence of the small banks there.
I will now read the second resolution that we have to present:
Resolved, That there be appointed by the chairman of this conference a committee of seven, to organize a business men's monetary reform league that shall have its main office in Chicago, with branches in the various centers of the United States where local committees shall constitute the management. The object of this league shall be to carry on an active campaign of education and propaganda for monetary reform, on the principles, without endorsing every detail, of a reserve association with branches in the business centers of the country as outlined in Senator Aldrich's plan.
Resolved, That the delegation here present be requested to use their influence in the commercial bodies they represent to gain the active co-operation of these bodies and of their individual members in the work of the league as defined.
Resolved, That the business men's monetary reform league be requested, when organized, to provide for a committee on propaganda and education, and also for a committee on legislation whose duty it shall be to further monetary legislation on the principles adopted by the league.
Resolved, furthermore, That the committee on organization be requested to bring about the co-operation and, if possible, a consolida
tion between this league and the National Currency League already organized about a year ago by the Merchants' Association of New York.
This resolution was passed unanimously by the Committee on Resolutions. I ought to say a word in explanation of this. I ought to make clear in the beginning that we indorse the principle of a reserve association, with branches in the business centres of the country, and not the details, leaving them entirely open, as Mr. VREELAND suggested, as it is clear to all of us that those details will have to be thoroughly digested and worked out.
Your committee was unanimous in the idea that the underlying thought of it deserved the fullest co-operation and commendation of these bodies.
What your committee thought ought to be done is this: Again, as Mr. VREELAND said, this can only be solved if the people take it in hand, not the Legislatures alone being left to settle it, but let the people take it in hand. The majority of the legislators have shown a great disinclination, to put it mildly, to disclose what they think. A great many have been afraid that standing for anything like a central organization means being for capital and for special interests. So it must be shown to the people that this organization is going to be the backbone of the little fellow, that it is going to be the protection of the little fellow. The big fellow gets through a crisis all right; it is the small fellow who goes under and suffers; it is the grocer and the charwoman. This is not a banker's proposition; it is a proposition of all the people. It is that thought that we desire to impress upon the minds of the people. When we do that we shall win.
It is from this point of view that we want to organize a league all over the country; that we intend to go back to the bodies which we represent here and ask them to back us up on that; that each section of the country should organize a strong committee for propaganda and education, to carry this thought to the people and get them so much imbued with it that the legislator will feel that he has got to do it because it is the most creditable thing he can do.
We chose Chicago as the headquarters of this Monetary Reform League or committee, because we thought it would come with more power if it came from the West rather than the East; and the East will have its local committee, as well as other parts of the country.
In reference to the last paragraph, I should explain that the Merchants' Association a year ago started a league of this kind, possibly a little ahead of time, because at that time the thoughts had not matured so that any actual plan existed for which we could start out and fight. Now the psychological moment has come, and it is not only desirable, but I think it is our duty that we should go ahead and enter upon this fight.
I think it would be very desirable if the Merchants' Association, which is represented here, should join in this movement and let it be done through one organization, rather than two, because the work could in that way be done much more effectively.
The PRESIDING OFFICER.-The Chair suggests just this practical rearrangement: that the words "Resolved. furthermore, That copies of this resolution be sent to the President of the United States," etc., be brought in at the end of the whole paper.
Mr. WARBURG.-Very well, we will accept that; and I move the adoption of the report and the resolutions offered.
The PRESIDING OFFICER.-The Chair thinks it would be proper and parliamentary that Mr. ACKER, who dissented with regard to the first resolution, should have the floor at this point.
Mr. ACKER, of Philadelphia.-Mr. Chairman, I offer this resolution as a substitute, and in offering it I appreciate the delicacy of appearing as one member of a committee of nine and having the temerity to present a separate resolution which differs with the conclusions of the remaining members of the committee.
The natural inference would be that the individual doing this is very obstinate, but I think my colleagues on the com