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it is equally right to assume that it is important-exceedingly important—that it should be fully understood. It is necessary that we should be conscious of the great breadth of the interests involved in order that this great issue should have its right place before the Government and before the people. The question is not academic, as so many of us have been thinking it to be. It is practical to the very limit. it is not limited to the interests of business men.

It concerns everybody's everyday life.

Of course, we can get on with the present conditions and wait-paying the great wasteful cost whenever it is demanded. We have gotten on and have waited-paying the cost. We have, notwithstanding our laws, a wonderful body of banks, both National and State; and taken all in all, a wonderfully able body of bankers. The ample, inherent financial strength of our banks, their broadcast distribution and consequent localized touch with business, and the long experience our bankers have had with the shortcomings of our system, have given us and can continue to give us not only reasonably satisfactory banking facilities for our business, but those increasing mitigations of panics which have been so welcome.

But why should we wait? Why should we, for instance, hold on to panics ? [Laughter.] Why should we cultivate or breed panics. Why should we invite them as though they were blessings? Why shouldn't we revolt at their barbarities, their cruelties and their wanton havoc ?

Of course we are not obliged to have panics. We can abolish them if we like. It is a mere matter of National choice. Other nations have abolished them and so we can. We used to have yellow fever, but now we look with pity upon nations which still have yellow fever. [Applause.) And I fancy those nations which used to have panics and stopped having them, as we stopped having yellow fever, look with pity on us. At any rate, they ought to. [Applause. ]

We have a financial system unscientific and ill-advised. Everybody knows, for instance, that one of the fundamentals of a financial system is a provision for reserves—for re


serves that are trustworthy, adequate and systematic. And everybody knows we have no reserves in any proper sense of the term. Reserves are something for use indeed, but they are kept for partial and infrequent use. And their existence itself prevents their excessive use. Our so-called reserves are largely in everyday use. Those that are left intact are just enough to lead to violent sequestration by the banks and by the public at the first intimation of a panic. A large part of the reserves required by law is handed on from bank to bank for the sake of 2 per cent. interest, and is forced into use at the reserve centres in order to get back their cost. The rest of the reserves are scattered throughout all the banks in small, or comparatively small, amounts. They have no cohesion; and this condition results for the most part at a time of pressure in mere panicky sequestration.

You cannot have reserves that are effective without some form of centralization. The authority over these reserves, or a sufficient part of them, must reside in a centralized form. Our reserves must be released from the present forces which drive a great part of them into everyday use and which scare the life out of another great part at the first sign that they may be used. Reserves must be permitted to sufficiently aggregate themselves. They must be permitted to sufficiently place themselves in an organized form, and under an authority and power constituted for their common handling and control. [Applause.]

At present the forces in our system which destroy the chief value of our reserves incidentally create and stimulate an abnormal speculative demand for money that adds only excesses to the nation's financial operations. But when we shall have organized available reserves, and the nation knows it, we shall both materially legitimatize our speculation and remove a large part of the occasion for panics.

One of our greatest needs is a currency that will move up and down with the legitimate demands of business. But that everybody has in mind as a fundamental matter, and I shall not stop over it.


present system attempts no control of the market interest rate. There is no power or authority for this, as there is in all the other countries of great finance. The harmful custom of paying the uniform rate of 2 per cent. for bank balances throughout all the fluctuating demands for money cannot be reached. The rate ought to go up and down according to the legitimate demands for money, but the banks are unable to influence this.

As I have intimated, there is no organized authority to properly and wholesomely influence the financial markets. There is no organization of our financial world. We have about 25,000 banking units, each community carrying on its business as nearly independently as possible, and certainly with independent judgment and independent selfishness when the stress comes. In some of the cities clearing houses have come to the rescue of our unorganized system and have supplied organizations as far as that was possible to them. What we need as a sine qua non, therefore, is the general organization of our banking system; and that organization cannot be brought about without some recognized central authority.

As is well known, there are in the vaults of the Government great quantities of gold-nearly $1,000,000,000—held, dollar for dollar, as a reserve, or, as we call it, a trust fund for the redemption of circulating notes. This great gold fund could just as well as not be the basis for several times its amount of circulating notes. We have plenty of money in the country suitable to become a reserve for all purposes, but we do not adequately use it.

I will speak of only one other of the things we should reform. Our National banks are not permitted to do international banking, though the commercial and industrial interests of the country are greatly demanding that they should. Our National banks are rigidly kept at home. And at home they are rigidly restricted and confined to a single function of banking. They are supervised, examined and controlled by the Government. The Goverment knows more about them than any other Government has known about its banks since the world began. They are, therefore, entitled to the confidence of the Government and to the kindness of the Government. But we restrict and restrain them most harshly—and to the large detriment of the commerce and the citizens of the nation.

The upshot of the whole matter is that until lately we have not been conscious of the deficiencies of our banking and currency system—and we are not yet conscious of the universality of the interests involved. The country is prosperous. Very few of the banks ever fail. The vast majority of the banks are wonderfully well managed, substantial and successful. And so we have waited.

As to the panics, we have been taking them as they have come along as visitations of nature, just as we take a destructive storm or earthquake, feeling helpless to avoid them. We have felt fated and were becoming stoical. Happily, we are entering a new epoch. Happily we are learning that we need not have panics or any other of the drawbacks of our monetary system any more than we need have other misfortunes that come from our own neglect or our own ignorance.' Science has been avoiding for us many of the plagues of humanity that used to seem unavoidable; and we are awakening to the fact that our financial scourges are just as curable as those others which knowledge and science are already abolishing. [Applause.]

The TOASTMASTER.—Gentlemen of the National Board of Trade, we are all deeply indebted to the Secretary of the Treasury for his able speech and for the information he has given us. It is not right to criticise anybody's speech, but when the Ambassador of Great Britain speaks of our numerous treaties and the Secretary of the Treasury intimates something about the self-constituted chambers of commerce of the United States and their self-adulation, we may take a lesson from that and think that it is a hint that we should not adulate ourselves so much; but it is an instructive speech and we are deeply indebted to Secretary MacVeagh.

Senator Aldrich had promised me that he would be here and we looked with a great deal of pleasure and with high hopes that the Chairman of the Monetary Commission would be with us. I have received a very kind note from him, saying that he has sent a better man. Taking that as it was written, I have the great honor of presenting to you Hon. John W. Weeks, of Massachusetts, Chairman of the Committee on the Post Office and Post Roads in the House of Representatives. [Applause.]


Mr. President, ladies and gentlemen, I know how you all feel when you go to a play and find that one of the principal characters has been replaced by an understudy, and I know how your indignation would be increased if you should find that the substitute had not even rehearsed the part. I have come here at the last moment to say a word in Senator Aldrich's place, but for me to speak for him would be literally impossible. I regret as much as you do that he is not here to represent himself. Those who are associated with him in public life, and especially those who are serving with him on the Monetary Commission, have the highest opinion of his ability and his capacity for leadership. A man who, at his time of life, takes up a subject not new to him, changes, to some extent, at least, after careful consideration, his point of view, and makes as able a statement relating to it as the one recently published, pointing out needed changes and the manner in which those changes should be made, simply demonstrates to everyone that he is not only an able, but a very broad-minded man. I wish for him, as I know you do, a speedy recovery and an early return to lead in the completion of this great work. [Applause.) If anything I say relating to this subject secms to you wise and sound, it should be credited to Senator Aldrich. If it does not appeal to you in that way, I am alone responsible for it.

I find myself further embarrassed, too, in saying anything on this subject, because I have heard from so many of you, since I came here to-night, of the admirable paper read by the Assistant Secretary of the Treasury, Mr. Andrew, this

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