Mr. Merchant: Gentlemen, just think what it means to withdraw these hundreds of millions of reserve money from the channels of trade, say in the fall, keeping in mind that every dollar that the Government grabs and withdraws, will support from five to ten times that amount of credit. The withdrawal, as Mr. MacVeagh said, of one hundred million dollars, means the contraction of from five hundred million to a billion dollars; this is not only a fool's practice, but it is an actual crime against the commerce of the country; a crime against the producers, a crime against the laboring men of the country.
Mr. Lawyer: How long, O Lord, how long, shall we remain the laughing stock of the rest of the world? But, let us see, can any man here give me a single reason why the United States Government should not deposit its money with the banks, precisely as all the other governments of the world do? It seems to me perfectly clear that the United States Government should treat its income precisely as this town does, this county does, this state does. Is there any conceivable reason why it should not act in this matter precisely as New York City, Chicago, New York State and Illinois, and every city and every state does?
Mr. Banker: Not one in the world.
Mr. Manufacturer: This discussion upon the development of banking in the United States and the present treasury situation brings out the necessary reforms most vividly to my mind from these two points of view, the banks, and the treasury.
First: Assuming that we are all agreed as to the result of our talk last Wednesday night upon reserves, that they must be national to be equal and adequate, our conclusions now are inevitable, (1) we must give to the National banks the power to do a Savings bank business, as well as a Commercial business; (2) we must give our National banks the power to do a Trust Company business; (3) we must give our National banks the power to issue a pure credit Bank Note precisely like that issued by the Scotch Banks and the Canadian Banks, and was issued by the five hundred banks in New England before the war. These notes will go to the Clearing Houses every day with the checks and drafts to be cleared at precisely the same time, and precisely in the same way.
Second: We must take the United States Government out of the banking business, so that its transactions will cease to be a disturbing factor in the everyday affairs of the commercial world.
Mr. Banker: You have outlined these necessary reforms splendidly, but there are just two more points in this connection that must not escape our attention. They are these:
First: All these various forms of banking are distinct in character and economically the funds of each perform a peculiar function that must be recognized and observed or we shall make a great fundamental error in constructing what we hope will prove a sound financial and banking system. We must provide that the commercial function, the savings function, the trust function shall be kept apart by separating the funds arising from each, and keeping them completely segregated, in order that the country may always know just what its commercial fund is, as distinguished from its investment fund.
Second: There is such a great demand for Farm Mortgage Loans by those who are pursuing agriculture that I am convinced that some provision should be made whereby the farmers of this country could obtain money upon their lands, as cheaply as our great railroads and other corporations are able to do. I have given this matter much study, and as you gentlemen are aware, I am a member of the Committee appointed by the American Bankers' Association to investigate and report the best method possible to accomplish this purpose. Therefore I think that we had better consider it here.