BANKING IN 1860
Uncle Sam: This is the fourteenth night, boys, since we began to meet, and discuss what in a way concerns me far more than any other question except the morals of the people. The tariff you can change, any time, any day, and, as I think should be changed schedule by schedule, so that there would not be any disturbance of business. Nor could corrupt trades between the various interests be made, if that policy were pursued. When we take up our money plan we must be sure we are right, before we adopt it. I mean absolutely right; for there is no hope apparently of changing our monetary laws when once they get upon the statute books.
Mr. Lawyer: That is certainly true, Uncle Sam, for we've not made a single substantial change in our National Bank Act since it was passed Feb. 23, 1863, almost fifty years ago. Of course, we dotted an "i" here and crossed a "t" there, but that is all.
Mr. Banker: I never thought of that before, but it is literally true. The only change ever made, worth mentioning, in the National Bank Act was that made in connection with the funding of the National Debt in the Act of March 14, 1900. Then Congress adopted word for word a provision contained in Congressman Fowler's first general Financial and Banking bill of March, 1897. This provision provided: That the new bonds should be payable in gold coin and bear interest at the rate of 2 per cent per annum and that the banks could issue circulation up to par of the bonds, and that the tax of 1 per cent should be reduced to one-half of 1 per cent. Not another change has been made, and this was incidental, rather than the direct purpose of the Act.
Mr. Lawyer: This indifference, or non-interference with monetary laws, is not peculiar to ourselves, however. You find the same is true in England. There has been no change in the English Bank Act since it was adopted in 1844, although practically all the English banking economists during the past fifty years have agreed that it is most faulty in some respects, particularly in its currency provisions. The same is true of the Bank of France which was established in 1803 by Napoleon, who proved to be as great an economist as he was a general. The same was true during the first fifty years of our banking legislation. The same will always be true in every country, for nothing is ever done, affecting a financial system, until the situation becomes intolerable as it is in this country today, and as it is fast becoming in Germany. Of course, the reason is not far to seek; it arises out of the fact that there is a general fear that any change in the banking practices, or system of any country, will disturb the existing business conditions, or arrangements. Hence nothing is ever done, as long as the people will put up with it. It takes the terrors and wastes of business misfortune to bring any change however obviously needed; therefore, we must be very patient, and most thorough in our work of preparing a measure for the reformation of our present banking practices which have been correctly described as "archaic," "barbaric" and "the worst in the world."
Mr. Merchant: That is right, we must be both patient and thorough; and to be thorough I think we ought to know what the situation was in this country in 1860, at the breaking out of the war; because if there is one fact that has impressed me more than any other, it is this, that all the real progress we have made during the past fifty years or since the war, has been either without any law, or in actual defiance of law. Under these circumstances I think it is of the utmost importance that we find out if we can what progress, if any, this country had made up to 1860, which was certainly a breaking up point in banking, as well as in all other lines.
Mr. Banker: I agree with Mr. Merchant, and ever since we began these discussions I have taken every opportunity to go back and investigate the banking situation, before 1860, hoping and expecting that our experience then would help us now. I have been literally amazed at what I have discovered in the way of sound banking in many of the states, and I have been profoundly impressed with the fact that then, too, as well as now, all that they had secured that was good was the outgrowth of experience.
Mr. Manufacturer: I was so greatly impressed with the complete and, as it seemed to me, practically perfect system that had grown up under the Suffolk Clearing House, which started at Boston in 1818, that I have been wondering whether there were not other instances like that which would help us; for, gentlemen, whatever we may think, or want, personally, one thing is certain, and that is this, that we must take things largely as we find them, and legislate as far as possible in harmony with them, bringing the inefficient, the laggard and the "sucker" up to the approved standards of our banking experience and compelling every individual bank to do its part in providing its own insurance by carrying equal and adequate reserves and by carrying on its business in accordance with the highest standards of banking practices today. Then we must bring all of the banks of the country under the reign of economic law, and into one harmonious whole for the benefit of all the people. We must protect our gold reserves against the demands of the rest of the commercial world.