Mr. Manufacturer: I don't think that that is at all strange when you remember that it only existed in a few states and consider just how we lost it. You will remember that the Virginia banks which were founded upon the old Scotch system started in 1804, and worked perfectly until the war broke out. The other banks, or systems of banks, were established from time to time, some of them as late as 1857, and as Mr. Banker remarked several nights ago, modeled very largely after the two United States banks, the charter of the last of which expired only in 1837.
From a close study one can discover both of these two systems combined in some instances. In this way we were gradually working out a national system precisely as we are today under new and vastly more varied conditions, but the war coming on, destroyed all that had been done.
You will remember that Secretary Chase, desiring to sell Government bonds for the purpose of carrying on the war, secured legislation which put a tax of 10 per cent upon all bank note issues and compelled banks desiring to issue currency to buy Government bonds as a basis of their circulation. As a result, he produced a currency of uniform appearance that was of equal value everywhere and a great blessing to the country. This condition was a very great and most agreeable change in the currency experience of the country, because there had been practically no legislation except in a few states that in any way controlled banking practices, or currency issues. The result was that we had "Blue Pup Money," "Red Dog Money," "Wild Cat Money," "Yellow Dog Money" and every other kind of "Dog Gone Money," that could be gotten up with paint and paper to fool and defraud the people. On top of this situation there arose a terrific political prejudice engendered through political controversy toward a Central Bank. The conditions brought about by the legislation, secured by Chase, have kept up the present régime until it has become so utterly intolerable, because utterly unsound economically, and so disturbing to the general welfare as to compel immediate consideration and reconstruction.
It is really the first time since the Civil War that the finances and banking of the country have become a serious question outside of the acute phases presented in the Government issues, or the Greenback craze of 1875 and the silver hallucination of 1896. Today, the question is not a specific one, or a mere detail, but one of fundamental principles and of a most comprehensive character. It involves the whole subject of governmental finance and banking and it is well that it should; for our business is so vast now, almost 50 per cent of the banking power of the world being within our borders. Our annual productions are approximately thirty-five billions. Our annual clearings will pass the fabulous mark of $170,000,000,000 (one hundred and seventy billions). So that every recurring financial disaster will be worse, if possible, than the one going before it.
Mr. Banker: Right you are, Mr. Manufacturer, and this is true because the principles involved are as fundamental and immutable as the law of gravitation; and if we persist in our folly, when dealing with these enormous volumes of credit, the destruction that is sure to follow will be on a scale with that of worlds in collision.
Mr. Merchant: That seems to describe the situation somewhat graphically and impressively, but I must say truthfully. We are undoubtedly "up against it" as the boys say. Only the other day I was talking with a president of one of the largest national banks in the country, and he told me that unless something was done very soon, he would get out of the business, because he could not stand the strain; but the bankers' troubles are no worse than those of every business man, and it seems to me as though we were on a perpetual strain, and living in a sort of terror of what may happen at almost any time. The business atmosphere is unnatural. Certainly this cannot be necessary.
Mr. Laboringman: Well, I don't see anything very strange or unnatural about this thing, if it is as you have already stated that there have been no changes in your banking laws worth speaking of, since 1863. Look at your railroad development. Fifty years ago the locomotive that weighed thirty-five tons was a whopper, but now they turn them out weighing one hundred and thirty-five tons. We used to have thirty-five and fifty-pound rails, and our ties forty inches apart. Now we have a hundred-pound rail, yes, one-hundred-and-fifteen-pound rail, with the ties twenty-five inches apart. The other day, I counted one hundred cars with one hundred thousand pounds capacity each, every one loaded full in a single train. Now, what would you think of running a hundred-ton engine, and that kind of a train of cars over a railroad built fifty years ago? Ties only eight inches thick and forty inches apart, on a corresponding road-bed. Why, men, I can tell you we don't want a single-track railroad of that character now, with a switch out every ten miles to let trains pass; but we want a four-track road, with twelve to fifteen-inch ties, only twenty-five inches apart, and equipped with signal and block systems of the latest type, and most perfect automatic operation.
Uncle Sam: Gentlemen, when it comes to getting down to brass tacks, and hitting the thing plump square between the eyes, Mr. Laboringman gets away with all of you. Now, can you beat that as an illustration of our financial and banking needs? If you will construct a banking system up-to-date, and just add to these domestic requirements the necessary provisions growing out of the fact that I am now a world power, I should have said, I am the world power, and prepare an international financial and banking system, we shall meet the demands of this new century; but otherwise I shall find myself wholly incapable of protecting the very foundation of commercial credit, my gold reserves, when the test comes.
Mr. Banker: Mr. Laboringman and Uncle Sam have laid down the right kind of a program in telling terms, if not explicit. It is clearly up to us to work out a plan as comprehensive and perfectly adapted to our needs today, as were the banking systems of Louisiana, Ohio, Indiana, Kentucky, Virginia, Iowa, Missouri and the Suffolk Banking System of New England was to the needs of those various sections of the United States at that time; for they were practically perfect from the standpoint of economic principles and the needs of those times. The principles upon which they were founded are eternal and are just as applicable today as they were then. The principles have not changed, although the conditions have, and that most amazingly.