Mr. Banker: My position was just the reverse of that of Mr. Lawyer, for while I had studied it from an economic point of view and that of a practical banker, and had become so convinced of its utter unsoundness on the one hand, and unfitness for use to ninety-nine out of every hundred of American banks, I never dug into the soul of its management, until the past week. So we compared notes, and found the situation particularly interesting.
Mr. Merchant: Before you go any further, I want to read something from a speech, delivered in Congress March 29, 1910, two years before the Aldrich plan was born. You are all doubtless aware that the Aldrich scheme was nothing more nor less than an attempt to transfer to this country the German scheme of note issue and banking generally.
Mr. Laboringman: I heard the other day, that the Aldrich bill was deader than a door-nail. Why do we want to spend any time on that? Or, are you fellows like the Irishman, who said that he was kicking a dead dog to teach him that there was such a thing as punishment after death?
Mr. Merchant: You must remember, Mr. Laboringman, that error is always repeating itself, and that sin and iniquity never die; so, the economic blunders of the Aldrich Bill and its administrative purposes should be exposed and held up as a lesson and an illustration to guide us in the future.
What I wanted to read, was a part of Congressman Fowler's speech, delivered in the House of Representatives. Referring to the German banking situation, he said:
"The position of both England and France, under present conditions, would seem sound and impregnable from a governmental as well as a banking point of view. Each has planted itself upon the gold standard, with certain precautions peculiar to its circumstances. Germany, on the other hand, has not pursued the course of England, with its limited gold reserve, forcing the public into the deposit and check system to meet the current demands of trade. This would have been impossible without a long-continued ruinous revolution, considering that there is a quarterly settlement in Germany that calls for an expansion in currency amounting to $125,000,000. Nor has Germany pursued the course of France, which has a gold reserve large enough to meet any test or burden that either the Government or the commerce of Germany might have imposed upon it, but has adopted a middle course which has not the strength of the position of either England or France, nor the credit facility of France.
"Its gold reserve is of the halfway sort, and its bank note issue is also of the halfway sort. The result is that the financial and banking situation of Germany must necessarily prove weak upon the first great test when the bank notes of the Imperial Bank of Germany must be made a legal tender.
"Indeed, upon the declaration of war by Germany or against Germany, the first step taken in a financial way would be for her to declare her bank notes a legal tender. It is hardly problematical what would soon happen, with the wide divergence between her gold fund and the amount of her note issue."
Gentlemen, within eighteen months after he made that statement, when war seemed probable with France, Germany made her bank notes a legal tender.