"Every single note of the so-called Reserve Association used in the reserves of our banks will displace just that much gold and drive it out of the country.
"Judged, therefore, from a purely economic point of view, I assert that the Reserve Association plan is the most unsound, the most dangerous; indeed, it is absolutely the worst proposal that has been brought forward for serious consideration by any respectable body of men since the adoption of the Constitution, with the two following exceptions: First, the issue of legal tender money by the Government such as greenbacks; second, the free and unlimited coinage of silver at the ratio of 16 to 1.
"An officer of one of the largest banks of the United States recently used this language: 'Mr. Fowler, it is incredible that we should be called upon to consider such a proposition.'
"If this is really true, how does it happen, that so many business men and so many bankers approve it, is a most natural inquiry. The cause is not difficult to perceive.
"There is not a business man nor hardly a banker who is not even now still living in a state of fright from the terror of 1907. One thought alone seems to have taken possession of the country to the exclusion of everything else, and that thought is this: That we must hereafter be able to convert our commercial credits into bank or current credits. There seems to be something approaching madness; indeed, there seems to be an insane haste lest they be caught again, possibly tomorrow, certainly next fall. But they need not worry, for danger is not imminent; 1907 will not come again right away.
"During the past two years up to the present time the entire thought of the country has been directed to a mere mechanism to achieve this result, without any reference to or consideration whatever of those fundamental, eternal principles of banking economics that demand recognition and obedience if we are to escape the frightful penalties which their violation always inflicts.
"In the outset I want to lay down two fundamental laws that I wish were burned into the minds of every banker and every business man within the borders of this republic. They are these:
"One—Nothing should ever be counted as a reserve which is not coined out of the standard of value. Our standard of value is gold, therefore nothing should go into the reserves of our banks except gold.
"Two—The poorer money always drives out the better.
"I hope that whoever hears these words will commit these two laws to memory, for they are as fundamental and eternal in their operation as the law of gravitation.