It is no more important that the banks in a Clearing House should get together than that all the banks in any given commercial zone should get together; and it is no more important that the banks in any given commercial zone should get together, than that all the zones should get together for a common defense of all the business interests of the country, and for the common defense of all the reserves of the country against all the demands of the rest of the commercial world. Unless this final union of reserves is made, no discount rate for gold can be fixed and enforced, and we would find ourselves in the same helpless, hopeless situation or position that we are in today. But if all the central reserves of all the zones are united in The American Reserve Bank, and every commercial zone has its representative upon the board of directors, you will have in the banking world of the United States identically the same form of Government we now have in our National Government. Then when we have converted our United States notes into gold certificates, and when all our silver certificates have been reduced to the form of token money, by cutting them up into pieces of two dollars and less, The American Reserve Bank will be in identically the same position that the Bank of England is in today, the most positive and powerful force in the world in controlling and directing the movement of gold. And yet, like the Bank of England, The American Reserve Bank would not be a bank of issue. It is not a question of note issue at all; but it is a question of centralizing our gold reserves to meet any emergency in the business world, coupled with the power of fixing and enforcing a price for the use of gold, a discount rate for gold throughout the United States.
The Financial and Banking system that we have proposed combines the Bank of England and the Canadian Bank note system—the two highest and best exemplifications of a central gold reserve and bank credit currency.
Mr. Farmer: Well, Mr. Banker, you are undoubtedly right. I see now that we would be very little, if any, better off with the individual zone system than we are today, when you recall the fact that the whole world now uses one common reserve, gold, and have ways of obtaining it. I think your argument illustrated by the Army and Navy and the National Government is absolutely unanswerable. What do you think, Mr. Merchant?
Mr. Merchant: I have never had any doubt about that question at all.
Mr. Laboringman: Abe Lincoln said, you know, "A house divided against itself cannot stand." I think this thing is just as plain as the nose on your face. It is Uncle Sam against the world just as much in banking as in anything else; and a good deal more so in these days of lightning intelligence and cheap transportation.
With a representative of every commercial zone, say forty-two in all, sitting at Washington and holding in trust for the protection of all the people of the United States such a Central Gold Reserve as you propose to make the banks create, you have a perfect duplicate of our present National Government, in political matters. These representatives of the zones are the servants of the zones, just as the senators are the servants of the states. Another thing, twenty-one of them will be business men, and twenty-one will be bankers; both sides of the bank counter, the inside and the outside, will be represented; and, since you have arranged to have one-seventh of them, or three business men and three bankers go out every year, your board of forty-two will always be old, and yet always will be becoming new. The more I think of it, the more I am for it, because I am for Uncle Sam against the world.
Uncle Sam: If you ever want a "B" line on anything, go to Mr. Laboringman every time.
Mr. Banker: Well, we have considered the economic side of the Aldrich scheme pretty thoroughly. I think it is about time that we heard something from Mr. Lawyer about the administrative features of the scheme.
Mr. Lawyer: From a professional point of view, I have been a student of motives all my life, and as you know, I have been a part of a powerful, political machine in this state for more than twenty years. The Aldrich scheme furnished me a rich mine of motives, and a detail of organization that staggered even an old political stager as I am.
You will remember that when Aldrich made his first announcement about his plan, he said that we must have a Central Bank and that immediately President Taft declared at Boston, "Senator Aldrich desires to round out his career with a financial system for the United States, and says that we should have a Central Bank." I never will forget what an eminent citizen of this state said when he read that statement. It was this: "Well, God help the American people if Nelson W. Aldrich ever rounds out his career with a financial system for the United States."