BY SYLVESTER BAXTER.
There is a possibility that the plan for the establishment of postal savings banks, so ably advocated by the postmaster-general, may result in a radical change in our entire banking system. The demand for postal savings-banks is so popular that it is not likely that there will be much further delay on the part of Congress in realizing the project. Now it happens that among the new political issues that have arisen, the question of the currency has assumed a most prominent place. There can be no doubt of the intensity of the feeling that has developed against the national banks, which have supplied a large proportion of the circulating medium since the war, and the demand for a currency issued directly by the government, without the intervention of the banks, is growing both in volume and in force.
The sense of the inadequacy of the national banks to the financial necessities of the country is by no means confined to those who, by theory or experience, have been made hostile to them, and regard them as detrimental to our institutions, and as dangerous instruments for the oppression of the common people. It extends to those who recognize that the national banks have been of invaluable service to the country, and are a vast improvement over the banking system that preceded them. Nevertheless they feel that grave defects are showing themselves, and that for the security of the community something better is needed. There is not the confidence on the part of the business community that there should be, and events like the recent occurrences in connection with the Keystone National Bank, in Philadelphia, are not likely to enhance that confidence. One of the most frequent of surmises is as to how many similar cases there may be, and a very commonly heard query is that as to the state of affairs that a general financial panic might reveal, with the banks loaded with collateral upon which it would be hardly possible to realize at such a time.
Then there is the moral aspect of the case, so well expressed in an essay[22] by one of the soundest philosophical and political thinkers whom America has known, the late David Atwood Wasson. Said he: "At present the government permits itself to become indirectly,—or, if we speak of the State governments, worse, sometimes, than indirectly,—confederate with those who amass fortunes by making credit precarious, and forcing the hazards of the gaming-table into all the legitimate operations of business. The comptroller of the currency has publicly said that about one half, on an average, of the means of the national banks, in one chief city—institutions, observe, created by government, and charged, in effect, with one of its most distinctive functions, that of supplying a medium of exchange—are loaned to speculators; that is, to men who subsist largely on artificial disturbances of credit, upon corners in the stock market and money market, upon alternations of inflation and stringency, the ups and downs of a disordered constitution. Without going into the matter closely, which is aside from my present purpose, I leave before the reader the main facts of the case: that the system of credit centred in the modern banking system plays a vast and increasing role in our civilization; that while of a utility not easily overstated, it affords peculiar opportunities of fraud and exaction; that aside from these, its unregulated condition is dangerous, resulting in alternations of inflation and depression, like the alternate extremes of fever and ague; that vast and growing combinations exist for producing artificially this disorder; that those institutions which credit has created under the express sanction of government, at once to supply its necessities and hold it healthily in check, are managed only as private property; that much oppression, alike of labor and capital, and also, I fear, much demoralization—which is an interior and worse oppression—are suffered in consequence; and that hitherto our statesmanship wants the studious leisure, and our method of government the stability and precision of operation, which these exigencies demand."
A truer statement of the case never was made, and these words should be well pondered by patriotic citizens.
Probably the reason why the feeling against our present banking system has not yet taken shape in legislation is because no sound constructive measures have been proposed. Faulty as the system is, what is there better that can take its place? is asked, and to this no satisfactory reply has been given. Even though the notes of the national banks should be retired, and currency issued directly from the national treasury should take their place, we must have banking facilities of some kind.
Absolute security of bank deposits is what is desired, and any measure that would secure that end could hardly fail to be joyfully welcomed by the business community, with the exception of the small minority either selfishly interested in present banking corporations, or whose prosperity is derived from operations based upon a state of insecurity. Powerful as these interests are, there is no reason why they should be permitted to stand in the way of the realization of a better condition of affairs, should that prove attainable.