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L;j L i SLL V ft P V \j V I J j U. ; • ' / "" L I ii l ii i I i 1K ' FOR RELEASE SUNDAY MORNING PAPERS FEBRUARY 1 9 , 1 9 2 2 , ADDRESS OF THE COMPTROLLER OF THE CURRENCY, HON. D . R. CRISSINOER, REEORE *HE vot^pr CHARTER; A F R I C A N I N S T I T U ^ OF RANKING, HOTEL COMIODORE, W ™ YO*K Ci 'TY, SATURDAY E ^ H l M , FEBRUARY 1 8 , 1922. CkAXRMAN AND GENTLEMEN: I am going to begin by confessing to you gentlemen that the American a U t u t e of Banking i s one of very few organizations whose i n v i t a t i o n s I ,7 °uld have f e l t constrained to accept at this time. You are e n t i t l e d to r ®gard this remark a s a compliment, for i t represents my strong f e e l i n g that 7cur institute i s one of the extremely u s e f u l forces working for the disnation of better knowledge and the soundest p r i n c i p l e s in banking and 'inance. The p a r t i c u l a r e f f o r t you have been putting forth i s not only de s i r a b l e but h i g h l y necessary owing to the special circumstances that G r o u n d the banking i n t e r e s t s of this country at p r e s e n t . In Owing to a v a r i e t y of causes with which we are a l l f a m i l i a r , banking the United States has grown up i n a fashion quite unique. There has never the same c l o s e l y knit understanding and s o l i d a r i t y among banking institutions i n this country that have been developed i n most European c o u n t r i e s , *t ig not necessary for u s to c o n s i d e r whether this has been a desirable^or an undesirable development; at l e a s t i t is a f a c t . The number of banks in th9 United States i s almost beyond the belief of European f i n a n c i e r s ; and the v a s t l y greater number of our banks are purely l o c a l i n s t i t u t i o n s with only r at her vague a s s o c i a t i o n s with the greater centers and forces of fiitence. This c °fi<Ution has of course been very much modified since the establishment of the Pe d e r a l Reserve System, but i t s t i l l prevails to an extent that quite s t r i k i n g l y d * f f e r e n t i a t e s the methods of Arorican banking from banking in the Old " t o y U . Your i n s t i t u t e h a s been devoted to dissemination of the underlying M n c i p i e s of economics, f i n a n c e , and business, which are needed as a part of the e q u i p m Q n t of the well-rounded b a n k e r . T h e r e f o r e , I have f e l t that your 0r g a n i Z a t i o n i 3 e n t i t l e d to e s p e c i a l consideration and encouragement. It i s p a r t a k i n g a work that has been too l i t t l e considered i n this country; a work, I Say add, that would have brought inestimable b e n e f i t s to the nation if i t had inaugurated much e a r l i e r , so that in these present d i f f i c u l t times we could ^ve turned to a great community of bankers a s thoroughly equipped with undere n d i n g of the law, the economics, the underlying philosophy of banking and finance, as you aim to equip the young men who enjoy the advantage of your Cour ses. h These are times i n which i t i s dangerous to be contented with the narrow * n d provincial v i e w . Great forces are a t work i n the world which, no matter i n s i s t e n t l y we may wish to take the narrower view, absolutely prohibit us doing so. We are compelled to regard our great profession in the l i g h t of i t s worldwide concerns; to recognize that i t i s i n e v i t a b l y inter-related wi t h the f i s c a l and f i n a n c i a l concerns everywhere; to understand that we can block ourselves off from intimate association and relationship with the N a d e r s of business, of government of f i n a n c i a l operation, everywhere. „ ,ut I confess to being a country banker myself, and am proud of the f a c t . i n making that confession, I f e e l that I may f i n d i n i t a j u s t i f i c a t i o n 0r applying to myself along with other bankers, the c r i t i c i s m that as a community bankers of the United States have been disposed to a limited view, a. foreshortened perspective, a narrowness of viewpoint, which are not calculated to *t us f o r the great part that world events have thrust upon u s . Not o n l y i n 6ur own country, but i n every other important country, the f e w years have compelled the l e a d e r s i n governmental finance and the great ifeUres i n general banking and b u s i n e s s , to improvise, und^r p r e s s u r e , many methods and systems i n f i n a n c i a l o p e r a t i o n , The processes by which the -flag f i n a n c e d , b y which the economic and i n d u s t r i a l structure of each country ' a s sustained throughout the great struggle and s i n c e , have v a r i e d w i d e l y i n A f f e r e n t countries. But on the whole, I think we now pretty g e n e r a l l y recognize " : h a t there has been too much of i m p r o v i s a t i o n , too l i t t l e of s c i e n t i f i c procedure, u nder the stress of i n s t a n t and imminent necessity,methods have been adopted ^ i c h seemed at the moment u n a v o i d a b l e , and which momentarily served more or ^•Qsg e f f e c t i v e l y the purpose to which they were addressed; but which u l t i m a t e l y ^ brought us to a time of d i f f i c u l t r e c k o n i n g . You w i l l a l l recognise cnat I r e f e r p a r t i c u l a r l y to such d e v i c e s as the gigantic i n f l a t i o n of both ^'Urrenqy and c r e d i t , which has been u n i v e r s a l ; to price f i x i n g ; to cost-plus £°ntracting; to the e x t e n s i o n of government c r e d i t i n many c a s e s where the r e s u l t s havs proved u n f o r t u n a t e , and where b e t t e r , more s c i e n t i f i c methods might have Voided it. I t i s u s e l e s s now to concern ourselves with i n q u i r i e s as to whether the f o r t u n a t e r e s u l t s of these proceedings might have been a v o i d e d , ^ v e r y such su Preme emergency b r i n g s to r e s p o n s i b l e statesmen': the q u e s t i o n whether the Qiiiergoncy can be f i n a n c e d by any other process thaft that of i n f l a t i o n . Even J* we grant that to a c e r t a i n e x t e n t i n f l a t i o n is unavoidably i n such cona t i o n s , we may yet p r o f i t a b l y i n q u i r e whether there i s not a l i m i t to i n f l a t i o n vhich on the one side w i l l s t i l l leave i t p o s s i b l e to mobilize the f u l l e s t industrial resources of the community, while on the other s i d e , a v o i d i n g the wreck money systems on the rocks which bound the ocean of unlimited paper i s s u e . 9 have d r i f t e d very f a r away from those money standards which we have long been to regard as s a f e , sound and r e l i a b l e ; and in the e f f o r t to b r i n g ourselves to them, we s h a l l need f o r many, many years to come the w i s e s t counsel and i9a d e r s h i p of men equipped a s t h i s i n s t i t u t e seeks to equip i t 3 members. c O n l y a few days ago the Washington Conference on L i m i t a t i o n of Armament ° n c l u d e d i t s l a b o r s with an a r r a y of accomplishments to i t s c r e d i t as the has never seen that a few years ago would have been esteemed quite ^Possible ™e men of the f i n a n c i a l world may as w e l l f r a n k l y look the f a c t s the f a c e , quit dodging and r e c o g n i z e that the p o l i t i c i a n s have " b e a t e n u s 0 i t " , i n the matter of s t a r t i n g systematic l i q u i d a t i o n and d e f l a t i o n , fhey ^ f 9 d e f l a t i n g , i n a systematic and e f f e c t i v e way, the great war-making establishments of the w o r l d . They are accomplishing t h i s through l a r g e cooperations, tnr o u g h i n t e r n a t i o n a l understandings, through measures which command the support a u n i t e d world o p i n i o n . I t i s true that they have h a r d l y accomplished more ^ n a good b e g i n n i n g ; but that b e g i n n i n g i s accepted everywhere as the earnest i n t e n t i o n f o r the f u t u r e , as the guarantee t h a t f u r t h e r ad-vanue w i l l be de a s f a s t as may prove f e a s i b l e ; and that the burdens of war establishments J * ! * be p r o g r e s s i v e l y lightened and governments given the opportunity to restore h9 i r budgets to a sound b a s i s . Iia I n d u b i t a b l y the b e g i n n i n g towards s o l u t i o n of t h i s e n t i r e problem of and economic l i q u i d a t i o n had to be made along the p o l i t i c a l l i n e s , b e g i n n i n g has been made. The next move mu3t be on the economic s i d e , a l r e a d y we are l o o k i n g forward to the conference of Genoa i n the hope that ^ 1 1 make as good a start on the economic and f i s c a l s i d e , as Washington made "the p o l i t i c a l . Te w i l l do w e l l to recognize that some extremely v i c i o u s ^Sftents have been introduced into the world, which seek the d e s t r u c t i o n of ° Ul f whole present scheme of s o c i a l o r g a n i z a t i o n . Bolshevism, a f t e r i t had ^ i n e d the upper hand i n R u s s i a , devoted i t s e l f f o r a long time to e f f o r t at t a k i n g down the s o c i a l and p o l i t i c a l system of western E u r o p e . It failed - 3 - tho f a i l u r e h a s n o t a lar^i ^ n y means removed the menace. For, havin* a n d o d i t g a t t a c k enarp-t * f western Europe and America, i t hag turned i t s B a 3 t tetrad ^ ' s0akinS there s t i r u P antagonisms, to organize ga nst the Piratf !" ' ^ a t e r n powers on the ground that these have been greedy domineering and t y r a n n i c a l ; that they havs refused to recognize the q U e S a n d r i g h t s of s9 differing races. Bolshevism, i n short, is Asia ? overthrow completely the i n f l u e n c e of western v i r i l i z a t i o n throughout influ " S T 0 6 A s i a t 0 r i s e U p a S a i n s t b o t h the p o l i t i c a l and the economic C9 the T h i s evitv ? ° "vest* w ^ m a n d i s i n t e n d e d to mean, lust one inn C l U 8 i 0 n : the a r r and t^ ,u° ^ i n S o f t h Q Q a s t , under the l e a d e r s h i p of Moscow sociIT i n t e r n a t i o n a l , a g a i n s t the e n t i r e western conception of human at i ! y + a n d h U W a n d Q s t i n 7 . The f a c t that bolshevism f a i l e d , for the time b e i n g s > s t A l n t h e " v e s t o r n c o u n t r i e s , does not mean that the menace has been 9 raerely raeans t h a t f o r the from i Xt torrent i t has been taken f a r t h e r away US; in T)i nevertheless i t i s p u r s u i n g i t s devious and menacing a c t i v i t i e s d w h e r s 170 c a n n o t h +6S Wh0r9 ™ C a n n 0 t *atch ° P e t o d e a l s o directly i t , as when i t was attempting to e s t a b l i s h i t s e l f in 5ur v e r y m i d s t . with We wQ a r 9 to cop * eff e c t i v e l y with t h i s a t t a c k on our i n s t i t u t i o n s , s t f i r s t of a l l recognize that the attack i s i n progress, and that i t i s ^ xremely dangerous; and a f t e r t h a t , we must search our i n s t i t u t i o n s and c t i t n i Z a t i ° n S i n t h e e f f o r t t 0 determine to what extent they j u s t i f y v i o l e n t d u t T C 1 S m a n d h o s t i l e a t t a c k ; and h a v i n g made such a survey, i t becomes our a d o p t m0 on a s u r e s of reform that w i l l j u s t i f y u s i n i n s i s t i n g that ours i s 7711016 t h o s le d 7 s t 9 m b 0 s t suited to the needs of the world. I n short, the u aaership ou m u s t the world by 0f res nd to the the European and American nations has been challenged P° challenge by c o n v i n c i n g the worldthat our institution civ i l i z a t i o n , our economic methods, our instruments thereby to promote the ^ n e r a l advance of mankind, are the b e s t i n s t i t u t i o n s , the best c i v i l i z a t i o n , 9 best economic methods, the b e s t instruments, that have been offered f o r the ^ o m o t i o n of human w e l f a r e . I submit if they are not a l l t h i s , they do not ^ serve p e r p e t u a t i o n , ^e are f i r m l y convinced that they r e p r e s e n t , in the ggregate, the best human program; and we must be prepared to defend them, to improve them; and to convince the wavering peoples and c i v i l i z a t i o n s e a s t t h a t t h e i r de Und 8 s t i n y w i l l be best served if they continue in r s t a n d i n g and cooperation w i t h the aggrieved powers of the western world. gVj. ly1^ The e a s t ha s always tended toward i s o l a t i o n s , the west toward neighborand c o o p e r a t i o n s . The western outlook on the world sees i t destined at to become a gr^at f a m i l y of If W9 of related and interdependent p e o p l e s , races, " 7 e s t e r n ' v o r i d a r e right in t h i s v i e w of human d e s t i n y , i t i s f o r us, f o r you bankers, to develop those i n s t r u m e n t a l i t i e s through lc ^ h something of common i n t e r e s t , understanding and i n s t i t u t i o n s may grow p to u n i f y the world and to prevent c o n f l i c t of a s p i r a t i o n and i n t e r e s t . th the % a a l l recognize that trade i s the great medium through which peoples me to know each o t h e r . The a c t u a l volume of i n t e r n a t i o n a l trade i s not 3a r i y s o i m p 0 r t a n t i n an economic sense as i n a s o c i a l snese. Most countries c oulft ? Q t a l o n g v e r y W Q i i without much f o r e i g n commerce, but if they attempted j they wouij p r e s e n t l y find themselves going to sea, f a l l i n g into provincial P o v J d e v e l ° P i n g t h e i r own narrow and l o c a l c h a r a c t e r i s t i c s , l o s i n g that cosmoJ-itanism of outlook and i n t e r e s t which c o n t r i b u t e s so much to the broadening human i n t e r e s t . K vS If i n t e r n a t i o n a l trade i s , then, of a p e c u l i a r and e s p e c i a l s o c i a l S n i f i c a n c s and v a l u e , i t Reserves encouragement and support. That i t may e n c o u r a g e d , developed and expanded, i t i s n e c e s s a r y that i n s t r u m e n t a l i t i e s - 4 of finance, of transport, merchandising of e x c h a n g e , s h a l l be d e v i s e d and of e a s y c o o p e r a t i o n i n a l l the processes encouraged. T h i s b r i n g s me to a theme t h a t has l o n g b e e n a f a v o r i t e of m i n e ; one to *hich I have so many times a d d r e s s e d myself i n r e c e n t months that I c o n f e s s s ome h e s i t a n c y i n t u r n i n g to i t n o w . I doubt i f I air. c a p a b l e ox a d d i n g a u c h t h a t i s new to my own p r e s e n t a t i o n s of t h i s Thome on o t h e r o c c a s i o n s , But 1 c a n not r e f r a i n from s a y i n g to you t h a t m a n i f o l d t e s t i m o n i e s have come to mc, a l l p a r t s of the w o r l d , p a r t i c u l a r l y from a l l p a r t s of our own country and w e s t e r n E u r o p e , which convince me more t h a n e v e r t h a t there i s a growing app r e c i a t i o n of the importance of t h i s g r e a t q u e s t i o n , and a g r o w i n g d i s p o s i t i o n to e x a m i n e , study and d e a l i n t e l l i g e n t l y with i t . I would not have you i m a g i n 0 t h a t because I am a b a n k e r I am n a r r o w enough to s u s p e c t that the M o t h e r h o o d of mankind i s to be b r o u g h t about through the e s t a b l i s h m e n t of some p a r t i c u l a r monetary and f i n a n c i a l program. I r e c o g n i z e t h a t there are P o l i t i c a l , e d u c a t i o n a l , r e l i g i o u s , s o c i a l and p s y c h o l o g i c a l f a c t o r s w i t h w h i c n must d e a l and to which we must devote the most a s s i d u o u s c o n s i d e r a t i o n . It m9 ^ e l 7 c h a n c e s t h a t my own realm i s t h a t of f i n a n c e . I have e x p r e s s e d many times the o p i n i o n t h a t the d i s j o i n t e d and 'unrelated mone^ systems of the world C o n s t i t u t e one of the o b s t a c l e s to t h a t c l o s e r i n t i m a c y among p e o p l e s , i n both t h e i r economic and s o c i a l r e l a t i o n s h i p s , that I c o n c e i v e to bo so h i g h l y d e s i r able,. The world spent a good many c e n t u r i e s t r y i n g to e q u i p i t s e l f w i t h a scheme of money s t a n d a r d s t h a t would make i n t e r n a t i o n a l commerce and exchange perc e n t and sound, t h a t would e l i m i n a t e those e l e m e n t s of u n c e r t a i n t y which make t h i s c l a s s of t r a n s a c t i o n s more or l e s s u n c e r t a i n . Un f o r t u n a t e l y , we had 5ust a b o u t got to the p o i n t of e s t a b l i s h i n g the gold monetary standard as a n a w P P r o x i m a t e l y u n i v e r s l system, when the war came a l o n g and broke i t down. e ha v e b e e n r e t u r n e d to a chaos of i n f l a t e d p a p e r , of over-extended c r e d i t s , of Va s t n a t i o n a l d e b t s , i n which the gold b a s i s of v a l u e h a s w e l l n i g i t been l o s t . T he q u e s t i o n i s whether t h e r e i s s t a t e s m a n s h i p and economic wisdom to which we ma 7 a p p e a l , to r e s t o r e something l i k e the h o m o g e n i t y t h a t b e f o r e the war e x i s t e d a mong the money systems of the world to m a i n t a i n i t i n the f u t u r e , to s i m p l i f y the p r o c e s s e s and p e r h a p s to l e a d u s u l t i m a t e l y to a s u b s t a n t i a l u n i f o r m i t y money systems and b a s e s , t h a t m i g h t do away £or a l l time * i t h the f l u c t u a t i o n n d u n c e r t a i n t i e s of i n t e r n a t i o n a l e x c h a n g e s . F o r m y s e l f , 1 b e l i e v e the time is r i p e f o r u n d e r t a k i n g e v e n so a m b i t i o u s a program a s I 'nave suggested., I ^ l i e v e t h a t o r d e r , and b e t t o r o r d e r , and sounder and securer &<d more w i d e l y 9 x t e n d e d o r d e r , may be b r o u g h t o u t of the p r e s e n t c h a o s of c u r r e n c y ^ s y s t e m s , than the vvorld h a s e v e r b e f o r e known. Not o:)ly t h a t , b u t f u r t n e r , I am convinced t h a t u n l e s s wo w i n to a b e t t e r syscem, out o f ' chis epoch of demoralization t h e n we s u r e l y w i l l go on to yet g r e a t e r d e m o r a l i z a t i o n and to u l t i mate d i s a s t e r . If we are to go f o r w a r d to b e t t e r methods, to improved systems, to f i r m e r s t a n d a r d s , we must have the courage to dare some e x p e r i m e n t s , to t r y p r o p o s a l s t h a t a t f i r s t may seem s t a r t l i n g , to make some b e g i n n i n g s i n the hope t h a t they may l e a d us to d e s i r a b l e e n d i n g s , e v e n though ^e may not be a M e a t the o u t s e t to see the end of the r o u t e . a I am c o n v i n c e d t h a t the c o n s o l i d a t e d c r e d i t and gold r e s o u r c e s of the * o r l d are even now ample to s u s t a i n a monetary system through whicn i n t s m a x i o n a commerce c a n be put back on a b a s i s of s e c u r i t y w i t h i n a r e a s o n a b l e t i m e . The h i s t o r y of money systems, I t h i n k , w a r r a n t s u s i n s a y i n g that i t i s p o s s i b l e to create a s p e c i a l medium of a c c o u n t i n g and s e t t l e m e n t f o r the t r a n s a c t i o n s of i n t e r n a t i o n a l t r a d e , and thus to e l e v a t e i n t e r n a t i o n a l trade above the diso r g a n i z e d c o n d i t i o n s and r e l a t i o n s h i p s of n a t i o n a l money s y s t e m s , i believe the time i s ripe f o r t h i s e f f o r t to be u n d e r t a k e n through i n t e r n a t i o n a l concerns and u n d e r s t a n d i n g ; and I b e l i e v e that A m e r i c a n f i n a n c i a l o p i n i o n should prepared f o r the p r e s e n t a t i o n of p r o p o s a l s l o o k i n g to t h i s e n d , m the not - 5 - ^stant ^"-c.^ic future, w h e t h e r a t Genoa, or a t some o t h e r and l a t e r international conference* The F e d e r a l R e s e r v e Board h a s r e c e n t l y committed i t s e l f s t r o n g l y to the Program of i n t e r n a t i o n a l e f f o r t f o r the r e s t o r a t i o n of the gold s t a n d a r d . In a statement issu-d so r e c e n t l y as F e b r u a r y 8, the Board said among o t h e r t h i n ? - : • "The argument i n f a v o r of the r e s t o r a t i o n of gold a s a n i n t e r n a t i o n a l standard of v a l u e i s twofold - f i r s t , that no s u p e r i o r or b e t t e r b a s i s f o r p r i c e s h a s a s y e t b e e n d e v e l o p e d , a n d , s e c o n d , t h a t the use of go'.ld a s a n i n t e r n a t i o n a l c u r r e n c y or p r i c e b a s i s a f f o r d s s t r o n g p r o t e c t i o n a g a i n s t p r e s s u r e to b r i n g a b o u t e x p a n s i o n of c r e d i t , 'in i n t e r n a t i o n a l trade the gold standard a l s o c o n s t i t u t e s a n e x u s between the p-ice l e v e l s oi' v a r i o u s countries. 'it c a n Tby no means be s a i d to be a n i d e a l means of payment, but u n d e r normal c o n d i t i o n s i t h a s been v e r y e f f e c t i v e i n p r e v e n t i n g the p r i c e l e v e l of any one c o u n t r y from f a l l i n g too markedly oat of l i n e w i t h t h a t of o t h e r s , ^ h e n c u r r e n c y and c r e d i t systems a r e e r e c t e d upon a gold b a s i s , l o s s of gold f o l l o w i n g i m p o r t s t e n d s to check the p r o c e s s of f u r t h e r c r e d i t e x p a n s i o n , and the knowledge that gold may be wanted f o r e x p o r t i s u n d e r a l l c i r c u m s t a n c e s a d e t e r r e n t to i n d e f i n i t e c r e d i t e x p a n s i o n . In s h o r t , i n t e r n a t i o n a l p u r c h a s e s and s a l e s tend to o f f s e t one another e x c e p t to the e x t e n t t h a t o c c a s i o n a l a d v e r s e b a l a n c e s c a n be covered by meand of gold s h i p m e n t s . However, i f there is no attempt to rr.aintain the gold standard or to l i n k gold, i n a n y way with the i n t e r n a l p r i c e l e v e l , the p r o c e s s of gold d e n u d a t i o n c a n go on to the p o i n t of e x h a u s t i o n . Tn f a c t , that i s what h a s v i r t u a l l y happened i n a number of c o u n t r i e s . O r d i n a r i l y the r i s i n g i n t e r e s t r a t e s that would acccunosny an o u t f l o w of gold would check such a movement. But if c r e d i t e x p a n s i o n by means of p a p e r i s s u e s goes ahead u n r e s t r i c t e d b y the need of r e d e m p t i o n , e i t h e r immediate or p r o s p e c t i v e , no e f f e c t upon i n t e r e s t r a t e s need e n s u e . " D i s c u s s i o n of the i n f l a t i o n now e x i s t i n g i n Furope l e a d s to the ^ s t i o n whether a so-called gold exchange standard might net be employed and the B o a r d ' s r e v i e w u r g e s t h a t a r t i f i c i a l methods of c o n t r o l l i n g exchange ° p e r a t i o n s are of no permanent v a l u e . It adds: " T h e i r i n a d e q u a c y a s a means of c o r r e c t i n g fundamental naiadjustments of trade b a l a n c e s h a s b e e n made so o b v i o u s by e x p e r i e n c e and has been a s u b j e c t of such l e n g t h y comment that i t d e e s not r e q u i r e f u r t h e r elucidation. I t i s , h o w e v e r , c o n c e i v a b l e that the s t a b i l i z a t i o n of exchange and the r e e s t a b l i s h m e n t of a s a t i s f a c t o r y system of i n t e r n a l payments c o u l d be a c c o m p l i s h e d by a r i g o r o u s c o n t r o l over c r e d i t and c u r r e n c y w i t h o u t r e t u r n to the gold s t a n d a r d . But i t i s h i g h l y u n l i k e l y t h a t such c o n t r o l would be s u f f i c i e n t l y r i g o r o u s and d i s c r i m i n a t i n g to p r e v e n t exchange f l u c t u a t i o n s from c o n ' A n u i n g to be of a magnituoe s u f f i c i e n t to c o n s t i t u t e a s e r i o u s i n t e r f e r e n c e with f o r e i g n trade I t may be that the use of the d i s c o u n t r a t e as a r e a n s of p r i c e s t a b i l i z a t i o n c-ould w i t h wise m a n i p u l a t i o n , unhampered by p o l i t i c a l p r e s s u r e , oe e f f e c t i v e i n some c o u n t r i e s . C h a n g e s i n d i s c o u n t r a t e s would then act a s a means of e n c o u r a g i n g the e x p a n s i o n or f a r c i n g the c o n t r a c t i o n of c r e d i t - c r e a t e d c u r r e n c y w i t h o u t e i t h e r a n i n f l o w or o u t f l o w 01 g o l d . B u t such a scheme p r e s u p p o s e s a c e n t r a l i z e d c o n t r o l over money markets t h a t was by no means a s s u r e d e v e n i n prewar t i m e s , and i t a l s o presupposes a s e n s i t i v e response to v a r i a t i o n s i n the i n t e r e s t rate t h a t i m p l i e s the e x i s t e n c e of h i g h l y o r g a n i z e d i n t e r n a t i o n a l markets -vhich no l o n g e r exist." - 6 - The statement is p l a i n l y made that the great accumulation of United States a t the present time i s gravely ia yjs, I .j r e v i e ^ s t a t i n g the case as f o l l o w s : gold in - 't n I t i s evident from a l l that has been said that the United states has an i n t e r e s t i n the i n t r o d u c t i o n cf some form ox gold standard as a means to the resumption of trade r e l a t i o n s h i p s through the e f f e c t i v e s t a b i l i z a t i o n of exchange. At present, furthermore, the abnormal c o n c e n t r a t i o n of gold i n t h i s country i s a source of d a n g e r , because i t i s a f a l s e guide i n matters of c r e d i t p o l i c y - no l o n g e r an index of the outside l i m i t of l e g i t i m a t e c r e d i t e x p a n s i o n . Considerations of national i n t e r e s t alone are, t h e r e f o r e , a s u f f i c i e n t reason f o r a c a r e f u l weighing of proposals l o o k i n g to a r e d i s t r i b u t i o n of the gold supplies of the world and i n v o l v i n g a return of some part of the gold held by the United States f o r use e l s e w h e r e . No proposals of any sort should, however, be entertained u n t i l far-reaching guaranties of f i s c a l reform have been secured from the c o u n t r i e s that require a i d . Otherwise the a s s i s t a n c e would be detrimental to the extent that it would lead to the postponement of the necessary f i s c a l reforms which must be made p r e l i m i n a r y to the r e h a b i l i t a t i o n of currency systems and the reestablishment of stabilised exchange r e l a t i o n s h i p s * " The s i t u a t i o n is that i t i s not only p o s s i b l e f o r the United S t a t e s , ^ t h o u t any undue assumption, to b r i n g forward proposals looking to the reestablishment of the gold standard; but i t is the duty of the United States to ^ k e the lead i n t h i s matter because t h i s country h a s become we]lnigh a Monopolist of the w o r l d ' s monetary g o l d , With about Vfo of the world*s Population t h i s country h o l d s some 4 0 $ of the w o r l d 1 s gold s t o c k . We have l i t e r a l l y more gold than we have proper use f o r ; more gold than i t i s good us to have* Senator Owen r e c e n t l y declared that we could well spare *ive hundred m i l l i o n d o l l a r s of our accumulated gold without i n anywise dec e a s i n g the security of our currency system, i t i s v a s t l y b e t t e r that we should, through c a r e f u l l y d e f i s e d measures, c a l c u l a t e d to conserve every i n t e r e s t i n v o l v e d , b e g i n the r e d i s t r i b u t i o n of t h i s gold about the world so ^hat i t w i ; Q restored to i t s proper f u n c t i o n of m a i n t a i n i n g a sound relations ^ i p between currency systems and the metallic s t a n d a r d . If we do not do ^ i s i n time, the i n e v i t a b l e operation of economic law w i l l sooner or later ° * g i n to do i t i n spite of us, and perhaps ±n circumstances- and by methods t h a t r e s u l t i n unfortunate consequences. Now i s the time to b e g i n preparation *or t h i s r e d i s t r i b u t i o n and f o r the r e s t o r a t i o n of money systems. As the Cu s t o d i a n , I might say the t r u s t e e , of the g r e a t e s t stock of gold that ever oam0 i n t o p 0 g s 3 g s i 0 n 0 f one country, our duty both to ourselves and to "the world at large demands that wo take the l e a d i n developing procedures which t h i s gold b a s i s of a sound currency system may be made a v a i l a b l e to ho service of the e n t i r e b u s i n e s s worlds i I have brought t h i s plea to t h i s gathering of bankers of the great ^ Q t r o p o l i t a n and cosmopolitan c i t y of America, because e v e r / b o d y recognizes from here must go forth the most powerful and e f f e c t i v e impulse and S e c t i o n to the p o l i t i c s of American f i n a n c e * I n making an appeal to you jptitlemen to take the broad and l i b e r a l v i e w of these great problems, I should 8 doing i n j u s t i c e to ray O'vn u n d e r s t a n d i n g , as w e l l as scant courtesy to you, 1 f a i l e d i n generous r e c o g n i t i o n of the great s e r v i c e s that the bankers : l the metropolis have rendered to the n a t i o n , to the government, and to the . u s i n e s s of the world i n a time of e x t r a o r d i n a r y d i f f i c u l t y . The i n t e l l i g e n t J e ^ d e r s h i p of metropolitan finance c o n t r i b u t e d very greatly to make possible Federal Reserve System. With that system e s t a b l i s h e d , we found ourselves > - 7 - P^unged into the w 0 r l d ? a r , which i n s t a n t l y imposed the most e x t r a o r d i n a r y a n<l unprecedented demands upon our f i n a n c i a l s t r u c t u r e . I n tne tremendous e * f o r t of the n a t i o n to finance the war and to d e a l with the e r a of r e s t o r a t i o n an d r e h a b i l i t a t i o n f o l ] o w i n g the war, you gentlemen? of the metropolis have always been a sure r e l i a n c e . As a country banker, a farmer, and a p l a i n small-town b u s i n e s s man, * 'vant to make my acknowledgments to you, "f want to congratulate you on "ft*© f a c t that today, by reason of the p a t r i o t i c p a r t you have played i n these hard years, e s p e c i a l l y the year j u s t c l o s e d , there i s l e s s of prejudice againgt great f i n a n c e i n this c o u n t r y , than e v e r before w i t h i n my r e c o l l e c t i o n . There i s a growing and most g r a t i f y i n g popular r e c o g n i t i o n of the service ? hich the great banking e s t a b l i s h m e n t s here have rendered to the c o u n t r y . That recognition r e p r e s e n t s the n a t i o n a l tribute to the men and i n s t i t u t i o n s , h9r e so splendidly represented, that h a v e " b y t h e i r p o l i c i e s , conduct and c ° o p e r a t i o n so emphatically t e s t i f i e d to the v i s i o n , the i n t e l l i g e n c e , and ^he n a t i o n a l s p i r i t of those who have directed the f o r c e s of American finance the l e a d e r s h i p of the b u s i n e s s w o r l d .
@FedFRASER