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Release afternoon papers, F r i d a y ,

May 26,


MAY 26, 1 9 2 2 .
W 0 have come to Pittsburgh, to the heart of i n d u s t r i a l America
to participate with the Pennsylvania Bankers Association i n c e l e b r a t i n g ^
Anniversary of i t s o r g a n i z a t i o n .
On such an o c c a s i o n it i s quite t i x x i n g
» say something about the primacy of Pittsburgh and of Pennsylvania in the

industrial activity.

But that i s / c e r t a i n to ;be said by oth " - t h a t

going to pass it by and r e c a l l to you Pennsylvania ^

*>Ur commonwealth has always borne

in c a r r y i n g


the banner of


the part that

sound money

°und f inance.

Pennsylvania can very properly be c a l l e d the cradle of banking i n t h e
United States.
Bobert Morris
T t was a P e n n s y l v a n i a * ,
'inanees of the revolutionary epoch and made i t possible to sustain t.
smuggle en U s economic s i d e .
Pennsylvanians may well be pardoned seme
Pride in the fact that they can t r a c e , link by link
the chaxn of cxrc„»stances which u n i t e s yeur Pennsylvania f i n a n c i a l c t r u c t u r o f toaay £ t h tea
« the c o l o n i a l era i n which your part was so great and honorable.
^ e p y o u £ l n d that Pennsylvania was enliete*: o n the side of good mon.y and
°und finance.
You w i l l r e c a l l that Alexander Hamilton,
four own Morris, made i t possible
Tho Bant of North America
congressional a c t i o n , and it must
^ n n s y l v a n i a bankers that it hae

here to create the f i r s t
" ^ J ^ f
was the f i r s t bank to be incorporated
be a s o u r c e of great ^ a c t
o,,U> a 1
.teed every test a n d t o d a y . s t a n d s i

°f representative American f i n a n c e ,
-ere in P a n n s y l v a n : ^ d o m i c i l e d i n
' i r s t bank of the United S t a t e s , chartered by i n g r e s s
and domiciled i,

fenter' s Hall,


scone of

eo many s t i r r i n g H i s t o r i c a l


Oarly h i s t o r y .
great as was P e n n s y l v a n i a ' s part in shaping the
national' f inane ial structure, they represented o r i y t h e prelude to jou
Wonderful advance since the C i v i l - a r
The Commonwealth . f i n a n c i a l _p g
has kepi f u l l pace with an i n d u s t r i a l development that has
Pride of the nation, and, I may add, the w m d e r 0 t h e
Your banks, conservative yet always constructive
hav^ re p
They have gathered together the
*>ur great commonwealth, and they have g a i n e d in th
•ueinoes end finance a long l i s t of groat l e a d e r s
Among ^
i s our pleasure and s a t i s f a c t i o n to recognize with ue on t h i o
J i s t i n e u i a h n i representative ^
f i l l s the poet of Secretary of 'treasury,/
P e n n . y l v a n i a n who serves with d i s t i n c t i o n afld
the House Committee on Banking and Currency
Pennsylvania, ever - i n money and never m
^ s t accumulation of resources
to tako a
of the nation in whatever
c r i s i s n s t
Contribution toward solving t o d o y ^ p x o i ^ ^

Vis o h a h i l i " ' v as Chairman of
hufc a ^ J . I t e ^ e e n
da 1
t h e i r
, ^
.g ^
r u c t i o n .


-2^'ou bankers of Pennsylvania have been fortunate i n that you have been
Privileged to serve a people i n s t i n c t with v i s i o n and courage; a people who
have made your mountains yield up t h e i r wealth, wherewith to e s t a b l i s h in
^ u r v a l l e y s the magnificent i n d u s t r i e s that are the pride of your state
nd the envy of your neighbors*
To you, as to a l l other leaders in the business world, the war has
b o u g h t new Conditions, new problems, and new i d e a l s .
The new problems
ttust ba met, and you bankers of Pennsylvania are called on now, as you have
i n every c r i s i s of the past, to play your p a r t .
That you w i l l play
well and l o y a l l y , no one could doubt who knows your s t a t e ' s record of
the past.
The struggle to maintain sound f i n a n c i a l methods, a safe monetary
system, i s one that seems never to be quite won and ended.
Today, as a
e s u l t of the special and extraordinary burdens resulting from the war, we
U n d ourselves facing once more a c e r t a i n tendency to take up with and consider seriously some dangerous formulas of unsound finance, which have always
one form or another, been brought forward in such c r i s e s , and have never
^ i l e d to attract a certain following of loose thinkers and unsound economists.
It w i l l do no harm to say cnco mere, what I have many times said, that
without the Aldrich- i ; reeland Currency Act and the Federal Reserve l e g i s l a t i o n ,
^ e beginning of the war i n 1914 would have precipitated a f i n a n c i a l c r i s i s
"that could not p o s s i b l y have f a i l e d to involve the nations which were then
-lled upon to make the f i g h t of our democratic c i v i l i z a t i o n .
Let us be thankful for the wisdom which gave us our start i n measures of
financial s t a b i l i z a t i o n ; we have come through the great c r i s i s , and have
stablishee a now plane, and a v a s t l y enhanced repute, partly because of our
wealth and partly because of our e^cell-nt f i n a n c i a l system.
These things
flow Constitute a chief reliance i n restoring the w o r l d ' s capacity for production, for exchanges, and for the normal methods of economic progress.
™e must recognize that p o l i t i c a l r e h a b i l i t a t i o n and economic reconstruction
e so intimately relate'1; that they cannot possibly be separated the one from
the other.
I n both, our country is under n 3 c e s s i t y to serve c i v i l i z a t i o n .


The storm of war has spent i t s greatest force; but just as sailors find
'^hat oft-times the g r ^ a t ^ t danger confronts them, not in the hours of the
hurricane, but in the succeeding period of v i o l e n t shells through which they
U3t s t 0 3 r without the advantage of well-filled s a i l s to hold them steadily
on their c o u r s e , — so c i v i l i z a t i o n now f i n d s itself floundering i n a choppy
nd uncertain sea, tossed h i t h e r and thither by mighty swells whos? causes
nd d i r e c t i o n s it can only conjecture, and lacking the power that i s needed
to insure steerage and c o n t r o l .
It i s i n times like this that disaster i s
liable to come, and against i t s p o s s i b i l i t i e s we must equip ourselves.
Almost the l a s t among great f i n a n c i a l communities to commit ourselves
^ f i n i t e l y to the gold standard, we find ourselves now summoned to determine,
I m a y 3 a y ^ f o r a l l the world, whether that standard shall be maintained or
^hother we shall abandon it and allow the economic craft to struggle without
hart or rudder.

-3I remember very wall the years of the heated controversy ov^r the ^old
In those we were constantly being assured that our country was
J-9 victim of the gold standard because we were a debtor n a t i o n , and others conpolled the w o r l d ' s gold,
^e were told that th3 tendency was f o r gold constantly
° increase in v a l u e , compelling the debtor always to pay in a dearer money than
^ i n which he had borrowed .
I t was not always easy to answer, for e f f e c t i v e answer required the cona e r a t i o n of economic fundamentals concerning production, exchanee and consumption.
But in 1 9 9 6 , a f t e r a campaign of education in these fundamentals, the
^ r d i c t was in favor of maintaining a gold standard.
I am very sure that if
^day the verdict had to be sought again on those issues, the gold standard
culd win a g a i n by a far greater majority.
In cthe quarter century since 1396 we have seen that t h i s standard does not
the economic enslavement of a debtor country; rather, it means the assurance
equal opportunity to develop resources, and the chance to transform the debtor
°*nmunity into a creditor s t a t e .
In 1896 we were the greatest borrowing community
the world; in 1922 we find ourselves the greatest lending community, the mainl y and reliance of business, of bankers, of nations, of c i v i l i z a t i o n i t s e l f ,
the e f f o r t to weather the greatest storm Ahat every burst over mankind.

If the gold*standard meant so much of opportunity to us as the great debtor
* a t e , how much more must i t s maintenance mean to u s , now that wo have become the
§r-at creditor nation.
Every argument that could be made in 1 8 9 6 , with however^ C h p l a u s i b i l i t y , against maintaining the gold standard, now a p p l i e s with a
kousand-fold more force in favor cf r i g i d l y adhering to i t .

^e know how absolutely necessary i s a uniform monetary standard throughout
^e know that without it our problems of exchange and of international
0nar.erco cannot be solv-od.
^e r e a l i z e that the debts which are owing to us,
balances which must be ^aid to us or by u s , must somehow be adjusted to a
» g l e , common, u n i v e r s a l standard; and that, as these o b l i g a t i o n s have a l l been
ttivs far related to or measured by gold, we cannot safely depart now from that
Yet, with our own interest absolutely bound up in the maintenance of t h i s
yntem we find that our very wealth and good fortune are fast becoming a
^ n a c e ' t o this system.
The security of the gold standard depends on the maintenance of a free gold market, on the comparatively unrestricted flow of gold. If
e movements of commodities shall too long continue in a particular d i r e c t i o n ,
must i n e v i t a b l y create a vacuum which can only b9 f i l l e d by a movement in
^ opposite d i r e c t i o n .

In the last eight years, the movement of commodities has been away from
J 1 ^ shores, and the"movement of gold has been toward u s .
The result is, as has
-Qn pointed out with possibly tiresome i t e r a t i o n , that our side of the world
* d 3 to gather to itself more than i t needs of the gold, while the other side,
^dened with debts, f i n d s i t s store of gold constantly reduced, and its powers
maintain a gold standard correspondingly weakened.
The gold standard cannot
maintained by p i l i n g up a l l the gold in one p l a c e .





sign that the movement of gold to us w i l l have to
™ . ' u n l e s s t h ^ e shall be some settlement of international debts and
j u s t m e n t s in governmental f i n a n c e s , international f i s c a l r e l a t i o n s
producing and consuming opportunities of the nations, as w i l l restore'sometv
like e q u i l i b r i u m .
At the b a s i s of the trouble we f i n d the huge domestic
international debts of the world,.-the fundamental disturbance that i s
— s t r o y m g trade and commerce and our o-«n i n d u s t r i a l prosperity.

, , D o r a Q s t i c debts ixgpose enormous burdens of t a x a t i o n , while the international
- b t s interpose well nigh insurmountable obstacles to the adjustment of exchange
^ l t h f i n a n c i a l exchange in t h i s chaos, commercial transactions are

> "JJ,



they tend to become mere speculation


d*v + T h e r e m u s t b s ' f i r s t ' 3 0 n 1 e determination of policv toward the international
, + j s;and, second, an adjustment of government budgets that w i l l give confidence
-n -ho power of states to pay the debts and maintain the gold basis of money.




n 0 t

b e l i e v s


Possible at t h i s time to reach a f i n a l

settlemert of

ai the international o b l i g a t i o n s .
But there i s absolute necessity that some
^ n e r a l policy shall be agree* upon among the nations with ref-rence to these
A beginning must be made, an understanding reached, for balancing
w a g e t s and a d j u s t i n g i n t e r n a t i o n a l debts, so t h a t there may be a start toward
international l i q u i d a t i o n and s t a b i l i s a t i o n .
In the f i n a l a n a l y s i s , we shall
p l a i n l y that the preservation of the gold standard depends on bringing a l l
nase obligations into a relationship with gold and then p l a c i n g moneys on a
told basis and setting out toward ultimate payment i n gold.
This is a b s o l u t e l y necessary, lest the stream of cold shall continue to
liow toward American shores, u n t i l other nations find i t impossible to <?0
3-rther with the pretense of maintaining a gold monetary standard.

r e c a l l , at one c r i t i c a l epoch during the war, reading a l e t t e r from
Ondon which said-- t h i s being a considerable time before America's entry into
unless American f i n a n c i e r s should extend credit to the a l l i e d
t h e n th9
a l l i 3 s
' v ould buy from us, pay in gold, send us their last
j s o u r c e s of the yellow metal, and then abandon the gold standard; leaving us
th the gold, but depriving it of i t s monetary v a l u e .


I r e c a l l the shiver with which I contemplated the consequence of such a
w 0 would be l e f t with a vast stock of gold, which, repudiated by
her nations, would become wellnigh valueless to u s ,
Fortunately, that c r i s i s was not p r e c i p i t a t e d .
But conditions no-v, despite
peace has been restored, confront us with a grave danger that this's^me
^ i s i s may be brought before us a e a i n .
^e cannot
on i n d e f i n i t e l y compelling
ere -itors to settle with gold ^hich, once it reaches us, flo-^s inevitably
"to vaults and there remains, comparatively u s e l e s s to business either at hem*
° r abroad.

There must be adjustment3 ar:ong the rations that -rill enable then to
'-Ckon with confidence u^on thsir financial futures.
It is not necessary as
* view it, that Europe shell forthwith begin to r>ay interest upon its obligations to us.
Indeed, today, that would mean that Europe must drain itself of
t s remaining gold and break down the gold standard.
The only alternative
'7ould be for Europe to furnish us with goods, which we could only accept at
the price of substituting them for goods produced by our own industries.
either case, our last state would be worse than our f i r s t .

The most that can be undertaken at this time—and it must be undertaken
oon if we are to avoid disaster-- is to reach a workable understanding and
ttiement as to the future of the international debts due us, and existing
^-tween other countries; and along with this there must be a serious effort
balance budgets and bring costs of government within the capacities of the
Nations to pay.

It has been proposed that a conference of the various national financial
Establishments be held, to devise measures to restore and maintain the gold
In ev?ry such discussion i t must be kept in mind that the Permanency
the gold standard depends fundamentally u^on some adjustment or settlement,
ftot cancellation, of all international debts, in terms of erold, so that they
be paid by the contracting parties without sorely impoverishing the people
through unbearable burdens of taxes.
It is well to remember that the economic
Possibilities of reconstruction must be measured in units of human energy, and
overload, or a lack of such units, means default and disaster.
In every
such effort our country must obviously take a part, for we are not only the
f a d i n g creditor nation but we have become custodian of the greater share of
the world's gold.
Nothing short of complete frankness, understanding, confidence, can serve
^ e purposes of such an international adjustment.
There must be nerfect candor
^bout policies and programs; complete understanding as to the end sought,
-here must be a recognition of the fact that the alternative, if we fail to
stabilize the old order, is bound to be a cataclysm.
In that cataclysm the
P r e n t social and economic system of the world will face the tremendous
Question of whether, incapable of protecting itself against its own weakness,
t des rves to survive,
Always a firm advocate of the gold standard, I have n-.ver been so convinced
s I am now, of its absolute necessity. me must maintain i t ; and we must bear
°ur part in'making the rest of the world maintain i t , or else we must be prepared to deal with new standards in the whole field of international intercourse.
man can guess what those standards might be.
But, just as faith, honor and
square dealings constitute the only standard to which human conduct can'every
^ universally related, so in the present state of society one feels that the
gold- standard of money'is the only one to which ^e can hope to relate the money
- systems of the world.



I speak of these things with great earnestness, because l a t e l y there have
evidenced of a r e v i v a l , in Unexpected p l a c e s , of sentiment altogether too
°spitable toward the old f a l l a c i e s of Cheap and unsound money.
Sometimss they
3 been dressed upon in attractive d i s g u i s e s .
Some of them, indeed, have been
thoroughly camouflaged that it i s hard to recognize them as merely the rel i s h e d and modernized doctrines of " C o i n " Harvey, General James B. " ^ a v e r ,
"Brick" Pomeroy.
But on examination they w i l l be found just that; and we w i l l be 'vise to
. ^mp them out now, with the inexorable logic of truth and experience..
^ U n t r y must stand for the p o l i b i e s that are sound and l a s t i n g .
Others may be
®&ptod into dangerous experiments.
e h a v e , s e e n the disastrous consequences
some of these, and we must hold firm for "the things we know to be deserving
our confidence.
By guch unswerving adherence we w i l l strengthen the f a i t h of others, more
orely tempted than ourselves,
i'i *ve stand firm, we w i l l ®ake a great contribJ i o ^ to the r e h a b i l i t a t i o n of the world and to establishment of the-new order
And I believe we w i l l do t h i s .
I believe we w i l l , by wisdom and
* u t i o n , add much to the contribution we have a l r e a d y made for the solvation of
ilized institution.