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CIATION, MAY 2k, 1923.


V ~
N ^ t RE.

In the past two years it has been my fortune to be the recipient
of so much courtesy and consideration, of helpful cooperation and generous
assistance from the banking community of Washington, that it is not altogether easy to formulate on this occasion a fitting expression of my appreciation for those added testimonies of support and loyalty which come
to me this evening.

I feel that my debt to the banking fraternity of the

District is one of those obligations which have no date of maturity, but
which go on accumulating at compounded interest.

Fortunately, having ceased

to be Comptroller, I am not under the professional obligation to take so
harsh a view of those irregularities which are involved in carrying overdue
items for an unreasonable time.

If the good will account which the bankers

of Washington have been carryin5 for rne should be pressed for instant
liquidation, I am afraid, that, with all the good intentions and amiable
sentiments in the world, I should have to take the bankruptcy route.

So I

hope you will go on letting me make an occasional curtail as I am trying to
do tonight, just as a sort of acknowledgment of the obligation and assurance
that at least I don't intend to permit it to be outlawed.
When your President extended the invitation to me to come here this
evening he conveyed the incidental assurance that I would not be expected
to nake a speech-

Inasmuch as I subsequently discovered that I had been put

down for an address on a highly formidable subject, I wish him to know here
and now that he didn't fool me for a moment.

I knew all the time that I

would have to make a speech, and the best testimony I can give ot my appre, r-.,

M GOy CT/ 1
» ^

SEP ;r


ciation of the honor you have done me, consists in the fact that I am
here, even at the price of having to make a speech.

But I can't refrain

from saying that sometimes I have wondered if we wouldn't get on faster
with tailing the government out of business, and putting business into
government, if you men of affairs could be induced to readjust the social
amenities so that occasionally a //ell-intentioned citizen might hold a
public office without incurring the suspicion that he really does it because it is his only chance to get a full-Nelson hold on an occasional
audience and compel it to listen, whether it wants to do so or not.
I find myself set down for some observations about the desirability
of the fullest possible exchange of credit information.

That means of

course the fullest measure of cooperation to assure the soundness of the
business and banking structure.

Now, we bankers have long taken pride in

the claim that ours is the greatest cooperative, the most highly socialised
business in the world.

The man who first conceived the idea of mobilizing

the credits, the liquid resources and working assets of a community,
through the functioning of a bank, took the longest step toward developing
a working philosophy and procedure in socialism, that has ever been taken.
All the philosophies of Karl Marx and Proudhon are as a drop in the bucket
compared with the tremendous social fact that was accomplished when the
first bank of deposit, issue .and discount, was set up.

There is a fact;

a big, fundamental fact to which I wish it were possible to divert some of
the attention of those pale pink radicals 7,ho nowadays propose to accomplish an economic revolution in the interest of the public, by such mild
and moderate proposals as hanging the bankers and sending the "money trust"
to perdition,



A proper exchange of credit information, it has always seemed,
•to me, is a logical and inevitable development in line witil that progressive
socialization which has been going on in the realm of business and finance
from the time when the first bank of deposit and discount was set up.


•'hole structure necessarily rests upon good faith, upon mutual confidence,
and upon certain rules derived from business experience which justifies us
in expecting that most debtors will pay, and that the great majority of
depositors will not all want to withdraw their accounts at the same time.
It is reasonably safe to assume that there are not many among you experienced gentlemen who are in this room, who seriously believe in the
guarantee of bank deposits.

Yet there is a large class of people in the

community who are convinced that such a system could be made to work, and
that it ought to be and would be but for the unreasoning hostility of the

Now, it seems to me that the nearest possible and practical ap-

proach to an effective and safe guarantee of bank deposits, would be found
in a system that would come nearest to eliminating the danger of bad loans.
If all borrowers were good, all the assets of the banks would be good, all
the depositors would be fully secured, bank failures wouldn't happen, the
curve of inflation and deflation would be very much flattened out, and in
short,the life of the business man and the banker would become one long,
sweet dream.
Quite obviously, the way to accomplish all this is, so nearly as
possible, to insure that the banker will not make unfortunate loans.


that could be effected the dishonest man would get no loans, the reckless
ttan would be,compelled to have a care about his affairs, the speculator
•vonId be kept measurably under control.


On the other side of the sheet,

i xero

this conservation of credit resources would ^


p o s 3 ible

for the

honest man, the man of character, and probity, end industry, end sincere
good intentions, to get the fair she, and fair share to which he is entitled.

There ,ill a l,eys he enough of competition among banks, enough

variation in the psychology, the points of vie,, the habits of mind
individual bankers, to prevent the creation of anything like
Moneys and credits.



proper organization and interchange of credit

information is, in short, simply

a trust




in the




of the bank, tcard a .ore nearly perfect establishment in

its social and economic relations to the community.
The creation of clearing houses and their development has marked
^ long progress toward the realization of this ideal in banking.


Clearing house examiner system, „hi=h is no, established in a considerable
number of cities,was a natural development, pointing in the direction of
'"at mobilization of credit information * i c h , once perfected and in
^actical operation, vould be wellni^ the final guarantee of banking
security and therefore of business stability.
It is inevitable that, just a s there ,ill always be some people
insist upon such false remedies as the guarantee" of deposits, so


Old 3 C m 3 £ 0 0 d a n d
y * hankers *







t strenuously to the application


meaSUr S
ar :0nS
° ^ °0ntr01' a e r e
can yet remember ,hen the right of the state to enter,

^ . i n e , and publish the reports of condition of banks, ,as bitterly
^ t e s t e d , hut who, in the interest of cither the borrower or the lender
^he h i
. anfc or its customer, would today propose
orooose tnao
thot examination
• 4.,
and pub-



lished reports be done away >vith?
In li us .vith the growth of these instrumentalities, has been
the development of credit associations.
his own.

The credit man has come into

He is recognized as one of the most important factors in every
Indeed, the credit man is the first line of safety, behind

/hich all accommodations can reasonably be marshalled with safety.


his local, regional and national associations, he has contributed enormously
to the establishment of reliable methods of business and of credit extension.

To articulate his work -vith such a fabric of creuit information

as has been suggested, would further strengthen the entire business and
banking structure.
We must always keep in mind, ana in the discussion of such
topics as this we can not too persistently remind the public, that the
banker does his business chiefly with other people Js money.

Whatever is

good for the banker, o.s a measure of assurance end security and soundness,
is good for the public which deposits with him.

It is good also for that

overwhelming preponderance of the public which, whether borrower or depositor or both, is actuated by good, sound, honest intentions.

It is

altogether to the interest of the banks that business shall be kept sound
and safe.

It is equally to the interest of business, legitimate and de-

serving business, that the banks shall be souna, reliable, and shall enjoy
the confidence of the community.

These things can only be possible if the

banker possesses the fullest and most reliable information concerning the
status of his customers.

In the long run, the customers will be the

greatest beneficiary, for such a system as this, applied in moderation




and through wise cooperations, would go very far to insure the even
tenor and stability of all business.