The Commoner.
May 23, I902
3
m
The Fowler
Bill
and the Wick Bid die Affair.
mmmmmmmammmmmuBmmmmmmmmmmmKmmnimmmmmmmmmmmmHmmmmmmmmmm
The periodical, "Sound Currency' in its
March issue, prints an interesting article entitled,
"The demand for centralized banking," and written
'by H. Parker Willis. This article, like all the ar
ticles now being issued by the single gold stand
ard literary bureau, is evidently designed to give
support to the Fowler bill, that remarkable meas
ure which has been recommended for-passage by
a republican committee of the house.
Mr. Willis shows, what a great many observ
ing people cannot fail to have noticed, that the
so-called demand for centralized banking is be
ing gradually complied with. Mr. Willis says:
It is true that some efforts are making
towards centralization in the larger cities, but
the principle is vell known that consolida- .
tion only results in fiercer competition as the
' number of contestants grows smaller, UN-
LESS IT, IS SUDDENLY REDUCED TO ZERO
BY THE CRUSHING OUT OF ALL SAVE
ONE. This principle may be seen in operation
in our banking system at the present time,
the recent consolidations having had the re
, suit merely of throwing certain groups of in
. stitutions into sharper contests with other
groups without bringing with it the advant
. ages usually supposed to accompany central
ize'd control.
Evidently this plan of centralization Is not
satisfactory to those whom Mr. Willis represents;
and he points but what, in his view,- comprises
a necessity for a centralized system of banking.
He says there are, in general, two ways-of se
curing such a system. One way is by "government
initiative" and the other by "private effort."
The government initiative plan would be met,
so Mr. Willis says, by the establishment of insti
tutions similar to the" early banks of the' United
States, the stock of which should bo largely' held
by private individuals, the government only re
taining so much as would enable it to exercise a
certain oversight in the management of its af
fairs. The private effort plan, according to Mr. Willis,
"can probably be fully attained only if all restric
tions upon banking centralization shall be re
moved so tliat the business community can be left
to work out its own ends unhampered. Chief
among these removals would be the withdrawal of
the prohibition on branch banking."
In considering the actual feasibility of the
different methods of concentration of the banking
powers of the country Mr. Willis concedes, at the
outset, that "any positive action by government in
itiative or recognition looking toward the estab
lishment of a bank .with which the treasury de
partment should enter into special relations is out
of the question." According to Mr. Willis, this is
so for reasons "connected both with our past his
tory and our political 'and economic organiza
tion." In brief, Mr. Willis refers to the banking his
tory of our country which made Andrew Jackson's
"By the Eternal" famous; and he admits that it
"will be "a long time before the history of the
Second Bank of the United States will be so far
forgotten as to permit of the creation of a succes
sor ta it, even though there should be every rea
son of expediency dictating such a course and no
tangible opposition on other than sentimental
grounds."
. Mr. Willis quotes former Secretary Gago
as having said: "The proposition for
a large centralized bank with broad powers for
the establishing of branches, OFFENDS THE
COMMON INSTINCTS OF OUR PEOPLE and may,
fairly be looked upon as at present impossible of
realization."
,.Then Mr. Willis says that, accepting these in
terpretations of public opinion as correct, "it will
be impossible to secure the adoption of a central
ized banking system by the natural mothod, that is
to say, by direct organization. The organization
leading to a change must be brought about in such
a way as to require no assistance from legisla
tion, but to bo merely the result of spontaneous
association and agreement among those affected by
it. That is to say, organization," if it takes place,
must be largely voluntary, and must aim at the
combination of existing institutions for the sup
ply of credit facilities."
In other words, It will bo impractical for the
organization of a banking trust by the creation of
a bank similar to THE "NICK" BIDDLE AF
FAIR; so a banking trust is to bo organized by a
measure known as THE FOWLER BILL, which,
will accomplish, in, a covert way, the end which
Mr. Willis and Mr. Gage and others have admitted
could not be accomplished in an open and manly
way.
Mr. "Willis prints some interesting figures,
showing the progress of local consolidation, and
says:
It goes without saying that the tendency
thus noted toward increase in the capitaliza
tion of the average national bank and the
relative decrease in the number of institu
tions is still at work WITH MORE FORCE
THAN EVER, as may be seen by an analytical
study of the organizations and capitalizations
under the gold standard law of 1900. Such
analysis shows that there has been no change
in the tendency noted, although it has been
obscured by the addition of a largo class of
small new banks, which vitiates the general
'comparison.
Mr. Willis bluntly declares:
If the growth in the capitalization of the
banks were solely the result either of the ad
vance of the country in wealth and its demand
for the services of larger institutions or even
of a more than proportionate tendency to or
ganize institutions of large capital, it might
mean merely that the superior economies and
advantages of organization on a large scale
were coming to be better appreciated. But the
movement MEANS MORE THAN THIS. It.
represents not simply an increase in the num
ber of large institutions, but A TENDENCY
TO CONSTRUCT THESE INSTITUTIONS BY
THE USE OF SMALLER ONES AS COM
PONENT PARTS.
Mr. Willis then pleads, in effect, for the pass
age of the Fowler bill and he says that in order to
give the desired scope two classes of legislation
are needed: "First, all resrlctions upon FREE
COMPETITION in banking must be removed; and,
second, the banks of the country must be made to
feel the pressure of those responsibilities WHICH
WILL COMPEL CONCERTED ACTION on their
part."
. Perhaps we do not clearly grasp Mr. Willis'
meaning, but it would seem that his first proposi
tion pretends to the encouragement of "free com
petition" and the second proposition would make
it practically impossible for any "free competition"
to exist.
Mr. Willis evidently realizes that the smaller
bankers throughout the country are making a
vigorous battle against the Fowler bill, for he
says: .
Country bankers foresee danger to them
selves in the possibility of inroads upon their
fields of effort, should the larger institutions of
the cities bo permitted to establish branches
and compete with them In their homo market
on equal terms. They know that such a policy
would result in a reduction of interest rates
in their towns and that their chances for the
profitable use of their funds might thereby
be somewhat diminished unless they were pre
pared to go as far as their new rivals in serv
ing .customers cheaply. The usual complaint
against such proposals is that they would re
sult in building up a money power which would
crush tho small banks out of existence. A more
absurd rovorsal of tho actual facts In the case
could scarcoly be Imagined. What the estab
lishment of branches would actually do would
bo to destroy tho local monoy power which
now practically stifles many forms of legiti
mate industry by the pressure of excessive in
terest rates, and by other even less justifiable
means.
Tho banking trust sought to bo created by the
Fowler bill would unquestionably operate, in
methods and results, similar to other trusts. The
great bank could operate its branch bank in a
cortain town with far less expense than is as
sumed by the local banker. Undoubtedly In the
boginning interest rates would como down, be
cause it would bo necessary for the banking trust
to decrease the r.ato of interest in order to drive
tho local banker out of business; but after tho lo
cal banker had been driven out of business, what
then?
After .all the local bankers in the country had
been compelled to close their doors and this cen
tralization process had continued all over the
country until ono immense banking house con
trolled tho local banks of tho country, overy one
must seo that tho same power which could de
crease the rates of interest and drivo tho local
bankers out would be sufficient after a while to
raise the rates of Interest to whatever figure the
banking trust desired to fix.
It is characteristic of the trust system that in
order to crush out competition, it decreases prices
only to raise prices according to Its own pleasure
when it has finally become master in the field.
It will be obsorved that in ono of tho para
graphs quoted from Mr. Willis' article, he said,
referring to tho efforts being made toward cen
tralization in the larger cities: "Tho principle Is
well known that consolidation only results in
fiercer competition as tho number of contestants
grows smaller, UNLESS IT IS SUDDENLY RE
DUCED TO ZERO BY THE CRUSHING OUT OF
ALL SAVE ONE." This is somewhat inconsistent
with Mr. Willis' statement with respect to the
country bankers.
Evidently the eyes of tho country bankers are
beginning to open. They were persuaded that in
order to maintain "national honor," they must
vote the republican ticket. They were deceived
on one or two occasions; but it stands to reason
that it will be somewhat difficult to make these
country bankers understand that any benefit is to
be obtained either by the country bankers or by
the general public In the creation of an enormous
banking trust which shall first prey upon tho
selfishness of money borrowers, by reducing inter
est rates for a time in order that it may obtain
the power necessary in its effort to take "the
pound of flesh" from the people generally.
JJJ
Why Not a Filipino?
In a speech delivered at Havana, President
Palma said: "Words cannot express my deep feel
ing when I seo how united the people are for the
good of our country. I hope they will be forever
firmly cemented, making a nation dignified and
honorable like her sister republic, the United
States, that great, honorable nation."
Is it not indeed regrettable that nothing like
this can como to us from the Philippine islands?
Did we act toward the Cubans so that they
regard us as "a great, honorable nation" simply be
cause we gave them .our pledge that we would be
honorable?
v Or did we act as we did toward tho Cubans
because -such conduct was in accordance with
simple justice?
Then, why may we not act toward tho Fili
pinos as we acted toward the Cubans? And why
. may we not make it possible for some Filipino
patriot to arise and pay to the United States the
cordial tribute which was given by tho Cuban
president-elect?