Image provided by: University of Nebraska-Lincoln Libraries, Lincoln, NE
About The commoner. (Lincoln, Neb.) 1901-1923 | View Entire Issue (Sept. 22, 1911)
ff-WT" . -Wv
ing for this year's work of treachery and be
trayal. "Tills newspaper believes today as always
In real protection and in real republicanism.
And it is with sorrow that we make tho predic
tion that tho sowing of tho wind by these false
loaders will bring ultimately a harvest either of
annihilation or of disaster nearly approaching
it to. the party as now controlled and organized.
America has no room for a traitor whether a'
party or a public man." Philadelphia North
THE CENTRAL BANK
One of the results of tho financial depression
of 1907 was tho appointment of a commission
by tho house and senate in Washington for the
purpose of investigating banking systems
generally, and suggesting amendments, if they
could, for tho improvement of our own system.
This commission organized by the election of
Senator Nelson V. Aldrich as chairman and
proceeded at once to the work for which it was
appointed. Tho commission decided that one of
its chief duties was to educate tho public in
banking and financial affairs. They undertook
to do that by means of public speeches and
literature. Senator Aldrich made a series of
speeches in the principal cities of tho middle
west. He began this series by criticising our
banking system, praising the banking system of
tho principal countries of Europe and asking
whether a' central bank would be suitable for
our country. Ho ended the series with a flat
footed stand for tho establishment of a central
In addition to this series of speeches, the
commission provided for the publication of a
library on banks and banking, probably the
most comprehensive that has ever been issued.
This library consists of soraethirig like fifty
volumeB. It is issued by tho government and
for tho most part it has been prepared by parties
specially selected by tho commission. After
these things had been done, Senator Aldrich, in
senate document No. 784, submitted a plan for
tho establishment by congress of what he calls
"The Reserve Association of America" with a
capital of ,$300,000,000 to be subscribed and
held by the national banks of the country. The
leatures of this proposed association .could not
Be' described in -anewspaper article. It is -sufficient
to .say that it is in -.essence, a .central bank,
chartered by congress with the head office in
Washington and its branches in every part of
The justification for a public .discuBsionof
the proposed law is the evident intention on tho
part of the captains of industry and certain
leaders of the republican party to establish, in
our country, a bank which shall be fashioned
after the great central banks of Europe. Those
who favor the establishment of such a bank
must stand upon some one of three proposi
1. That a central bank would be profitable
to its stockholders.
2. That a central bank would be of service
to the government in tho transfer of its funds
anil in tho transaction of its business.
3. That a central bank would be a cure -for
panics and financial disturbances.
Whatever may be said of secret motives, I
have not heard any one attempt, publicly, to
justify his support of a central bank on the
ground that it would be profitable to the stock
holders. Neither have I heard any one point
out a need on the part of the government with
its treasury and sub-treasuries and affiliated
banks for any new means of transacting itB
The only one of the three propositions that
has been discussed by tho commission or by tho
friends of the bank Ib that such a bank would
bo a cure for panics.
President Taft, in one of his messages to
congress, says that tho monetary commission
has found that there are no panics in countries
' that have central banks. Senator Aldrich, in
an address before the Economic club of New
York, "asks attention to an examination of some
of the methods employed in modern times in tho
great commercial nations of Europe to prevent
financial panics or to relievo congestion and
dangerous pressure in tho money markets." An
examination .of the address shows that Senator
Aldrich assumes that a central bank is a cure
for panics without going to the trouble of show
ing that such is tho case. This address has
been published as senate document No. 406.
It is well known that the opponents of a
central bank deny that such a bank would pre
vent panics. and it..Is.,nard to understand why.
Senator Aldrich, with his great ability and un-
limited resources in securing information for
the public should havo left tho question open.
England has had a central bank since 1694;
Franco has had a central bank since 1800 and
Germany has had a central bank since 1876.
If Senator Aldrich had caused a study of these
great countries since tho establishment of their
central banks, to bo made with special reference
to the influence of these banks on panics, it
would, I am sure, havo left no room for further
dispute. Tho evidence, ono way or the other,
must be abundant, but among tho fifty volumes
he has caused to be published not one deals
with this vital question. I do not allege that
the omission was intentional but I am willing to
allege that an impartial study of tho history
of the countries above named will furnish no
justification for a belief that a central bank is
a cure for panics. On the other hand, I believe
It will show that panics and money disturbances
are world-wide, and, in a general way, such a
study will show a European counterpart for
each of our American panics.
We are not entirely without instruction upon
this question in our own country. We have had
two central banks in America. The first ono
was established in 1791 and lasted for twenty
years; the second one was established in 1816
and lasted for twenty years. In 1820, we had
a central bank fashioned in every way after tho
bank of England, and in that year we also had
one of the most disastrous panics in our history.
The chief objection, however, to a' central
bank is not that it would fail to prevent panics.
The chief objection is that such a bank is a
monopoly the most powerful and dangerous
monopoly that the American people could
create. Senator Aldrich praises the efficiency of
tho central banks of Europe. With equal truth,
he could praise the efficiency of Standard Oil,
but notwithstanding its efficiency, the people are
demanding its destruction.
As I havo said above, congress established a
central bank in 1791. It proved to be a great
bank, the greatest our country had ever known,
but when its charter expired in 1811, the people
refusqd it a new charter. In 1816, the financial
affairs of our country were in such desperate
condition that congress, remembering the effi
ciency of the old bank, chartered another cen
tral bank. Under Its powerful and intelligent
lead, business revived and plenty smiled 'upon
our lathers" in" a way they had never toiown.
The second bank was greater than the first;
it was the 'greatest bank tho country had ever
known but in 1-836, when its charter expired, the
people refused it a renewal. And what vas it
that caused our fathers to deny themselves the
advantages of this great bank? ' The unswor is
evident to any man who reads the story. The
bank was a monopoly.
At one time or another, ten presidents have
been parties to the bank controversy and ten
presidents are on record In opposition to a
Madison vetoed a bill to charter a central
bank; Jackson vetoed a bill to re-charter a
central bank; Tyler twice vetoed bills to char- .
ter central banks.
President Jefferson, speaking of the first
central bank established by congress said: "This
institution is one of the most deadly hostility
against the principles and the form of our con
stitution. An institution like this, penetrating
by its branches, every part of the union, acting
by command and in phalanx, may, in a critical
moment, upset the government."
President Van Buren; at a banquet one night,
proposed this toast: "Uncompromising hostility
to the United States Bank."
Theodore Roosevelt, in his life of Benton,
says: "Good ground can be shown for think
ing Jackson's veto proper."
Henry Cabot Lodge, in his life of Hamilton,
says: "A central bank with branches, such as
wo had in Jackson's time, would be dangerous
to a perilouB magnitude."
During the Tippecanoe and Tyler campaign of
1840, General HaTrison was asked to state in
writing whether, in case of his election, he
would favor the establishment of a central
bank. His answer was, "I will not give my
sanction to a bank of the United States unless
by tho failure of all other expedients it should
be demonstrated to bo necessary to carry on
the operations of tho government and then only
as a fiscal and not as a commercial bank."
In December, 1861, when tho expenditures of
tho government amounted to $2,000,000 per
day, when the treasury was ompty and tho
enemy was threatening our capital city, Secre
tary Chase sent a call to congress for financial
help. The need was so .urgent that tho secre
tary asked congress to pass a law tho very day
VOLUME' 11, NUMBER 37
it received his report, and what did he recom
mend? Ho know the financial history of our
country, and of other countries and he know
that a central bank was the quickest and surest
way to secure the help he needed but he did
not ask for the establishment of a central bank.
He asked for the establishment of a system of in
dependent banks scattered throughout a thous
and cities, and the reason Secretary Chase gave
for his recommendation is a significant reason.
He said: "A system of independent banks wili
enable the government to procure loans with
out risking the perils of a great money
More than one hundred years ago James
Madison declared in the congress of the United
States that the bank of England can never serve
as a model for this country. "The genius of
the British monarchy," he declared, "favors the
concentration of wealth and the concentration
of power while the genius of our government re
quires a diffusion of wealth and a diffusion of
power." Speaking further, ho said, "A system
of independent banks is in harmony with our
institutions." For half a century we have had
a system of independent banks and notwith
standing their faults, the record of that half
century for industrial progress is unmatched in
the history of the world.
In every generation a central bank has been
the dream of the holders of swollen fortunes.
It would be in their hands a magic wand which
would enable them to control the industries of
a republic. Three-quarters of a century ago, a
distinguished democratic president, contemplat
ing the over-reaching tendencies of the captains
of industry, gave utterance to a sentiment that
I am willing to make my creed. He said: "It
is to be regretted that the rich and powerful
too often bend the acts of government to their
selfish purposes. Distinctions in society will
always exist under every just government.
Equality of talent, of education or of wealth
can not be produced by human institutions. In
the full enjoyment of the gifts of heaven and
the fruits of superior industry, economy and
virtue, every man is equally entitled to protec
tion by law; but when tho law undertakes to
add to these natural and just advantages, arti
ficial distinctions, to grant titles, gratuities and
exclusive privilege, to make the rich richer and
thepotent more powerful, the humble members
of society who have neither the time nor the
means of securing like favors to themselves
have a right to complain of the injustice of their
government. There are no necessary evils in
government. Its evils exist only in its abuses.
If it would confine itself to equal protection and,
.as neaven does Its rains, shower its favors alike
on the high and the low, the rich and the poor,
it would be an unqualified blessing.
H. S. MARTIN.
Marion, Kan., September 6.
What a contrast between Congressman
Underwood's excited, intemperate roast of
Bryan on the floor of the house the other day,
and Mr. Bryan's dignified and gentlemanly reply
to said roast. Mr. Bryan, in an article in Tho
Commoner, had charged Underwood with being
a protectionist. Underwood replied that Bryan
is a liar and a would-be dictator, and said many
other harsh things about him. Now comes
Bryan's reply, in which ho says the information
on which his editorial was based was contained
in a Washington dispatch in an Omaha news
paper, and that if the information is erroneous
he will gladly acknowledge the mistake. He
also states that he will give the democratic
leader of the house an early opportunity to ex
plain some other things.
The fates never intended that William J.
Bryan should ever become president of the
United States, and Mr. Bryan no doubt realizes
that fact. But he is nono the less recognized
as iho leading and most influential democrat
in the United States today, and neither his
reputation nor his influence will -be impaired
by anything Mr. Underwood may say, of him.
Through his party leadership of fifteen years
Mr. Bryan has always been scrupulously honest,
sincere and consistent, and these well known
qualities constitute the foundation of a reputa
tion that Mr. Underwood will not be able to
The first skirmish shows the striking dif
ference between the two men a difference that
emphasizes Bryan's bigness and Underwood's
littleness. Underwood lost his head completely,
as his intemperate language indicates, while
Bryan maintains the dignified, temperate bear
ing that has always, been one of his chief sources
of power. Morced County (Cal.) Sun.
Powered by Open ONI