KONGRESS TANTZT

The inability of the American banking system to stand up under the financial stresses and strains of the depression was at first attributed to the great severity of this crisis. But when one-third of all the banks in the United States failed, and when America saw other nations, notably Canada, weathering the depression without a single bank failure, it became more and more evident that the American banking system was intrinsically defective. Especially among the masses of the people it became incomprehensible why they could not deposit their earnings in a bank, without that institution closing its doors a little later, and tying up their funds.

Bray Hammond, writing in the New Republic, expresses some of this righteous indiguation. Though a little radical, at least his indictments against American banking appear sound. His criticism is two-fold. In the first place, he contends that there are too many banks. Where one strong institution might adequately serve a whole region, there are five weak banks struggling for existence. When crises come, some of these are bound to go under. In the second place Mr. Hammond points to the hopeless chaos in which the dual system of control, state and national, has resulted. Two different sets of rules, and two different responsibilities are thus set up; and the banks take advantage of this by chartering under both agencies. Often whatever operations are prohibited to it as a state bank, it may carry on as a national-bank, and vice-versa. Thus all control is rendered ineffective.

This current criticism of the banking system is part and parcel of the whole interesting tendency toward the socialization of private business. For long this tendency has been going on, but it is such catastrophes as the present depression which serve to bring it to a head. In such times, it becomes clear to all that in certain fields of commerce, free competition is undesirable. In these fields the prime requisite is stability and security. Even if some of the much vaunted freedom of action which is the essence of the capitalistic system must be abridged to secure these, still, the pitiful experience of the past years should teach the value of such sacrifice. The trend of opinion toward a nationally controlled banking system can never be thwarted by the mere cry, "Socialism."