"JOLLY BANK HOLIDAY"

The moneychangers have fled from the temples, leaving official notices plastered to the front gates. Mounting uneasiness among individual and corporate depositors led to runs upon and closures of middlewestern banks, and to such a strain upon other parts of the banking system, especially in the-East, that similar protective measures became universally necessary. The superficiality of this explanation makes it peculiarly suitable for promulgation by bankers and a subsidized press. But to go just one step beyond this "lack of confidence" is to discover the utter incompetence and frequent dishonesty which have graced the laissez-faire operation of the American banking system. Incompetent management led to the failure of hundreds of small, undercapitalized state banks in the West which folded up at the first signs of receding prosperity. Dishonesty was largely responsible for the failure of eighty percent of Chicago's banks, was entirely responsible for the unsavory investigation of New York banking houses. When the mighty have fallen so low; it is small wonder that the depositor hastens to the teller's window.

The first duty of the new administration is obviously to restore confidence in the banking system. Several measures have been proposed by which the government can prevent a complete prostration of business. Obviously, first of all, is the plan for a national bank holiday of about a week, during which the government can inaugurate relief measures. Secondly, it is proposed that the President be given extraordinary powers under the "Trading with Enemies" act of 1917, to restrict gold shipments. Thirdly it is suggested that there be an issue of clearing-house certificates, based on bank deposits, in order to furnish a scrip money as a medium of exchange during the period of the holiday. Finally, many have favored at least a partial guarantee of deposits by the Federal government.

It is almost certain that these or similar measures will be promulgated early in the week. But it must be recognized that such action is at best a palliative, and that the real source of infection will remain untouched until a much stricter Federal control is imposed permanently upon the whole American banking system. Legislators and technicians must argue over the important differences between control exercised through a National Bank, owned and operated by the Federal government, or through a more stringent Federal Reserve System, of which every banking institution in the country must become a member. Either the government is to enter directly into business, or it must exercise a very minute and comprehensive authority over corporations which have hitherto grossly abused their great power. But whatever solution is put into effect, the era of incompetent and irresponsible banking, banking that exists in so many cases for the maximum of private gain and the minimum of public good must be forcibly brought to a close.