has the advantage of being published in an American as well as an English edition.

84. A Municipal Internal Audit, by Arthur Collins. The book is stated by the author to be "a full description of an audit of the departmental receipts of a municipality, especially designed to assist students in their preparation for the examinations of the Institute of Municipal Treasurers and Accountants; based on systems in operation in the leading municipalities in the United Kingdom." While not complete, nor by far adaptable to American municipalities, yet the book is suggestive, and gives some assistance in auditing municipal accounts.

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85. The Railway Auditor, by H. C. Whitehead This is the first number of Studies in Business" of the New York University School of Commerce, Accounts and Finance publications, and comprises the lectures delivered by the author before that school.

Although bearing the title "Auditor," the book gives a complete résumé of railway accounting. It begins with the details which are handled by the employees in the various departments, leading up to the general books, income account, and balance sheet. It also contains an appendix on definitions adopted by The Association of American Railway Accounting Officers.

The Directors of The New York State Society of Certified Public Accountants have determined to entertain the delegates visiting the accountants and members of The American Association of Public Accountants at a reception to be given on the evening of Tuesday, October 20th, 1908, at the Marlborough-Blenheim Hotel, Atlantic City, N. J., on the occasion of the twenty-first Annual Meeting.

It did not take Treasurer William F. Weiss more than a few minutes, the other evening, at a meeting of the New York State Society of Certified Public Accountants, to raise a guarantee fund of one thousand dollars to provide for the cost of a reception to the delegates, visiting accountants and members of The American Association at Atlantic City on October 20th, 1908.

Colonel Franklin Allen, C. P. A., President of the New York State Society of Certified Public Accountants, is a member of the Committee on Arrangements for holding the twenty-first Annual Meeting of The American Association of Public Accountants at Atlantic City on October 20th, 21st, and 22nd, 1908. The Colonel is an enthusiastic booster for anything for the good of the profession.

T. Cullen Roberts, C. P. A., President of the Society of Certified Public Accountants of the State of New Jersey, is a member of the General Committee on Arrangements for holding the twenty-first Annual Meeting of The American Association of Public Accountants at Atlantic City on October 20th, 21st, and 22nd, 1908.

Measures for Banking Reform.

BY CHARLES W. MIXTER,

Professor of Political Economy in the University of Vermont. PART I.

If the situation were ripe for a genuine, once-for-all putting of our house in order, the watchword should indeed be "Thorough." Our existing system, or rather lack of system, of banking and currency should be wholly recast. We ought, in that case, to get at once, in place of the present so-called system of many independent, insufficiently coöperating, frequently weak and mismanaged banks, a real system of large banks with branches, managed exclusively by the best banking talent the country affords a scheme of banking law and practice similar to that which so well meets the business requirements of Scotland and Canada. Such an organization of banking would on the one hand concentrate responsibility and give security, and on the other hand would extend banking facilities-banking competition in its beneficent form-into every corner of the land, to a degree that a system of independent banks never can. Several branches of the comparatively few strong banks competing under such a plan can be located in a small town and vie with each . other to accommodate its business public, where there is room now for only one independent bank, and that a weak one. A new United States bank might be chartered to hold the position of leadership in such a system, but that would be largely a matter of minor importance. In any case a system of some thirty or forty or fifty banks, with branches-as in Scotland or Canadawould be far preferable to one overshadowing central bank, as in France, having more or less of a monopoly.

Along with a thoroughgoing scheme of financial reform should go the driving of all trust companies entirely out of the banking business. These institutions should either reorganize as banks, state or national, or confine themselves to their own proper functions. A dangerous anomaly has been allowed to grow up, entirely without original intent, and it should now be handled without gloves by the national power. Deposits used as checking accounts are currency-a leading branch of currency under

modern conditions-and Congress has, under its enumerated powers, full control over currency. It is like waiting for a river to run by to wait for the states to act adequately and harmoniously with respect to such matters. Congress, therefore, should take hold of the situation boldly, as it did a generation ago, when the national banking system itself was first formed, largely from reorganized state banks. Also, as a part of general house cleaning, the national government itself should withdraw entirely from the banking business-the greenbacks should be retired. And not only that, but the United States revenue (the whole of it) should go at once as collected, without pledge of specific property as security, into the depository banks designated in advance by Congress. In other words, the existing survivals of the Jacksonian independent treasury scheme should be straightway and wholly abolished as a matter of course. The life blood of commerce should not be even temporarily withdrawn from circulation, and there should be no opportunity for the Secretary of the Treasury to practice favoritism or to be suspected of it. This last measure of reform would, moreover, take away the chief standing excuse for “relief measures" on the part of the government. That sort of dependence of the banks upon government is a source of weakness, and only of weakness.

But all these more ambitious projects for reform must wait until public opinion grows up to them; and the plans in detail must be worked out in another and a quieter time. What is needed for the present-imperatively needed at the hands of this present Congress-is provision for the essentials of reform for the existing national bank system. These essentials fall under three heads-first, "Additional General Safeguards"; second, "Effective Maintenance of a Proper Reserve"; third, "The Securing of a Flexible Credit Bank Note Circulation." * GENERAL SAFEGUARDS THE FUNCTIONS OF GOVERNMENT IN GENERAL WITH RESPECT TO BANKING.

The present writer does not care to go much into detail under the head of "additional general safeguards." Such problems as those pertaining to "loans," "collateral for loans," "investments in other securities," "overdrafts," "payment of interest on deposits," "amount of capital," "ownership of stock," "directorates," and the like, each resolves itself into particulars of great

See what is said below concerning the introduction of Branch Banking.

intricacy. The legislative problems connected with these economic problems are difficult in the extreme and require experienced banking opinion as a guide for their solution. Moreover, it is probably impossible to make any one code of law respecting these things that will fit conditions in all parts of the country and all forms of business in each part. Wisdom would seem to dictate few and simple general laws in these premises, and they to be very largely enforced through the coöperation of the banks themselves. The present writer would suggest that the Clearing House Associations be given, each in its own community, very broad legal powers to enforce good banking morals. Many kinds of police work have to be performed by government through just such agencies, if they are to be performed at all.

Governments the world over, and never more than at present, undertake too much and actually accomplish too little. They do not do enough in the way of the provision of "known stand ing laws" and the establishment and support of the common judge." They do too much in the way of trying, amid the dust of the market place, to see to it that the work of the world goes aright. Of late, indeed, they even try more and more to actually carry on the work of the world. Not results, but conditions-the affording of opportunity through proper institutions--should be their aim. As regards the particular subject before us, it is obviously out of the question that the Government should put its hand on each piece of commercial paper discounted to see that it is good. The work of government in these matters of banking regulation is largely negative: it can prevent fraud and prepare the way. It can get itself out of the way so that the banks can pass on to the performance of their proper functions. We ascend in any discussion of things of this sort into the higher air of the most difficult problems of statesmanship. Said the wisest man in things political in modern times: "In its preventive police the state ought to be sparing of its efforts, and to employ means rather few, unfrequent and strong, than many and frequent. Statesmen who know themselves will, with the dignity which belongs to wisdom, proceed only in this, the superior orb and first mover of their duty, steadily, vigilantly, severely, courageously; whatever remains will, in a manner, provide for itself. But as they descend from the state to a province, from a province to a parish, and from a parish to a private house, they go on

accelerated in their fall. They cannot do the lower duty; and, in proportion as they try it, they will certainly fail in the higher. They ought to know the different departments of things; what belongs to laws, and what manners alone can regulate. To these, great politicians may give a leaning, but they cannot give a law." *

If our National Government will only lay down a few simple and reasonable laws establishing the conditions for sound and efficient banking, it might well leave the "lower duty" of carrying these laws into effect, in large part "to provide for itself." It is clear to my mind, strange as it may sound in this over-governing age, that a firm of Certified Public Accountants employed by the banks could enforce all the laws for all the banks, under the present or any future code, far better than a corps of under-paid inspectors sent out, like the thirteenth century aulnagers of the assize of cloth, by the Comptroller of the Currency.

PUBLICITY.

The matter which alone the present writer desires to develop at any length under the head of "general safeguards," is the matter of greater publicity. The weekly collective statements of the associated banks in the larger cities, at present voluntary and too much in bare outline, should be made out and published under sufficient specifications of law, and sworn to. What is called "window dressing" by individual banks should cease; and the collective statement in all cases should be a real group-statement of the standing of the banks on a particular day, not the average for the week as it is at present. The financial editors of the leading newspapers have been demanding this last change for years; why hasn't it been made long ago? Obscurationist methods of accounting, designed to cover up slipshod and more or less dishonest methods of doing business, are by their very nature fraudulent; and it is always within the province of government to exert its full powers to prevent fraud.

As an important aid to publicity (and without that in a democratic country, no good system of banking can be initiated or long maintained), the item of "deposits " in the individual bank statement, or in the collective statement of associated banks, should be changed. It should be renamed "accounts current,"

P. 108.

Edmund Burke, "Thoughts and Details on Scarcity," Works, Bohn's edition, Vol. V, † Since writing the above an improvement has been made in this matter in the case of the banks of New York City: but it is still voluntary and may be withdrawn.