Show STUDENT LIFE 184 Treasury is best described in Webster's words “He smote the rock of national resources and abundant streams of revenue gushed forth lie touched the corpse of the public credit and it sprang upon its feet The fabled birth of Minerva from the brain of Jupiter was hardly more sudden than the financial system of the United States as it burst from the conception of Alex- ander Hamilton’ Among the great monuments which Hamilton erected to his memory arc two of the early American Hanks The lank of Xew York was founded by I lamilton in 1784 as a protest against Chancellor Livingston’s land bank The latter based its circulation on landed security a basis which has always proved unsuccessful while the new bank was to be a “money" bank i e its circulation was to be secured by specie Xo one understood the function and the true nature of a bank better than Hamilton He saw clearly how banking may serve as a manufactory of credit and how it economizes the use of capital He saw how by a safe reserve and by reputation for honesty and integrity a bank can loan its own notes up to three or four times the amount of its capital Hut lie understood also that the resources of a bank must at all times be convertible into specie and that all objections must be met in the existing standard on demand All these principles have prevailed in The Hank of Xew York and it stands today one-hundred-twc- nty years old a monument of sound principles and practice in banking The First Hank of the United States was one of the financial measures through which Hamilton sought to bind the people and the Union together It was modelled largely after the Hank of England h The government became a in shareholder the bank It was a one-fift- great financial as well as political It contributed considersuccess able revenue to the national treasury but above all it served as guardian of the public credit and a regulator of the currency by maintaining the highest standard of commercial honor It finally be- came a football of politics and the nation lost a useful public servant In our own by political intrigues financial theories bank failday of ures and panics statesmen are reminded of the solidity and usefulness of foreign state banks and their branch systems upon which the first and second bank of the United States were founded and wonder if our national banking has not wandered from first principles A confederacy of banks is hardly less objectionable and weak than a confederacy of states A strong central bank the head of all the national banks invested with exclusive power of note issue and the custodian of the government funds could maintain public confidence on a general bank reserve of 5 per cent whereas now from 15 to 25 per cent must be locked up in the bank vaults “Hamilton possessed every gen- - |