THE PROBLEM

For many years the country has suffered from recurring periods of severe financial stringency. During these periods interest rates have been excessively high, and business men have lost heavily through inability to obtain necessary loans and discounts from the banks. At times wide-spread panic and general suspension of payments by the banks have resulted from runs upon a few banks by their depositors. Only recently we have emerged from a disastrous panic which forced the suspension of nearly all the banks, and, by the destruction of confidence and credit, arrested business activity throughout the country and caused vast losses to the people. This panic brought to a violent close a period of unprecedented prosperity, in which manufacturers and merchants had not unduly expanded their obligations for the purpose of carrying unsold stocks of goods. On the contrary, production had been barely able to keep pace with demand for the products of industry.

Such extraordinary financial disturbances do not occur in other civilized countries. They indicate that something is seriously wrong with the system of banking and currency in the United States. The National Monetary Commission was created for the purpose of devising a remedy that will prevent similar disturbances in the future.

When a doctor is called in to prescribe for a patient, his first step must be to discover the disease that causes the symptoms of which the patient complains. Similarly, before the Commission can intelligently prescribe remedies it must ascertain what is wrong with our present financial system. The first step must be to discover the true cause of our financial troubles. The next step should be to devise a remedy that will remove the existing cause of trouble, but will not itself introduce a new source of trouble or of danger.

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