Banking In Action (1963)

point to a dynamic capacity for change imagination vitality knoow and a dynamic capacity for change are found in abundance in the American system of modern Commercial Banking this is Banks both of which are privately owned and operated working side by side this dual banking system of ours marked its first Centennial in 1963 100 Years After Abraham Lincoln signed the national Currency Act the 1863 law first permitted the establishment of banks which received their Charters from the United States federal government of course Banks which received their Charters from the states had existed in this country ever since the states themselves going all the way back to the days of the American [Music] Revolution [Music] banks are where they save money to others where checks are paid or where consumer credit loans are obtained Banks purchase municipal bonds which provide funds to build roads schools and hospitals and other vital installations for local governments local communities are also aided by the personal services of individual Bank officers who contribute their time and knowledge and quite often the facilities of their Banks to promote Community Serv service [Music] projects Banks lend money for construction manufacturing Mining and [Music] processing both in war and during peace time Banks sell savings bonds for the United States government and perform the service without charge either to the government or to the purchaser of the savings bonds Banks lend money to service Industries which are often big [Music] business and to retail stores which are often small business practically all children see Banks as the place where daddy keeps his money safe and also where they keep their own [Music] f [Applause] [Music] [Applause] [Music] Bank customers are farmers needing seed and equipment to increase productivity or financing to carry them through to Harvest [Music] Time Bank customers are businessmen seeking Housing Development [Music] loans [Music] or young marrieds who need a larger [Music] home Bank customers are manufacturers seeking loans to purchase newer more productive [Music] equipment banks are used By Truckers Desiring larger more profitable rigs to carry bigger payloads at less cost Bank officers with substantial backgrounds in finance contribute their experience for the benefit of the community in Rehabilitation projects for [Music] example and in industrial areas experienced Bank Personnel know their local problems well the financial future of thousands of Americans is secure because of the careful handling of family finances and trust funds set up for that purpose while Bankers work constantly to expand their range of services to the public internal improvements are always in the works to speed up handling mountains of paper [Music] shorten the time lapse necessary to clear checks improve the accuracy of monthly statements while getting them out to the customer faster and free Bank Personnel for other kinds of banking [Music] work just as Bank services and methods have changed with the times likewise the buildings Banks occupy have evolved to accomp odate their customers and to keep in step with new and different bank [Applause] Services some banks have even become works of art inside and out and banks have often been both the focus and the stimulus for community redevelopment as in the case of the massive rebuilding of the Wall Street Financial District in New York City service projects are in the banking tradition of community responsibility that has its Origins deep in America's passed the place Frederick Maryland the time July 9th 18 1964 as Confederate troops marched on Washington under the leadership of Lieutenant General jubil a early they passed through Frederick in order to finance their campaign the troops levied a ransom of $200,000 on the town in an extraordinary session the Alderman and common Council adopted a resolution requesting the town's five banks to furnish the $200,000 and to do so to quote the exact wording of the resolution quote prated according to their several capitals unquote the banks responded quickly to the call and within a few hours time they provided the ransom money The Ransom was paid by notes issued in the names of the individual Banks which was the General banking practice of the times but the days were numbered for currency backed by individual banks at the time the national Currency Act was signed on February 25th 1863 there were more than 10,000 different varieties of paper money many of which were discounted in value when exchanged for gold silver or usable merchandise although the president's signing of the bill went virtually unnoticed by the newspapers of the day the national Currency Act became one of the most enduring of our foundations up until until that time the banks in this nation were State Banks many of which had a proud history of service which could be traced all the way back to revolutionary days then as now State Banks received their Charters to operate in accordance with the various banking laws and their operations were supervised by specially designated State authorities one of the major effects of the national Currency Act was to broaden the foundation of our banking system by establishing a new system of federally charted Banks and by creating the office of the controller of the currency within the treasury Department for the purpose of chartering and supervising these National Banks the ACT permitted the many important advantages of our dual commercial banking system with national and State Banks working side by side thus although both state and National Banks today they are regulated by government agencies they are privately owned and operated and have remained a strong and vital part of the private enterprise system perhaps the most important achievement of the national Currency Act and subsequent legislation was to establish a national currency on a Sounder basis this was accomplished by backing The New National Bank notes with United States government bonds a sound currency was especially vital during the years following the Civil War because the nation was expanding Westward on credit with a few dollars in his pocket a farmer could move West to Nebraska and stake a claim it cost $15 in 6 months time he has made the improvements necessary to maintain the claim a saw house a 4T well and and 5 to 20 acres of clouded land then the farmer goes to the bank and obtains a mortgage on his farm money in hand he purchases a horse a plow machinery and a wagon harness and equipment to harvest his crop then back at the bank he borrows money on his crop in advance to purchase seed on the frontier an adventuresome people demanded equally adventuresome Bankers whose belief in the future often exceeded the limits of reality but the farmers were settled in the west and they were there to stay Agriculture and Mining in the west expanded rapidly but the cost of shipping Goods long distances to Market was virtually prohibitive before 1850 only one railroad line had been completed between the Tidewater and the great interior of the country aided by investment and Commercial Banks which purchased more than $1 billion in railroad equipment bonds and provided Millions more in short-term loans a 35-year period of growth in American railroading began by the turn of the century 200,000 M of track had been welded into an efficient coordinated system the massive projects leading to the development of heavy industry gradually eased America from an agricultural economy toward an industrial economy and along with this increasing industrialization it became clear that we also needed a new type of banking institution to cope with our new credit needs we needed a Central Bank in 1913 50 years after the passage of the national Currency Act the Federal Reserve System was formed today it includes 12 federal reserve banks which operate exclusively in the public interest a central governing board in Washington and thousands of member banks which together represent 85% of our total banking assets the Federal Reserve Banks issue most of the currency we use they serve as Bankers both for the government and for private commercial Banks and they also influenced the lending and investment policies of commercial banks by utilizing a variety of economic tools which are available to the Federal Reserve System the American banking system was further strengthened when Congress established the Federal Deposit Insurance Corporation to ensure bank accounts up to $10,000 the premiums for this insurance are paid for by the Banks the FDIC like other National and state agencies also conducts rigorous examinations of its member [Music] [Applause] [Music] banks [Applause] in the Years just before World War I the automobile industry became concentrated in Detroit partly because of the foresight of the local banks and their willingness to extend financing to the fast growing youngster increased competition combined with the growing number of cars required independent dealers to go to commercial Banks to finance their [Music] inventories later on banks became major suppliers of Consumer Credit in turn this led to the other forms of consumer financing which identify the greatly expanded range of personal services in these modern Department Stores of Finance a a During the period from 1863 to 1963 our commercial banking system successfully adapted itself to the changing needs of our Dynamic economic system the predictions that were made 100 years ago have generally been far too conservative nobody can predict what the American scene will look like 100 years from today but we can be sure of this Central F the American Commercial banking system will be a part of that scene Bankers will be meeting the credit needs of our nation during the next 100 years regardless of the changes this new century may [Music] bring