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THE UNIVERSITY OF TEXA; 
 
 DEPARTMENT OF EXTENSION 
 
 r f Extensio * <>f the University of Texas 
 
 established for the purpose of rendering service to the peopl< 
 the State generally, and especially to those who are unable to att 
 he University The work of this Department is carried on nr 
 the following five Divisions : 
 
 PUBLIC DISCUSION DIVISION. 
 
 This Division has immediate charge of 'The University In 
 scholastic League/' This is an organization of all the -school* 
 Texas for the purpose of promoting contests in debate, deck] 
 .ion, and athletics. The University is desirous of aiding 
 schools in the matter of training for citizenship; and also to 
 teachers in developing, controlling, and standardizing a thl< 
 activities in the schools. 
 
 This Division is also engaged in the preparation of refere 
 Jists and material on various subjects of general interest, and 
 collection of small traveling libraries for loaning to citizens 
 Texas upon application. Books and pamphlets thus loaned n 
 be kept not longer than two weeks. The person to whom matei 
 s loaned pays the carriage (postage or express) both ways Eei 
 ence lists, together with more or less material in the way of boo 
 pamphlets, or bulletins, are now ready on the following subiee 
 Commission Form of City Government; Compulsory Educatic 
 educational Improvement and Social Reform; Initiative and R 
 erendum; Municipal Ownership of Public Utilities; Old Age Insi 
 ance; Penitentiary Refrom; Prohibition and the Liuor Problei 
 Tariff and Free Raw Materials; and Woman Suffrage. 
 
 Clippings and miscellaneous material have also been collect 
 on various other subjects. Correspondence is invited. 
 
 PUBLIC LECTURE DIVISION. 
 
 t Provision has been made to allow members of the staff of instrt 
 tion to deliver public lectures in Texas towns, when asked to do ; 
 About a hundred lectures in fifteen different lines of work are n< 
 available. 
 
 (CONTINUED ON INSIDE OF BACK COVEB.) 
 
I 
 
 BULLETIN 
 
 252-7 13-2m-3467 
 
 OF 
 
 E UNIVERSITY OF TEXAS 
 
 NO. 284 
 FOUR TIMES A MONTH 
 
 ?.NSION SERIES 34 
 
 JUNE 22, 1913 
 
 PUBLIC DISCUSSION DIVISION 
 
 OF THE 
 DEPARTMENT OF EXTENSION 
 
 r nter collegiate Debates and Bibliographies 
 
 On 
 
 Old Age Insurance 
 
 And 
 
 Banking and Currency Reform 
 
 PUBLISHED BY THE UNIVERSITY OF TEXAS 
 
 AUSTIN, TEXAS 
 
 Entered as second-class mail matter at the postoffice at Austin, Texas 
 
T) * 
 
 PEEEACE. 
 
 This bulletin contains the affirmative and negative speeches of 
 the University of Texas debating teams in the intercollegiate de- 
 bates of 1913, together with bibliographies. The main speeches 
 only are included, arranged in the order of affirmative-negative in 
 each case. 
 
 The University of Texas is a member of two intercollegiate debat- 
 ing leagues: The Triangular Debating League, consisting of the 
 State Universities of Colorado, Missouri, and Texas ; and the Penta- 
 gonal League of Southern State Universities, consisting of the State 
 Universities of Arkansas, Louisiana, Mississippi, Tennessee, and 
 Texas. In the Triangular League the question for debate was, Re- 
 solved, that a Policy of Compulsory Old Age Insurance should be 
 adopted by the Federal Government, Constitutionality waived, Mr. 
 Eugene H. Cavin of Galveston and Mr. Douglas Tomlinson of 
 Hillsboro supported the affirmative of this question in a debate with 
 ihe University of Colorado, held at Austin on April 18, 1913, the 
 negative winning by a vote of two to one-. On the same date a 
 Texas team consisting of Mr. Charles I. Francis of Denton and Mr. 
 George W. Dupree of Clairette upheld the negative of the same 
 question in a debate with the LTniversity of Missouri at Columbia, 
 Missouri, the Texas team winning a unanimous deciion in this 
 debate. 
 
 In the Pentagonal League series the question for debate was. 
 Resolved, that the Plan for a National Reserve Association ax pro- 
 posed by the United States Monetary Commission offers a desirable 
 remedy for the defects of our present Banking and Currency Sys- 
 tems. Mr. Theodore A. Gatchell of Austin and Mr. Sylvan Lang of 
 San Antonio upheld the affirmative side of this question in a debate 
 with the University of Mississippi at Austin, Texas, April 11, 
 1913. The Texas team won a unanimous decision. On the 
 same date a team from the University of Texas, consisting of Mr. 
 Winfree W. Meachum, Jr., of Anderson and Mr. Tom B. Ramev, 
 Jr., of Tyler upheld the negative of the same question in a debate 
 with the Universitv of Tennessee at Knoxville, Tennesse. In this 
 debate the affirmative side won the decision by a vote of two to one. 
 
 It is interesting to note that two of the members of the Texas 
 team's were former district winners in the debates of the State De- 
 bating and Declamation League. 
 
 M261421 
 
UNIVERSITY TEXAS INTERCOLLEGIATE DEBATING, TEAMS, 1913. 
 In order from left to risftt, Texas-Colorado Debate: Eugene H. Gavin 
 
 and Douglas Tomlinson. 
 and George W. Dnpree. 
 
 Texas-Missouri Debate: Charles I. Francis 
 
UNIVERSITY OF TEXAS INTERCOLLEGIATE DEBATING TEAMS, 1913. 
 
 In order from loft to rio-lit. Texas-Mississippi Debate: Theodore A. 
 Gate-hell and Sylvan Lang-. Texas-Tennessee Debate: Tom B. "Ramey 
 and Win free W. Meacrmm, Jr. 
 
COMPULSORY OLD AGE INSURANCE. 
 
 FIEST AFFIRMATIVE SPEECH. 
 
 BY EUGENE H. GAVIN, OP GALVESTON, TEXAS. 
 
 Mr. Chairman,, Honorable Judges, Ladies and Gentlemen: 
 
 In offering the plan of old-age insurance which we of the affirma- 
 tive advocate tonight, we offer a plan which England, after forty 
 years of experiment with industrial insurance, has seen fit to follow 
 as the best remedy for the relief of her old-age poor ; a plan which 
 has operated in Germany for half a century, and which has been 
 found to work so successfully that this year the plan in Germany 
 was extended three-fold; a plan which Denmark, which France, 
 which every great civilized country in the world to-day, with the 
 single exception of these United States, is successfully operating 
 and constantly extending. 
 
 Briefly, the plan is this : Throughout the laborer's active life, a 
 small monthly premium is to be paid for the support of old age. 
 Of this small premium,, the laborer pays a part, the employer pays 
 a part, and the government pays a part. The money thus raised 
 is to be used for supporting those who would otherwise be objects 
 of charity in their old age. 
 
 In the discussion this evening, it is my purpose to present the 
 needs of some plan for the relief of old age poverty in this country, 
 and the intrinsic merits of the plan which we propose, while my 
 colleague will describe the successful working of the plan in every 
 great and civilized country in the world, except in these United 
 States. 
 
 Year by year, as this country grows older, there is a gradual in- 
 crease in the percentage of the old people in our population. The 
 census of 1910 shows that from 1900 to 1910 the number of people 
 in this country who had reached the age of 65 and over increased 
 869,000, or according to population, an increase of two-tenths per 
 cent. A large number of this steadily increasing class are too poor 
 to provide for themselves. This offers the steadily increasing prob- 
 lem of providing for them. 
 
 There are in "this country 18,000,000 wage earners. There are 
 1,250,000 former wage earners who have reached the age of 65 in 
 want, and are forced to depend upon public and private charity 
 for support. Now, if everyone of these 1,250,000 old age depend- 
 ents had a monthly income to take care of him, there would be no 
 old age poverty. If we could give just such an income to every 
 
8 . ', / University of Texas Debates 
 
 old age dependent,. ij; would certainly be desirable; if we could give 
 this income at a very small cost, it would be more desirable; if we 
 could give this income at no additional cost at all, it would certainly 
 be most desirable. Let us see. 
 
 In an effort to take care of these 1,250,000 former wasre earners 
 who have reached the age of 65 and who are in want, the people 
 of this country are spending annually in nublic and private charity, 
 $220,000,000. Yet, although we are spending enough monev to 
 adequately care for our old-age poor, they are not adequately cared 
 for. Why? Because of the lack of a systematic method for col- 
 lecting and administering the money which is now being spent in a 
 haphazard manner ! Thus we see that this situation exists : We 
 have 1,250,000 old age dependents. We spend enough money to 
 provide for them. But they are not provided for. Why ? Because 
 we have no systematic method for collecting and administering 
 the money which we are spending! Now, ladies and gentlemen, 
 what is it that we propose to do? We simply take the 1.250,000 
 old age dependents we have. We then take the $220,000,000 we 
 are spending. And what we propose to do is to provide a systematic 
 method for collecting and administering this money instead of 
 allowing it to be wasted in the present haphazard manner. 
 
 Can such a plan be worked? Let us see. 
 
 We have 18,000,000 wage earners. We are spending $220,000,- 
 000 to take care of the 1,250,000 wap-e earners who reach old 
 age dependency. But we are spending this money under a 
 very haphazard plan, the administration of which costs a waste- 
 ful per cent of the capital. But we propose to do this: Dividing 
 this $220,000,000 by 18,000,000 wage earners, we find that $12 
 per wage earner must be raised per year. Dividing thig^ $12 per 
 year by 12, we find that $1 per wage earner must be raised per 
 month. Dividing* this $1 per month by three, that is, the part of 
 the premium paid by the government, the employer, and the em- 
 ployee, we find that the monthly premium which must be paid in 
 order to put our plan into successful operation is 33^ cents. Now. 
 how about the cost of administration? Whv even in Germany, the 
 country against which the opponents of our plan complain most 
 bitterlv, the administration only costs 7^ ner cent. So we 
 find that under our plan, the $220,000.000.00 necessary to 
 support the aged poor, can be raised at the small cost of a 
 premium of 33^ cents. Furthermore, under our plan, the admin- 
 istration of this money only costs 7} per cent, whereas, under the 
 present plan the administration of this money costs many times as 
 much. In other words, we simply replace chaos with system. Our 
 
Compulsory Old Age Insurance 9 
 
 plan is not one cent of additional cost. We simply propose that 
 the money we are now spending shall be collected and administered 
 in a systematic manner, instead of the present haphazard manner, 
 in order to save the waste of misdirected expenditure. 
 
 How much better is our plan than the present plan of individual 
 saving ! Under the present plan of individual saving, each laborer 
 must provide all the money which will be needed to care 
 for him in his old age. But only one out of every fourteen ever 
 reaches the age of 65 years, and needs this annuity. Therefore, 
 the present plan is costing the laborers as a class, fourteen times 
 as much as is necessary. To illustrate : Suppose fourteen laborers 
 are serving under the present plan to provide for old age depend- 
 ency. Suppose, for example, $100 apiece will be needed to sup- 
 port those who reach old age dependency. Now we have seen that 
 only one of these fourteen laborers reaches old age dependency. 
 So. while these fourteen laborers must each save $100 apiece, mak- 
 ing a total of $1400 which must be saved, vet only one of them 
 reaches old age dependency, and, therefore, only $100 is needed to 
 provide for old-age dependency of this class of fourteen. So we 
 see that in providing for old age dependency under the plan of 
 individual saving, for every $100 needed, $1400 must be raised. 
 Therefore, under our plan, $1 of savings will go as far as $14 of 
 savings will go under the present plan. Then, since our plan does 
 everything that the present plan of individual saving could do, and 
 only costs one-fourteenth as much, isn't our plan better than the 
 present plan? But granting the merits of our plan, some have 
 questioned the right of the government to make it compulsory. 
 Ladies and gentlemen, the government itself is based ur>on the 
 right of society to control individuals where the welfare of society 
 demands it. Individuals are compelled to pay taxes. Why? 
 Because the welfare of society demands it. Individuals should be 
 compelled to pay the premium on an old-age insurance policy ! 
 Why ? For the same reason that the payment of taxes is compul- 
 sory: Because the welfare of society demands it! Because the 
 rights of the individual are subordinate to the rights of society ! 
 
 But let us see if the compulsory feature we propose is as 
 bad as its opponents would have it seem. Fearing compulsion be- 
 cause of the way it sounds, it opponents say : Let the plan be vol- 
 untary. But a voluntary plan could only succeed* if the laborers 
 would voluntarily take advantage of it. Then, if the laborers 
 will voluntarily take advantage of the plan anyhow, we can do no 
 possible harm by adding a clause which requires them to do so, 
 because you do not affect a man when you require him to do that 
 
10 University of Texas Debates 
 
 which he will do anyhow. Suppose the law which requires men 
 to wear clothes when they go out on the street were to be repealed ! 
 Yet surely we would all wear clothes voluntarily. Then suppose 
 that the next day the law requiring men to wear clothes were to be 
 reenacted ! How much would that affect us ? Not one jot ! 
 Why? Because it would simply require us to do that which we 
 would do anyhow ! 
 
 So, if our opponents attack this compulsory feature, they find 
 themselves in this embarrassing predicament: If the voluntary 
 plan will not succeed, then the system, if adopted at all, must be 
 compulsory. On the other hand, if the voluntary plan will succeed, 
 it must be universally adopted. If it will be universally adopted 
 anyhow, then the addition of a clause requiring it to be adopted 
 will not in fact coerce anybody. 
 
 Now, having seen that the compulsory feature of this plan is 
 not at all the paternalistic bogie its opponents would have von 
 believe, we next naturally inquire : Is the compulsory feature sim- 
 ply a harmless addition, or will its adoption do anv affirmative 
 good ? Even if the experience of other countries had not demon- 
 strated that the compulsory feature is necessary to the successful 
 administration of the plan, the compulsory feature would still be 
 rendered desirable because of the money it will save. Any volun- 
 tary system must be carried on by solicitors. Insurance company 
 statistics show that it costs 40 per cent of the premiums to 
 solicit and collect them. Therefore, any voluntary nlan would 
 cost 40 per cent more than will our plan, which dispenses with 
 the services of these solicitors and collects the insurance through 
 the employers. 
 
 If a voluntary plan, then, would succeed, the addition of a com- 
 pulsory feature could do no harm: since the compulsory feature is 
 necessary to the successful administration of the plan, and, further- 
 more, since the compulsory feature will save to the aged poor 40 
 per cent of their savings which under a voluntary plan they would 
 lose, can any one seriously contend that the compulsory feature 
 is not to be desired ? 
 
 But aside from the good which thus directlv flows from the 
 plan, there is another, I would almost say a greater reason for its 
 adoption. Picture to yourselves the "worn-out toiler, turned from 
 the ranks of the industrial army because he is too old to work. 
 Where does he go when the day of his usefulness is past? Some- 
 times he goes to the poor-house; sometimes he goes to the street- 
 corner to beg; sometimes he goes to the home of some poor son or 
 daughter, where, although he knows there waits the loving wel- 
 
Compulsory Old Age Insurance 11 
 
 corne, he also knows he is too heavy a burden. So the burden~of~ 
 the old man's support falls at last upon the father of a family 
 upon whose shoulders too many burdens already bear down. What 
 is the result? In thousands of cases the children of this family 
 must give up their education and go to work. The burdens 
 must be borne ! The child must help ! 
 
 And of what avail in such cases, let me ask you, are your com- 
 pulsory education and your child labor laws? What can they do 
 when the wolf must be driven from the door? A thing must be 
 possible before it can be done. Give us this system. Give this 
 old man his insurance policy, and let him go to that home not as 
 a burden; it may be as a help. Give the child of this home a 
 chance, and let his footsteps turn from the factory whistle and 
 answer the school bell. Then will you build up a healthy citizen- 
 ship of free Americans ! 
 
 Will you reject this reform, and turn these thousands of chil- 
 dren away from the door of equal opportunity which we Americans 
 love to boast is open to all? Will you reject our plan when we 
 have shown you that there is a steadily growing need for some 
 plan for the care of the aged poor in this country, because the 
 percentage of aged poor among our people is steadily increasing: 
 that our plan makes adequate provision, and without additional 
 cost. beca.use it simply means that the money which we are now 
 spending improperly, shall be spent properly; that our plan i? 
 better than the present plan of individual saving, because our. pi an 
 does everything that the present plan does and onlv costs the 
 laborer one-fourteenth as much; that the compulsory feature is to 
 be desired, because it harms no one, is necessary to the successful 
 administration of the plan, and will save to the aged poor forty 
 per cent of their savings, which under a. voluntary r>lan would 
 have to be paid to solicitors; that it will relieve thousands of 
 families of a burden which will enable the children of these fami- 
 lies to go school. 
 
 It is for these reasons, together with the fact that commilsory 
 old age insurance has been adopted with marked success in every 
 civilized country in the world, except in these United States, that 
 we of the affirmative submit that the plan is necessary, practicnl 
 and just, and should, therefore, be adopted in this country. 
 
12 University of Texas Debates 
 
 FIRST NEGATIVE SPEECH. 
 
 BY GEORGE M. DUPREE, OF CLAIRETTE, TEXAS. 
 
 Mr. Chairman, Ladies and Gentlemen: 
 
 A system of compulsory old-age insurance, administered by a 
 host of Federal officials, reaching out over forty-eight states of 
 diverse interests and different economic conditions, involving the 
 incomes of twenty-five million laborers, in order that a few 
 thousand workmen may become so-called financially independent 
 this is the proposition which the affirmative is called upon to sup- 
 port. It must be understood in the beginning, that the question 
 is not whether this old-age insurance is better than our present 
 conditions, but whether or not such a system recommends itself to 
 the American people as a fixed governmental policy. Do you 
 know, gentlemen, that in Germany under compulsory old-age 
 insurance., pauperism is actually increasing, while in this country, 
 according to government statistics, pauperism is decreasing? Do 
 you know that the countries adopting old-age insurance have made 
 it a mere incident of unemployment, accident, invalidity and other 
 phases of insurance? Do you know that every nation adminis- 
 tering forms of old-age relief has adopted that policy? We of the 
 negative oppose the adoption of such a measure for the following 
 reasons : 
 
 First: The conditions of our society are not such as to war- 
 rant the adoption of the proposed plan. 
 
 Second: A system of compulsory old-age insurance admin- 
 istered by the Federal Government is inexpedient. 
 
 Third : A system of compulsory old-age insurance administered 
 by the Federal Government is impracticable, and, 
 
 Fourth : A consideration of the evils that would arise from the 
 administration of such a system does not recommend its adoption 
 as a desirable remedial measure. 
 
 It is my purpose to show that this system is unnecessary and 
 inexpedient. My colleague will show that such a system is im- 
 practicable and undesirable. 
 
 The supporters of compulsory old-age insurance must show 
 that the conditions are such as to warrant the adoption of this 
 system in the United States. They must show that the proposed 
 plan is in conformity with American customs and ideas, and that 
 such a measure, considering the social forces now at work, will 
 solve the problem of old-age dependency in an expedient, desirable 
 
Compulsory Old Age Insurance 13 
 
 and practicable manner. We wish to provide for such denendents^ 
 but it does not necessarily follow that we should adopt the plan 
 proposed by the opposition. Let us investigate the necessity for 
 adopting any such plan. 
 
 The American laborer is not to be compared with those of other 
 nations. He has a social standing, a force of organization behind 
 him, and. the individual influence of social welfare of which no 
 other nation can boast. Our dependent workmen are now cared 
 for by mediums of support based upon our peculiar economic con- 
 ditions and American means of relief, mediums direct in their 
 nature, relieving the individual laborer according to local condi- 
 tions. 
 
 An organization characteristic of our American methods is the 
 United Charities. This agency, though still in its infancy, is the 
 real basis for the solving of our poverty problem without resort 
 to a plan not in conformity to our American ideas and customs, 
 a medium having for its aim the better conditions of the poor 
 and for its basis the solving of social diseases by trained students 
 of such conditions. Whatever its faults may be, there will be 
 remedies in the future, for the American laborer is vitallv inter- 
 ested in this question. The purpose of the American mediums 
 is to allow individual responsibility, to furnish the motive for 
 encouraging the laborer to provide for his future welfare, and 
 when he fails, to extend to him the needed aid. 
 
 But aside from the gigantic social forces which, when estab- 
 lished, will alleviate our old-age problem in accordance with our 
 local conditions and industries, there are certain fundamental 
 objections to the expediency of the proposed measure. The opposi- 
 tion wish to impose this Federal system without regard to our 
 diverse interests and different economic conditions. France, Den- 
 mark, Australia, England and other nations have adopted forms 
 of old-age insurance, but did they adopt the insurance policy 
 which Germany administers? No, they have adopted policies 
 peculiar to their own economic conditions and industrial labor. 
 Germany, a manufacturing nation, adopted her insurance to meet 
 the needs of such a class of workmen. Denmark, a dairying cen- 
 ter, has conformed her insurance to meet the needs of this class; 
 Australia, an agricultural country, has adopted a svstem to pro- 
 vide for this principal class of laborers; England a manufacturing 
 and commercial nation, has provided a medium to meet the needs 
 of that larger class of workmen. Those nations with mining as a 
 principal industry must conform their insurance to meet that 
 
14 University of Texas Debates 
 
 particular class of employees. Texas represents a greater diversity 
 of interests and conditions than all Germany. New Jersey is 
 closely allied to Denmark in the conditions of its labor problem; 
 Kentucky or any of our agricultural and stock-raising states pre- 
 sents economic conditions of labor much resembling those of Aus- 
 tralia; the New England States presents the manufacturing and 
 commercial interests that are to be found in Great Britain. Yet 
 the opposition propose a Federal system operating uniformly in the 
 agricultural, manufacturing, the dairying and the mining sections 
 of the United States! They suggest a scheme which proposes to 
 unite the labor conditions of Germany, Denmark, Australia and 
 England all of which exist in the United States under one 
 iron-clad system of insurance, while each of these countries has 
 found it expedient to adopt that insurance policy best suited to 
 their labor interests. 
 
 But the greatest evils of the Federal compulsory old-age insur- 
 ance system are not that it is unnecessary, nor that it is incapable 
 of adapting itself to varying economic social conditions, but its 
 greatest objection is to be found in the complexity which is inher- 
 ent in the administration of such a law, Germany, after a practi- 
 cal experiment of twenty-five years under the most favorable condi- 
 tions, is confronted with these three indictments by Mr. Frieden- 
 burg, an organizer of the system, and for years President of the 
 Imperial Commission. He says, first, that the state insurance, 
 specifically designed to replace pauperism and charity, is itself 
 merely pauperism under another form ; second, that the system has 
 fostered to an incredible extent the German evil of Bureaucratic 
 formation, for, seemingly sound in theory, it has become a burden 
 to the German nation on account of its complex and intricate 
 administrative machinery; and third, that the whole system has 
 become a hot-bed of fraud and corruption, and, therefore, a 
 source of demoralizing influences. 
 
 Compare, if you p]ease, the facilities for administering such a 
 law in Germany with the facilities that exist in this country, and 
 yon can not help but see that the evils which have developed in 
 that military nation, used to the rule of an iron hand, would 
 be augmented in this country one hundred fold. Consider for 
 a moment the fact of a Federal system of commilsory insurance 
 reaching out over forty-eight states of which Texas alone has 
 more varied economic conditions and a wider range of industries 
 and population than the entire German Empire. Consider the 
 vast amount of clerical work required for the weekly assessment 
 
Compulsory Old Age Insurance 15 
 
 scheme; the hoard of collectors, inspectors, committees, bureaus, 
 and courts required for the administration of the plan. Consider 
 the opportunity offered for political pull, for the corruption of 
 officials, and I believe that you will realize the expediency of 
 rejecting such a measure as is proposed. On the dockets of the 
 German Courts to-night there are four hundred thousand insurance 
 cases demanding .adjudication, and although the assessments 
 against the employers have constantly increased, the cry of the 
 masses on the one hand is still heard that "Capital is the oppressor 
 of labor. We demand a fair division of the profits of industry." 
 On the other hand, we hear the quiet warning voice of the ?tudent 
 of political economy, and the admonition of the patriot, that "The 
 moral fibre of the people is weakening, and the spirit of class hatred 
 is becoming more intense." So great has become the complexity 
 of the German system, so numerous the evils arising under the 
 administration of the law, that students have been led to character- 
 ize this scheme as "the cancer which is destroying the vitals of our 
 country." 
 
 Now, ladies and gentlemen, if there exists in the United States 
 to-day these great remedial agencies to which your attention has 
 been directed, and which promise to effect a desirable solution of 
 this problem in the future, in conformity with American methods 
 and customs, then the plan of the affirmative is wholly unnecessary. 
 That the plan of a compulsory old-age insurance system in this 
 country is inexpedient may readily be seen when one takes into con- 
 sideration our diverse interests and varied economic conditions, 
 our different standards of living and wages paid to American 
 laborers, and finally, the plan is inexpedient because of its com- 
 plexity of administration and its effect upon individual character. 
 If my colleague can show that it is both impracticable in admin- 
 istration and undesirable in its effects upon the individual and 
 upon our citizenship in general, then we ask you to reject a system 
 which is not onlv incompatible with our varied economic conditions, 
 but foreign to the social tendencies of our country, to the charac- 
 teristics of our citizenship, and to the policies of our government. 
 
 S-ECOND AFFIRMATIVE SPEECH. 
 
 BY DOUGLAS TOMLINSON", OF HILLSBORO, TEXAS. 
 
 The most accurate insurance statistics show that for everv one 
 thousand persons living at the age of twentv, five hundred will be 
 living at the age of sixty- five, and two hundred of these will be 
 
16 University of Texas Debates 
 
 in poverty and want. There are in this country to-day 1/250,000 
 human beings with human flesh and blood and hearts who are 
 suffering the miseries of old-age poverty, too old to work any more, 
 begging or dependent. 
 
 My colleague has shown in dollars and cents that these aged 
 poor can be cared for under our plan without additional cost what- 
 ever, because our plan replaces the present unorganized wasteful- 
 ness with an efficient system. Our plan will solve the problem. 
 
 All other plans are admitted make-shifts. No other plan in the 
 history of the world has ever pretended to solve the problem of old- 
 age dependency. In the history of mankind, only three other gen- 
 eral plans have ever been offered : first, pensions or insurance by pri- 
 vate corporations like the Steel Trust; second, Free Government 
 Pensions; and third, Voluntary instead of Compulsory Govern- 
 ment Insurance. 
 
 Of these three plans, pensions for aged employees by private cor- 
 porations is the worst, because many corporations use the scheme 
 not so much to provide for their aged employees as to add to the 
 company's profit. For example, the Cambria Steel Company 
 makes a profit of $11,822 a year from their philanthropic old-age 
 pension department. Further, old-age insurance for employees 
 by private corporations prevents mobility of labor. The laborer 
 must stay with his one company continuously for from fifteen to 
 forty years in order to get his insurance; he must stay with his 
 company no matter if labor is little needed there and great indus- 
 tries are crippled for lack of labor elsewhere; if the laborer is dis- 
 charged or quits he loses his old-age pension forever; he is tied 
 to the one company, regardless of sanitary conditions, regardless 
 of the kind of work to which he may be shifted ; he becomes a kind 
 of chattel of the company, especially during his declining years, 
 because if he leaves their service he can never hope for an old-age 
 pension. In brief, insurance or pensions for a^ed emplovees by 
 private corporations would tend to reduce free American laborers 
 to the position of the serfs of the Middle A,ges. Old-age pensions 
 by private corporations adds to the profits of the corporations, but 
 from a social standpoint this plan is a bitter failure. 
 
 Free Government Pensions is the second plan. In this country 
 we know what a pension system means; it means freelv voting 
 money out of the government treasury into the individual pocket. 
 To relieve old-age dependency we would have to give a free pension 
 to every needy and deserving old person of the nation. Our oppo- 
 nents can not defend such a system for this country because the cost 
 would be prohibitive, and because our experience with military pen- 
 
Compulsory Old Age Insurance 17 
 
 sions shows, to speak plainly,, that many congressmen buy vote 
 with pension money. Fifty years removed from any serious war, 
 we are spending more than $158,000,000 a year in pensioning 
 mostly "old soldiers" who never .smelled gunpowder. Why? 
 Because they vote for the man who will vote them the money. 
 Xow, adopt the universal policy of voting monev out of the gov- 
 ernment treasury into the individual pockets of all aged persons, 
 and there is before each politician and each party the constant 
 temptation to attract votes by offering larger pensions to each per- 
 son, and by lowering the age limit offering free pensions to larger 
 numbers of people. The fact that many congressmen do not vote 
 against excessive military pensions when only the old soldier vote 
 is involved shows the danger of beginning the universal pension 
 policy involving all voters. Our opponents will not defend such a 
 system unless,like drowning men, they catch at a straw. Our plan 
 of insurance guards against this danger by making each person 
 help to pay through early life for the annuity he is to get in old 
 age; thus there is no temptation to the laborer to vote for a larger 
 annuity that he needs for his own protection, because he himself 
 has to help pay for it during long years before he can expect the 
 benefits. England tried the old-age pension system for four years 
 and gave it up to adopt our plan of compulsory insurance. The 
 free old-age pension system is a failure. 
 
 For relieving old-age poverty, only one other plan has been tried 
 in the history of civilization. The third plan is that of voluntary 
 rather than compulsory old-age insurance by the government: 
 offer old-age insurance to all, just as under our plan, but do not 
 require the laborer to take advantage of it; let him take advantage 
 of it voluntarily. This plan looks so good on its face that every 
 nation has tried it first, but each nation has in time abandoned the 
 voluntary plan to accept our compulsory plan. The reason is clear. 
 
 Under the leadership of Gladstone, England adopted the plan 
 of voluntary old-age insurance by the government in 1864. Prac- 
 tically no one took advantage of it. In 1872 an expert committee 
 was appointed to revise the plan, another expert committee again 
 revised the plan in 1892. England tried every variety of volun- 
 tary old-age insurance, and in all the forty years literally did not 
 write as much insurance as the London Prudential writes in ten 
 days. France and Denmark had the same experience, and dropped 
 voluntary old-age insurance to accept our plan of compulsory insur- 
 ance. 
 
 Massachusetts has recently inaugurated the voluntary insurance 
 
18 University of Texas Debates 
 
 system a.nd has issued only fifty-six old-age policies. Wisconsin 
 adopted the voluntary system and, at the last report I could get, 
 so few applications for insurance had come in that their bureau had 
 not even begun to issue policies. Canada tried the voluntary plan, 
 sent broadcast over the Dominion their advertisement bulletin 
 on "Comfort in Old Age." Canada has issued two hundred and 
 forty-four policies. Voluntary old-age insurance is a failure. 
 
 The system of pensions by private corporations is a failure; the 
 system of free government pensions is a failure ; the system of vol- 
 untary old-age insurance is a failure. 
 
 On the other hand, our plan of Compulsorv Old-A^e Insurance 
 is succeeding in every great civilized country in the world except 
 our own. Germany adopted it in 1889. Everv laborer whose 
 income was below $476 was required to take out old age insurance, 
 the cost being divided between the laborer, the employer, and the 
 government. This was the experiment of 1889 ; if it had been a 
 failure, the whole scheme would have been repealed long ago; if 
 it had been only a moderate success it might merelv have been con- 
 tinued, in operation without extending its SCOT>P but the nlan of 
 compulsorv old-aere insurance has proven so universallv satisfactory 
 that it has been constantly extended. Tn 1899 it included all labor- 
 ers whose incomes are $1250 a year, almost three times as much as 
 it was at first. 
 
 The plan we propose is succeeding in Germany. No political 
 party in Germany, no great economist or sociologist in Germany 
 now advocates the repeal of the law. Their management is so 
 efficient that it costs only ?'J per cent for litigation ; the remaining 
 91-J- per cent goes directly to the benefit of the insured. 
 
 Dr. Paul Kaufman, President of the German Imperial Insurance 
 Department, says: "The successful handling of the labor prob- 
 lem by means of social insurance is one of the strongest factor? 
 in Germany's constantly growing industrial progress." Dr 
 Spieckler says: "We have secured higher efficiency in our industries 
 due to the increased worker's efficiency, all brought about by reliev- 
 ing our workers from worry and distress" for .the future. 
 
 Under this plan for increasing the efficiency of their laborers 
 Germany has advanced from fourth to second place in the world's 
 trade; the property of her people has doubled in value; there are 
 18.000,000 savings banks' accounts; wages have risen on the average 
 for unskilled workmen about twenty-five per cent, for skilled work- 
 men about fifty per cent, and in certain trades even one hundred 
 per cent; there are fewer unemployed in Germany than in any 
 
Compulsory Old Age Insurance 19 
 
 other nation in the world; the death rate has considerably dimin- 
 ished; the length of life has risen from 38'.1 years to 48.8 .years. 
 Germany is satisfied with the plan we propose. 
 
 These facts impressed England so strongly that the Trades Con- 
 gress of Great Britain sent a commission to study the German 
 situation. This commission officially reported back that there 
 were literally no slums in Germany. Then England adopted a 
 compulsory old-age insurance system. The law went into effect 
 on July 13, 1912. England's method of administration is simple 
 and efficient. Each laborer is given an insurance card; at the 
 end of the week he carries this card to his employer who affixes 
 to it an 8 cent insurance stamp; the laborer then carries this card 
 to the postoffice, gets his credit, and the postmaster forwards the 
 card to the Central Bureau. 
 
 England, after studying and experimenting with every known 
 system for relieving old-age poverty, at last adopted the plan of 
 compulsory old-age insurance which we of the affirmative offer 
 to-night. The Liberal party in England passed their compulsory 
 old-age insurance law; the conservative party no longer declares 
 against it; the Labor Party through its leader, Mr. Eamsey Mac- 
 Donald, has officially -declared in favor of it. England is satisfied 
 with the plan we propose. 
 
 France began experimenting in 1850, and by 1910 reached the 
 goal at which all nations ultimately arrive Compulsory Old-Age 
 Insurance. All whose incomes are $600 a year or less are 
 required to insure, the government paying a liberal part of the 
 cost. The French system has one especially noteworthy provision 
 for encouraging thrift. The laborer may contribute a larger pre- 
 mium than is required, and so by his own foresight and saving pro- 
 vide for himself a larger annuity on reaching the pension period. 
 France is satisfied with the plan we propose. 
 
 Without going into the detailed system of other countries, it 
 is sufficient to say that the experts of all European nations assem- 
 bled at Rome in 1908 and again at The Hague in 1910, and both 
 conferences declared officially that compulsory insurance was the 
 best and most efficient means of solving the problem of old-age 
 dependency. 
 
 Germany says compulsory old-age insurance is a good thing: 
 our opponents tell Germany that she is mistaken, that the system 
 is bad. Denmark says compulsory old-age insurance is good; our 
 opponents say it is bad. France says old-age insurance is good; 
 our opponents still insist it is bad. England affirms that compul- 
 sory old-age insurance is good; our opponents waxed mighty in 
 
20 University of Texas Delates 
 
 stature and wisdom deny it. The experts of all of the nations in 
 Europe in conference twice declare that the combined experience 
 of their .nations has shown that compulsory old-age insurance is 
 the best solution of the problem. 
 
 Our opponents can escape this overwhelming testimony only bv 
 saying that their theories overturn all of the facts of Europe ; that 
 in the interpretation of these facts they themselves are wiser than 
 the World's congress of experts! That would be mighty hard 
 on these experts, but I guess they could stand it. 
 
 Our affirmative case rests upon this rock: I have shown that 
 every other plan that has ever been tried has failed; the nations 
 one by one have abandoned them to take up our plan ; our svstem 
 . has never failed anywhere ; no nation having ever adopted old-age 
 insurance has ever abandoned the policy, but on the other hand each 
 has constantly extended the scope of its operations; my colleague 
 has shown that our plan can be adopted in the United States and 
 will care for old-age dependents without adding one penny to the 
 annual $220.000.000 we are at present spending ineffectively for the 
 purpose, because our plan will substitute a system for present 
 unorganized wastefulness. 
 
 Every other plan has failed ; our plan has alwavs succeeded ; hence 
 our opponents are driven either to accept our proposed commileory 
 old-age insurance or to defend the barbaric policy of making no 
 provision whatever for old-age poverty. Dr. Eeinhart, a mission- 
 ary, discovered one wild heathen tribe in the far interior of Thibet 
 whose custom it was to drive their useless aged from the tents to 
 the wilderness to starve. Are the gentlemen on the negative will- 
 ing to say that society in America should be allowed to cast off its 
 aged poor to starve ? 
 
 Honorable Judges, upon this Gibraltar we rest our case: every 
 other plan has failed ; our plan of Compulsory Old-A^e Insurance 
 has always succeeded, and it can be adopted in this country with no 
 additional cost, 
 
 SECOND NEGATIVE SPEECH. 
 
 BY CHARLES I. FRANCIS, OF DENTON, TEXAS. 
 
 Mr. Chairman, Ladies and Gentlemen: 
 
 My colleague has shown that the adoption of a compulsory old- 
 age insurance law by the Federal government is unnecessary and 
 inexpedient; unnecessary, in that there are now at work on the 
 
Compulsory Old Age Insurance 21 
 
 problem certain gigantic forces which will in the "end effect _a . 
 desirable solution; inexpedient, in that 'our varied economic 
 resources and peculiar Federal form of government preclude an 
 effective administration of the system. He has pointed out that 
 the inherent complexity of the proposed measure will destroy what- 
 ever benefits might theoretically be expected to result from the 
 adoption of the plan; and he has shown that a compulsory insur- 
 ance law is unsuited to the individualistic sentiments and ideals 
 of the American people. 
 
 The opposition in their constructive argument have said that 
 old-age poverty is due fundamentally to our unfair industrial sys- 
 tem, together with the naturally improvident character of the 
 average workman, and that the only way that this condition can be 
 remedied is through the agency of a compulsory old-age insurance 
 law. Gentlemen, we are constrained to take issue with the affirma- 
 tive in the very premise upon which their entire argument is 
 founded. If the average workman is improvident of the future, 
 can compulsion remedy this defect of character ? Just as the mus- 
 cles of the body are not strengthened but rather weakened bv inac- 
 tivity and idleness, so are self-reliance and independence taught 
 only by the exercise of these qualities. We are, therefore, unable to 
 discern how governmental paternalism can ever instill these quali- 
 ties in the American laborer, of the lack of which the affirmative 
 complain. NOT can we understand how in the face of modern 
 investigation and research, the opposition can contend that poverty 
 is due to the unfairness of our economic system. We contend that 
 it is due primarily to social and not to economic causes. 
 To illustrate my meaning: Prof. Divine of Columbia University 
 says, <r We have too long been paying for the effects of our social 
 diseases without trying to remedy their causes, and the social condi- 
 tions of the American people demand that we must remedy these 
 causes instead of year by year paying for our industrial defects." 
 Germany has instituted an old-age insurance plan, and yet accord- 
 ing to the statement of Dr. Friedenburg, former President of the 
 Imperial Insurance Commission, and according to Henrv W. Far- 
 num and Dr. Emil Munsterburg, leading European authorities, 
 poverty has increased at a remarkable rate since the inauguration 
 of the plan. Our own country has had no such Federal insurance 
 plan, yet according to our census reports, poverty decreased, during 
 the period from 1890 to 1903, 15.1 persons for every 100,000, and 
 during the period from 1903 to 1910 it decreased to 8.8 persons 
 per 100,000; during the past thirty-three years it has decreased 
 30.6 persons per 100,000 of population; an increase in poverty 
 
22 University of Texas Debates 
 
 under a compulsory insurance system in Germany and a decrease 
 in poverty in this country where no such system exists. Germany 
 has tried to solve the problem by a spurious law of compulsory 
 insurance; it has pursued the policy of paying year by year 
 for its industrial defects. Our country has in a small way 
 pursued the policy of removing the causes which give rise to 
 poverty. The German plan has failed. Our own plan has suc- 
 ceeded in a measure. Then which, ladies and gentlemen, 
 should be the future policy of our county? Furthermore, ac- 
 cording to the statement of Dr. Friedenburg and Herr Zahns, 
 Germany expends more today in proportion to its population on 
 charity and out-door relief than it did before the inauguration of 
 the Federal Insurance System. Herr Zahns, a leading German 
 authority formerly connected with the administration of the insur- 
 ance law, after a research covering the years 1909-1910, has pub- 
 lished the following statement: "In reality the poor expenditure 
 both as regards the number of beneficiaries and as regards the 
 number of individual allowances, has almost everywhere increased." 
 Dr. Friedenburg further says : "As to the promise to kill pauper- 
 ism, it is remarkable how little of that promise is heard to-day." 
 Germany thus bears a double burden the burden of charity, 
 administered by poor relief societies and charitable organizations, 
 and the burden of Federal insurance, paid in a large part by the 
 laboring classes who are least able to bear the burden. In this 
 country, we have but one burden the burden of charity which 
 is paid by that portion of society which is financially able to make 
 such a contribution. Year by year, according to the United States 
 census reports, this burden of our country is decreasing, while both 
 the burden of insurance and the burden of charity are increasing 
 in the German Empire. 
 
 Modern society is confronted with the great problem of the 
 ?ocial evil. Shall we allow the conditions producing this evil to 
 .continue, and seek to make amends to the victims by a money pay- 
 ment? Yet, speaking comparatively, this is what the opposition 
 proposes; this is what the above statistics show that Germany has 
 done, merely continued that social system which produces the 
 abnormal condition of poverty, and hence has failed to find a rem- 
 edy for the causes of its social disease. The result has been 
 additional burden of insurance plus the increasing burden of 
 charity. 
 
 An analysis of the debate up to this point, shows the following 
 status: The affirmative says (forgetting the experience of Ger- 
 
Compulsory Old Age Insurance 23 
 
 many), "Our industrial system is wrong; it produces old-age 
 poverty; remedy it by each year paying the price of your negli- 
 gence and incompetence." The negative says: "Poverty is due 
 primarily to social conditions; remedy the evil by eradication of 
 the fundamental causes." The affirmative says : "The American 
 laborer is incompetent and incapable; hence compulsion is neces- 
 sary." The negative says : "The incompetence and incapacity of 
 the American laborer is not inherent, as the British investigation 
 committee said, but due to disease, lack of education, mental and 
 physical inabilities; and the paths of reform must follow the lines 
 of industrial education ; the passage of fundamental social laws for 
 the able, such as Workmen^ Compensation, Minimum Wage, and 
 Child Labor Laws ; and finally, scientific and organized charity 
 must provide for that portion of society which has become depend- 
 ent upon the state." 
 
 But passing by the experience of Germany, and disregarding the 
 opinions of our leading economists voiced by the President of 
 Wisconsin "[University when he said : "Did we but apply the agen- 
 cies which we have at hand, we would solve within two genera- 
 tions the great social problems that confront our nation." let UB pre- 
 sume that the American people desire this compulsory insurance 
 law even though it does not reach the fundamental causes of pov- 
 erty. What difficulties would we encounter in the practical admin- 
 istration of the law? 
 
 Society would be divided into two great classes: those com- 
 pelled by law to provide for old age through a system of insurance ; 
 and those who are exempt from such provision, inasmuch as their 
 wages exceed the minimum required by the government. Statis- 
 tics will hardly warrant such a division, for proportionately just 
 as many lawyers, just as many ministers, just as many merchants 
 become paupers as industrial laborers. So any system of compul- 
 sory insurance must fail in its purpose of preventing old-age pau- 
 perism among the uninsured classes, and such classes in this coun- 
 try would amount to more than 65 per cent of the entire population. 
 But the classes subject to such a law mind you, representing but 
 35 per cent of our population may also be diivded into two classes : 
 (1) Our industrial classes representing those whose employment 
 is steady and whose incomes are fairly regular, and (2) the great 
 army of the irregularly employed whose wages constantly vary 
 from month to month, such as carpenters, masons, contract work- 
 ers, agricultural laborers, seamstresses, house-servants, wash- 
 women, and so forth. 
 
24 University of Texas Debates 
 
 The former class, our industrial laborers, according to the United 
 States census, represents 24 per cent of the laboring classes; the 
 latter class, those irregularly employed, represents approximately 
 76 per cent. In the case of the 24 per cent, a system of compulsory 
 insurance might be administered by compelling the employer to 
 deduct from the salary of the employe the amount of the weekly 
 assessment. But in the case of 76 per cent of the wage earners, 
 the irregularly employed, no assessment could be made by the 
 stoppage-at-the-source plan, for their wages are uncertain, varying 
 from month to month, and the wage-earner has no certain employer 
 for any considerable length of time. So any system of compul- 
 sory insurance must fail in its purpose of preventing old-age pau- 
 perism in the great army of the irregularly employed, and it is 
 from the latter class, as Frederick I. Hoffman says, "that the 
 majority of old-age dependent paupers come." Now, of this indus- 
 trial class representing but 24 per cent of our wage earners (not 
 of our population, mind you), what proportion will ever reap the 
 benefit of an insurance policy? Reliable statistics, found in the 
 1910 census reports, shows that only one man out of every twenty- 
 five reaches the age of 65 years, the lowest age at which a paid-up 
 policy could possibly be granted. Then of the 24 per cent of the 
 laboring class, who have a potential possibility of receiving a paid- 
 up policy, only one out of every twenty-five will reach the minimum 
 age limit. The other twenty-four will pay for the one, and will 
 realize no benefit whatever from the thousands of assessments which 
 they have been forced to pay to the Federal government. Gen- 
 tlemen of the affirmative, is this the 'equitable system for which you 
 plead ? Do you mean to say that you will attempt to assess the 
 salaries of twenty-five million laborers for the benefit of such a 
 small per cent of our population? When of this small, per cent 
 three out of ever four are independent of all forms of charity? 
 You propose to institute a gigantic system of insurance in order to 
 remedy old-age poverty, when such a system could not possibly 
 benefit more than one-half of 1 per cent of our population. Then 
 it is unreasonable to suppose that the system will succeed in its 
 primary purpose. 
 
 To summarize my second point: Our government under the 
 proposed plan will purpose to reach but 35 per cent of our popula- 
 tion, the other 65 per cent being exempt; of this 35 per cent only 
 the industrial class, amounting to but 24 per cent of the wage earn- 
 ers, can be reached, as the other 76 per cent are irregularly em- 
 ployed; of the 24 per cent only one out of every twenty-five will 
 
Compulsory Old Age, Insurance 25 
 
 ever receive any return on his investment, and to those whom aid 
 is given, a large majority will have no need for such aid. We con- 
 tend that the results do not justify the means. 
 
 My colleague has discussed the great complexity attendant upon 
 the administration of a Federal Insurance System; in Germany 
 so complex and intricate has it become that practically everv bene- 
 fit expected by its supporters has failed to materialize. Join to 
 the inherent complexity of the scheme the fact that it fails 'to reach 
 the fundamental causes of poverty, and benefits only such a small 
 per cent of our population, and it will readily be seen that the 
 system is impracticable in administration. 
 
 In 1884 Bismarck, Chancellor of the German Empire, when 
 asked his reason for proposing and supporting a social insurance 
 policy, said : "Because it will be an inoculation against socialism, 
 the power of which, although detrimental to the empire, is steadily 
 increasing." When Bismarck made that statement the influence 
 of the Social Democrats in governmental affairs was practically 
 negligible; in 1872 they cast a vote of 125,000. In the election of 
 1912 their candidates received a plurality of 3,000,000 votes, the 
 Socialist vote amounting to 7,500,000 out of a total vote of approxi- 
 mately 12,000,000. The platform of the party is "the destruction 
 of capitalism, and the inauguration of a state monopoly of the 
 production and distribution of goods." 
 
 Social insurance but added fuel to the flames of Socialistic ideas ; 
 the lines of class cleavage have become clearly more marked; and 
 the people clamor for a greater degree of protection from the state. 
 Politically America, knows no servile class; if it is ever created 
 through a system of compulsory insurance, we will have no Bun- 
 desrath as in Germany, to defeat the will of the popular assembly. 
 To illustrate: To-day in the United States no political party 
 dares to favor a reduction of the pension system, and as a conse- 
 quence, though fifty years removed from any serious war, we have 
 a pension list the largest in the history of our country, and con- 
 stantly increasing through popular demand. Just so under an 
 insurance system, in order to curry popular favor, our parties would 
 be forced to favor an increase in the assessments against employers, 
 a lowering of the age limit, and more extended privileges to the 
 masses. We of the negative hesitate to favor the adoption of a 
 system which experience shows will become entangled in politics, 
 where fraud and corruption will creep in, and by which the dema- 
 gogues may appeal to the feelings and interests of the insured. 
 
 Whereas my colleague has shown that the proposed measure is 
 
26 University of Texas Debates 
 
 unnecessary and inexpedient, that it is inherently complex and 
 incompatible with American sentiments,, institutions and ideals, it 
 has been my purpose to prove that the law does not reach the funda- 
 mental causes of poverty ; that whatever benefits might theoreticallv 
 be expected from the system, the practical results do not justify 
 the measure in that such a few would reap the benefit of the law, for 
 it does not include within its scope the welfare of the uninsured 
 classes, amounting to 65 per cent of our population; it does not 
 include the great army of the irregularly unemployed, amounting to 
 76 per cent of the wage-earners, and it will be of no benefit to those 
 who do not attain the minimum age limit; joined to these defect? 
 is the fact that complexity arising from the administration of the 
 law would be seriously detrimental to, and perhaps destructive of, 
 the efficiency of the scheme: that the system would become entan- 
 gled in political alliances, would encourage class hatred, and fos- 
 ter the tenets of Socialism. For these reasons we ask the rejection 
 of a compulsory system of old-age insurance administered uniformly 
 by the Federal Government. 
 
 BIBLIOGRAPHY. 
 
 BOOKS AND PAMPHLETS. 
 
 Australia. Attorney General. Old Age Pensions. Published 
 for the Government of Australia by J. Kemp, 1908. 
 
 Adams and Sumner, Labor Problems. 
 
 Boyd's Compilation of Insurance Laws, 1912. 
 
 Canada. Parliament, 1906-1907. Senate Old Age Annuities. 
 Ottawa, Govt. Printing Bureau, 1907. 
 
 Devine, Edwin T. Misery and Its Causes. 
 
 Dryden, John F. A Method of Providing With Certainty for 
 Dependent Old Age. American Underwriter, 19'08. 
 
 Dr. Friedenburg^s Criticism of German System of Social Insur- 
 ance. 
 
 Eberfield, System of Charity. German Government document. 
 
 Frederick A. Ogg. The Governments of Europe. The Macmil- 
 lan Co., 1913. Social Progress in Contemporary Europe. Gives 
 status of insurance in various European countries. 
 
 Henderson, Charles R. Introduction to studv of dependent, de- 
 fective, and delinquent classes and of their social treatment. Bos- 
 ton, D. C. Heath & Co. 
 
 Henderson, Charles R. Modern Methods of Charity. The Mac- 
 millan Co. The Social S<pirit in America. 
 
Compulsory Old Age Insurance 27 
 
 .Hoffman,, Frederick L. Paper read before Board of United. 
 Charities. In Eeport of United Charities Association, 1908. 
 Also American Journal of Sociology, September, 1908, Social In- 
 surance. 
 
 Investigation of Imperial Insurance Commission of New South 
 Wales. Government Document of New South Wales. 
 
 Great Britain, Laws, Statutes, Etc., 1912. Insurance Act, by 
 William A. Casson. London. C. Knight & Co., 1908. 
 
 Massachusetts Commission on Old Age Pensions. Report. 1907. 
 Boston, 1907. 500 pp. 
 
 Missouri University Bulletin by Dr. Charles Ellwood. Alms- 
 house Statistics. 
 
 Murray, London J. The Manufacturer of Paupers : a Protest 
 and a Policy. 1906. 
 
 Nearing. Scott. Social Adjustment. 
 
 Proceedings of National Conference of Charities and Correction. 
 Papers by C. E. Henderson, E. A. Vanderlip, Frank A. Fetter. 
 
 Report of British Investigation Committee. British Govern- 
 ment. 
 
 Report of Imperial Insurance Commission of Germany. Govern- 
 ment Document of German Empire. 
 
 Report of Massachusetts Investigating Committee. Bureau of 
 Statistics of Massachusetts. 
 
 Seager, Social Insurance. A Program of Social Reofrm. The 
 Macmillan Co., 1910. 
 
 Squier, Lee Welling. Old Age Dependency in the United States, 
 The Macmillan Co., 1912. 
 
 United States Census Reports for 1900 and 1910. 
 
 Workmen's Insurance and Compensation Svstems in Europe. 
 Annual Report of U. S. Commissioner of Labor, 1909. Govern- 
 ment Printing Office, Washington. 
 
 PERIODICALS. 
 
 Affirmative References. 
 
 Amer. Jour. Soc., vol. 17, 177-87. Atlantic Mo., vol. 108, p. 
 105. Econ. Jour., vol. 9, pp. 520-40. Independent, vol. 61, pp. 
 705-6; vol. 64, pp. 1103-4; vol. 65, p. 175. Contemp. Rev., vol. 93, 
 pp. 94-107. Scribner^s Mag., vol. 37, pp. 454-67. Survey, Janu- 
 ary 20, 1912, p. 1622. World's Work, vol. 3, p. 2019. Rev. of 
 R's, vol. 27, pp. 84-5. Harper's Mag., vol. 119, pp. 727-34. Fortn. 
 
28 University of Texas Delates 
 
 Rev., Jan. 20, 1912, pp. 40-59. Forum, vol. 40, pp. 569-76. 19th 
 Century, vol. 69, pp. 1141-56. Pol. Sci. Q., vol. 26, p. 500. 
 
 Negative References. 
 
 Rev. of R's, vol. 38, p. 746. Arena, vol. 23, pp. 635-46. Forum, 
 vol. 28, pp. 287-700; vol. 68, p. 187. Nation, vol. 69, p. 146; vol. 
 82, p. 96. 19th Century, vol. 30, p. 380 ; vol. 4-5, p. 681 ; vol. 68, pp. 
 957-74. No. Airier. Rev., Jan. 1912, pp. 108-19. Westin. Rev., 
 vol. 176, pp. 209-14. Atlantic Mo., vol. 108, pp. 105-9. Econ. 
 Rev.; July, 1892. Blackwood's Magazine, Jan., 1912, pp. 147-54, 
 Outlook, vol. 30, p. 1911. 
 
Banking and Currency Reform 29 
 
 BANKING AND CURRENCY REFORM. 
 
 FIRST AFFIRMATIVE SPEECH. 
 
 BY THEODOKE A. GATCHELL, OF AUSTIN, TEXAS. 
 
 Ladies and Gentlemen: 
 
 The subject under discussion this evening is, Resolved, That tJie 
 Plan for a National Reserve Association as Proposed by the U. S. 
 Monetary Commission Offers a Desirable Remedy for the Defects 
 of Our Present Banking and Currency Systems. 
 
 Our present monetary system arose at the time of the Civil War, 
 and it was formed for the purpose of furnishing a market for 
 U. S. Bonds on which the war was financed, and to secure a safe 
 currency system. But as President Wilson points out, in endeavor- 
 ing to secure safety we sacrifice flexibility, so that to-day we have 
 neither the one nor the other. To-day,, therefore, we have simply 
 a bond-secured currency as contradistinguished from asset currency, 
 with the result that the amount of bank notes in circulation is not 
 based on the business demands but solely upon the amount of bonds 
 which are issued. For example, if the Panama Canal is to be 
 built, we must necessarily have an extra amount of bonds, and 
 therefore in addition an entirely superfluous issuance of bank notes. 
 Is it within reason to suppose that if a lock canal costs fifty million? 
 more than a sea level canal, we should have fifty million dollar? 
 additional of bank notes in circulation? So, the changes in the 
 price of bonds and not the business demands, is the sole factor 
 which determines the amount of notes in circulation to-dav under 
 our present currencv system. 
 
 The most vital defects of the system, therefore, may be enum- 
 erated as follows: first, the inelasticity of currency; second, the 
 lack of cooperation between banks; and, third, the financing of our 
 exports by foreign bankers alone. As a result of these evils we 
 see constant expansion in our bank notes, with no corresponding 
 contraction, which results in inflation and a panic every few years. 
 We see an annual money deficiencv at the crop-moving season. 
 Farmers have to pay eight per cent for loans throughout the coun- 
 try while Wall Street speculators get these same loans for three per 
 cent. We see Texas cotton, exported and financed by European 
 
30 University of Texas Debates 
 
 bankers simply because the American bankers are not allowed to 
 deal in acceptances. We see a lack of mobilization of reserves, lack 
 of credit facilities, lack of cooperation between banks and an abso- 
 lutely inelastic, unsatisfactory currency. 
 
 To remedy these existing evils the plan of the National Eeserve 
 Association was brought forward. This plan is as follows : 
 
 There will be an organization similar to our counties, States and 
 Nation, represented by the local associations which elect the direc- 
 tors of the fifteen district associations into which the country is 
 divided, who in turn elect the directors of the National Association. 
 The Governor of the National Association and the two deputies 
 and the other forty-three directors of the National Association will 
 exercise general control over all the Association, but the stockholders 
 of the local banks throughout the countrv hold absolutely in their 
 power the personnel of each board of directors, that is, the sub- 
 stantial business men in each community. The plan contains eight 
 different provisions: 
 
 (1.) To insure the maintenance of adequate reserves, (2) to 
 provide for the concentration of cash reserves, (3) to authorize 
 the rediscounting of commercial paper by the Association, (4) to 
 give to individual banks the facilities for an increase of their 
 reserves and loaning power, (5) to grant further note-issuing* 
 power to the National Reserve Association, (6) to provide for a 
 uniform rate of discount, (7) to standardize commercial paper, and 
 (8) to establish foreign banks. 
 
 This plan, resulting from our experience in the past, possess- 
 ing the best features of the European systems, and revised and 
 made suitable for modern financial demands and the peculiar and 
 widely differing conditions existing in this country is the medium 
 we offer you this evening through which the present evil of our 
 system may be cured and the future needs of our Nation be pro- 
 vided for. The benefits resulting from the adoption of this sys- 
 tem would be three-fold. The National Reserve Association, first, 
 will furnish the means for cooperation between different banks and 
 make possible concentrated reserve; second, it will provide means 
 for. financing our exports, and, third, it will give us better credit 
 facilities. 
 
 This plan will furnish a means for cooperation between differ- 
 ent banks. The aim of this plan is to establish a cooperative, not 
 a centralized banking system. To-day in panic and crop-moving 
 times the banks act only for themselves and thereby both they 
 and the public suffer. Under the proposed National Reserve Asso- 
 
Banking and Currency Reform 31 
 
 elation the banks will be able to obtain all the cash they need ancU 
 they will gladly cooperate with each other. They will be able to 
 do this because the plan (Section 28), proposes that the Associa- 
 tion may rediscount direct obligations of subscribing banks. Any 
 bank,, therefore, in times of panic when cash is necessary, needs 
 only to send its securities in the form of commer.cial paper to the 
 Association and immediately it will receive the amount in cash 
 holdings. Nothing but cooperation can result when such a plan is 
 in force. Contrast this state of affairs, if you will, to those existing 
 under the present system. This same bank, in times of panic 
 when it needs the cash, may possess all the securities in the world, 
 but under the present law it could not negotiate a single dollar's 
 worth, with the result, that not alone do the banks suffer but the 
 people as well, and no cooperation whatsoever will exist between 
 individual banks. Moreover, all possible means, such as trans- 
 ferring bond balances by telegraph, etc., are provided in the plan in 
 order to facilitate this cooperation. 
 
 This means an absolute elimination of exchange charges. The 
 National Reserve Association shall at once upon application, with- 
 out charge for transportation, forward its superfluous notes to any 
 depositing bank account to credit its balance. Once this coopera- 
 tion is established, we wil Ibe enabled to have a mobilization of 
 reserves and a large gold fund mav be kept in one place. This 
 concentrated gold reserve, always accessible, would be able to break 
 panics and alleviate conditions. 
 
 For instance, the Bank of England with a concentrated gold 
 reserve of one hundred and fifty millions in 1907, helped .the 
 United States with a reserve of nine hundred millions in govern, 
 mental vaults and twice that much scattered throughout twenty-five 
 thousand various banks. The policy of every bank in times of 
 panic would change under the National Reserve Association. In 
 times of panic under our present system, each individual bank 
 begins to hoard money regardless of whether or not the panic effects 
 its section. Under the National Reserve Association the individual 
 banks would be enabled to loan money to the afflicted ones and thus 
 immeasurably relieve the situation. This method has repeatedly 
 worked with success. 
 
 For example, on September 23, 1907, at Germany's commercial 
 crisis and our panic the cash on hand of the Imperial Bank was 
 $236,797,000.00; on. September 30 it had declined to $199,025,- 
 000.00, a decrease in one week of $37,772,000.00. But, during 
 the same week the loans and discounts rose from $289,750,000.00 
 
32 University of Texas Debates 
 
 to $391,637,000.00, an increase of $101,887,000.00. The note 
 circulation rose from $339,625,000.00 to $435,437,000.00 an in- 
 crease of $93,812,000.00. Thus by merely increasing the loans 
 and note circulation, Germany was able to escape the panic which 
 the same year and the same month ran wild over the United 
 States, and in which our banks were forced to decrease the loans 
 and increase our reserves. 
 
 My second point. The National Eeserve Association will pro- 
 vide means for financing our exports. This plan will enable the 
 United States to finance our own exports and thus get our propor- 
 tionate share in financing the products of the world. We should 
 finance our own foreign exports, and the people of the South should 
 be particularly interested in the matter of who exports, who 
 finances, who reaps the profit of. our cotton. To-day our banks can 
 not deal in acceptances because of ridiculous laws, though they can 
 lend on promissory notes which often do not have the security be- 
 hind them that acceptances have. Thus the Texas farmer, when 
 he exports his cotton, gives his bill of security and gets his bill of 
 acceptance, finds that no American banker is able to deal in this 
 acceptance, with the result that the deal is put through by London ; 
 and London gets the profit. Last year we exported six hundred 
 and fifty million dollars worth of cotton. This amount was largely 
 financed by sixty to ninety-dav bills drawn on Liverpool or Berlin. 
 The business was done and the profits received bv foreign banks 
 and this large sum was in the last analysis paid bv the cotton 
 planter himself. We are now spending five hundred millions to 
 build the Panama Canal and we should be able to finance our own 
 products and 'be able to profit by the canal instead of having 
 to pay increased millions to foreign bankers. The National 
 "Reserve Association meets this defect and offers a remedv. This 
 plan will be able to meet this demand, first, through its provision* 
 whereby the banks can rediscount bills of exchange, notes, drafts, 
 etc., and second, through its liberal provisions whereby banks may 
 be organized under it in the foreign countries and there do the 
 business of this country. Thus, under the National Reserve Asso- 
 ciation we will be able to finance our own exports, our Merchant 
 Marine will again flourish, and we will be able to stand at the top 
 in all fields. 
 
 My third point. The National Eeserve Association will give us 
 better credit facilities. This point stands out at once as one of the 
 preeminent reasons for the adoption of the plan of the National 
 Eeserve Association. In modern times money transactions are 
 
Banking and Currency Reform 33 
 
 based upon credit, and the modern monetary system is based upon 
 a small foundation of gold upon which are added numerous obliga- 
 tions payable in gold which are settled by clearings of credit. This 
 factor of credit is more important in. business, in banking, in 
 exchange than the actual gold. This, therefore, is one of my main 
 reasons in advocating the adoption of the National Reserve Asso- 
 ciation ; that the proposed plan aims at establishing standard values 
 for which a broad market can be created, so that assets can be 
 quickly turned into bank credits. 
 
 Tn the discussion of this section of the plan, two facts are brought 
 before our notice : first, that our present system fails to break panics 
 simply because it provides for no definite and well regulated credit 
 facilities, and second, that the credit facilities of the plan of the 
 National Reserve Association have always succeeded in averting 
 panic runs and prevented financial disturbances. 
 
 In 1893, during a panic period of seven months, the legal tender 
 money held by the national banks reached 23.2 per cent of their 
 net deposits; liquidation of net deposits amounted to $203,000,000 
 outside of the reserve cities. The reserves amounted to 30 per 
 cent of deposits, being double the legal requirements. Here is a 
 system which failed to break a panic for a period of seven months 
 even with cash reserves amounting to double the legal requirements. 
 The lack of proper system of credit expansion was responsible for 
 the panic run. 
 
 Again, look at our panic of 1907. During this disastrous year 
 we had no war scare, the country was full of gold, but sales of 50 
 per cent to 100 per cent could not bring money because our system 
 had killed our own confidence in our own credit. 
 
 The plan of the National Reserve Association has been modeled 
 after the banking systems of England, France and Germany. The 
 main head, however, in which identity exists between the systems 
 is to be found in the credit facilities features. In other words, the 
 method of banking a panic and meeting the annual crop-moving 
 deficiency in England, France and Germany would be identical 
 with the method necessarily taken by the plan of the National 
 Reserve Association. These European systems have avoided -panics 
 and other financial disturbances because of extensive credit facili- 
 ties identical with those of the plan of the National Reserve Asso- 
 ciation. 
 
 During the recent Morocco crisis, a war scare developed in France 
 and actual hoarding of gold began; the withdrawals from deposit 
 banks were alarming. But there followed no panic, the Bank of 
 
34 University of Texas Debates 
 
 France issued notes freely, the French banks collected their hold- 
 ings of foreign paper and the general confidence in the bank's power 
 to cope with the situation overcame the fright without the calamities 
 that would have followed with us. All because of credit facilities 
 which our present system lacks and which the plan for a National 
 Reserve Association possesses. 
 
 When France withdrew from Germany more than two hundred 
 million marks that had been invested there, when England and 
 Russian money was called back, when runs began on savings banks, 
 Germany had to face a crisis identical with our panic of 190?'. 
 What happened ? The Reichbank rapidly increased its credit facil- 
 ities by about $150,000,000.00. Moreover, it had accumulated in 
 times of peace vast sums of foreign bills, and when rates of ex- 
 change moved up to a point warranting gold exports, it began to 
 sell these foreign holdings. At the same time, a slight increase in 
 its rate took place, which brought new money, mainly American, i 
 Germany's assistance. This inflow of foreign money was increased 
 by the sale abroad of German treasury notes. All because of credit 
 facilities which our present system lacks and which the plan 
 for a National Reserve Association possesses. 
 
 Commercial paper and bank acceptances form the main assets 
 of European banks. These bills have the widest possible market, 
 when millions are exchanged daily with the margins of one-six- 
 teenth per cent of one-eighth per cent in the interest rate without 
 the necessity of scrutinizing the paper when the bargain is struck. 
 Everywhere, bills of exchange have been standardized, and a long 
 list of financial success is the result. Yet, these same credit facili- 
 ties are provided for in the plan of the National Reserve Associa- 
 tion, and still we hesitate about its adoption. This system is 
 built upon credit as it necessarily should be. To be safe it should 
 make cash less valuable or attractive than bank credit. This it 
 does by allowing depositor and bank alike to turn cash holdings into 
 interest-bearing bank credits. Thus, cash is allowed at all times 
 to return freely and rapidly into the central reserve of the National 
 Reserve Association. The Association would then become the 
 safety valve of our Nation. Its existence plus its ability to main- 
 tain the Nation's credit would create that safety for calculating 
 credits which would make the whole system practicable. By 
 increasing or decreasing its rate of interest, by investing in the 
 nation's commercial paper, by accumulating holdings of foreign 
 paper, all of which is included in this plan, it would become strong 
 enough to give efficient and elastic service in times of panics and 
 thus protect each bank individually in time of need. 
 
Banking and Currency Reform 35 
 
 On the one hand, therefore, you have our present system, incapa- 
 ble of preventing panics, incapable of rendering help in times of 
 need, incapable of efficient credit regulation, incapable of protec- 
 tion; on the other hand, the proposed plan of the National Reserve 
 Association with extensive credit facilities, with ample provision 
 for giving help, with the opportunity and power to better the 
 Nation's finances, with success and experience behind it, with a 
 record of stability, utility and practicability upholding it. Reform- 
 ation and renovation of our present monetary system is absolutely 
 necessary. The North needs it, the -South needs, the East needs 
 and West need it. Why, gentlemen, during the last year eight 
 national banks, the very foundation of our monetary system failed, 
 and eighty-three national banks were placed in voluntary liquida- 
 tion. The foremost, the sanest, the most practicable remedy is to 
 be found in the plan for a National Reserve Association as proposed 
 by the National Monetary Commission. 
 
 FIRST NEGATIVE SPEECH 
 
 BY TOM B. RAMEY, OF TYLER, TEXAS. 
 
 Ladies and Gentlemen: 
 
 The career of the so-called Aldrich Plan has been most extraor- 
 dinary. For quite a time the plan seemed certain of success, and 
 all that appeared to be lacking was the formality of passing the bill 
 in Congress. But gradually the tide of public sentiment has 
 changed, until to-day its staunchest supporters have abandoned 
 all hope of its being enacted into law in its present form. At New 
 Orleans in 1911, the American Bankers' Association gave its 
 unqualified approval to the plan of the National Monetary Commis- 
 sion. But at Detroit last September, the same Association of 
 .bankers totally abandoned the Aldrich Plan, and resolved to cooper- 
 ate with any and all persons in divising a better financial system. 
 In 1911 we saw in the Aldrich Plan a scheme of reform calculated to 
 satisfactorily remedy all the evils in our present banking system.. 
 In 1912 we saw in it a plan strongly repudiated by the leading opin- 
 ion of the country, we have seen it specifically rejected by the 
 Democratic platform, specifically opposed by the Progressive plat- 
 form, and as specifically ignored by the Republican platform. 
 
 When we think of the powerful influence and pressure that has- 
 been brought to bear in the attempt to crystalize sufficient senti- 
 ment to insure the passage of the Aldrich Bill, we sometimes won- 
 
36 University of Texas Debates 
 
 der that it proved a failure. In view of the fact, however, that it 
 did not succeed in spite of the powerful influence behind it, we are 
 inevitably led to conclude that the plan must contain certain funda- 
 mental features that are objectionable to the people of this country. 
 It is our intention in this discussion to expose the most flagrant 
 faults in the Aldrich Plan, and to show you how the proposed scheme, 
 if enacted as a remedy for the evils in our present banking system, 
 would be impracticable and undesirable. 
 
 Certainly one of the most serious objections to the Aldrich Plan- 
 arises from the opportunity "afforded by it for the inflation of our 
 currency and the over-extension of credit. The fundamental fea- 
 ture of the National Reserve Association is to concentrate a great 
 part of the cash reserves of the banks of the country into one great 
 fund to be used as a sort of common reserve against bank deposits, 
 and at the same time to act as a basis for an issue of credit currency, 
 which would eventually become our principal circulating medium. 
 The Association will have the power to issue its notes to practically 
 an unlimited amount. Section 51 of the Aldrich Bill makes pro- 
 vision for an uncovered note issue of one billion two hundred mil- 
 lion dollars without any effective prohibitive tax. Mark you, this 
 sum is far in excess of the uncovered untaxed note issue permitted 
 by the twenty great central banks of Europe combined. 
 
 The affirmative maintain that the greatest and most fundamental 
 evil in our present banking svstem is its inelasticity. They tell 
 us that our money lacks a needed elasticity and is not responsive 
 to the demands of trade and commerce. Experience has taught 
 us that the money supply is subject to the law of supply and demand 
 ihe same as other commodities are, and that it flows automatically 
 from communities where it is over-abundant to those in which it is 
 more in demand. This is what constitutes the true elasticity that 
 money should possess. But this natural elasticity will be destroyed 
 if a large issue of credit notes is made, as is proposed under the 
 Aldrich Plan. The elasticity claimed for these credit notes is that 
 they will be issued only for the regular commercial demand, and 
 will be retired when that demand is satisfied. But experience in 
 the United States has demonstrated that bank notes issued upon the 
 credit basis will continue in circulation until they wear out. Paper 
 money once issued and absorbed becomes a "part of the active capi- 
 tal of the country, and its destruction has the same effect as the 
 destruction or withdrawal of capital in any other form. The 
 panic of 1873 was caused by the attempt of the government to 
 withdraw from circulation the legal tender notes which were never 
 
Banking and Currency Reform 37 
 
 intended to remain permanently in our money system. But the 
 calling in of so much currency was the taking away of so much 
 capital from active use. and this constituted a draft upon the vol- 
 ume remaining which it could not stand, and a, panic resulted. The 
 Government soon abandoned the undertaking, however, and we have 
 the legal tender still with us. The history of the operations of 
 cur national bank currency also illustrates this point. Since its 
 first issue the volume outstanding of these notes has steadily 
 increased, and has rever decreased, regardless of the demands of 
 commerce and trade. In 1900 the amount of these notes was 
 $200,000,000; while to-day it is $700,000,000, which represents 
 an increase in ten years of two hundred and fifty per cent. At 
 no period has there ever been noticed the slightest symptoms of this 
 mysterious elasticity, the notes increasing the same whether money 
 was easy or tight. 
 
 It is now generally conceded by the experienced bankers of the 
 country that our present currency issue is excessive, and would 
 seem to demand some restraining action by Congress. Even the 
 strongest proponents of the plan of the National Monetary Com- 
 mission, including Professor Laughlin, admit that the evils they 
 complain of in our present system are not due to a scarcity of 
 our currency. But the Aldrich Plan, instead of proposing to put 
 a check on further expansion, would give the National "Reserve 
 Association the power to increase the existing volume of our cur- 
 rency to an unlimited extent. The amount of our so-called infe- 
 rior currency outstanding at present is as follows: Legal tender 
 notes, 346 million dollars; legal tender silver, 550 million dollars; 
 and national bank notes, 700 million dollars, making the vast sum 
 total of 1596 million dollars. Gentlemen, I ask you how we can 
 possibly ignore all laws of monetary science, and still further inflate 
 our currency by eliminating the 700 millions of bank notes, and 
 substituting therefor, as provided in the Aldrich Bill, the enormous 
 sums of 900 million dollars of untaxed National Keserve Associa- 
 tion notes, with an additional 300 millions of notes only taxed li 
 per cent. 
 
 There is no limit fixed upon the note-issuing power of tha 
 National Reserve Association except that a reserve of at least 33^ 
 per cent must be held in the vaults of the Association in lawful 
 money. The balance may be represented by commercial paper. 
 Even this minimum reserve will likely be considerably reduced by 
 the provision made in Section 42 of the Bill which permits the 
 Apsociation to deduct half of the amount of bonds which it takes 
 
38 University of Texas Debates 
 
 over from national banks from the liabilities, in effect using such 
 bonds as partial reserve. The notes of the Association will be 
 merely paper promises to pay, the same as the notes of any other 
 corporation. While they would circulate freely as money, thev 
 would not be money in the basic sense. You can't make a dollar 
 out of 33 J per cent gold and 66 J per cent promise, and he always 
 sure that that dollar is going to be just as good as a gold dollar. 
 At any rate you can't pay foreign debts with that kind of money. 
 
 What will be the result of this unprecedented expansion of our 
 currency ? Instead of working to prevent the occurrence of panics 
 and periods of business depression, it will only tend to au^invat" 
 the evil. One of the strongest supporters of the Aldrich Plan 
 frankly concurs in the opinion that the origin of each recurring 
 period of tight money in this country can be traced to preceding 
 periods of easy money. It is an indisputable fact that commerce 
 suffers more in the long run from periods of over-abundance of 
 our present circulation than from scarcitv. 
 
 Our friends of the affirmative ask us, if the paper discounted by 
 the National Eeserve Association must be based on actual commer- 
 cial transactions, how it is that such inflation is possible? The 
 answer is simple. Although for ordinary times the loans of the 
 National Eeserve Association itself are restricted to commercial 
 paper, there is nothing to prevent its member banks from making 
 any kind of loans they please. The purpose of the Reserve Associa- 
 tion is to supply the banks of the country with currency as called 
 for, and thereby the Association becomes practically an appendage 
 to each member bank whose ordinary resources are thus immensely 
 increased by the note-issuing privilege indirectly conferred upon it. 
 Now, it is well known to most of us that nearly all of our large 
 city banks invest their resources in stocks, "bonds and similar secur- 
 ities, rinding it far more profitable to make this class of loans than 
 to hold their funds for the inconstant demands of commerce. In 
 the fall of the year when the usual commercial demands occur, the 
 Reserve Association will relieve the banks of their commercial loans, 
 and they will not be obliged to call in their loans on stocks and 
 bonds but will be able to continue their investments in these specu- 
 lative securities. Should this latter class of loans call for more 
 money than their commercial paper can supply, then the National 
 Reserve Association may loan them direct upon their own notes, 
 provided such are endorsed by a local association. It thus can be 
 plainly seen that the Aldrich Plan not only offers a large field for 
 inflation, but for dangerous speculation as well. 
 
Banking and Currency Reform 39 
 
 Mr. Aldrich says that under his rlan the banks of the country 
 will be able to replenish their reserves indefinitely. Is this not 
 equivalent to saying that the banks may expand their loans indefin- 
 itely ? So long as the Reserve Association stands ready at all times 
 to convert commercial paper into circulating notes which can be 
 used by the banks to purchase more commercial papers, which in 
 turn should be converted into circulating notes, and so on indefin- 
 itely, it would seem that there would be little check on inflation 
 except such self-restraint as each individual bank might be able to 
 exercise. As an illustration of what could be done with this plan 
 in operation, let us say the Austin National Bank has $200,000 
 in gold in its vaults. Suppose this is deposited with the National 
 Reserve Association, and credit is taken for it. Under the pro- 
 posed law the Austin National Bank still counts this two hundred 
 thousand dollars as reserve cash on hand. The Reserve Association 
 also counts this gold as part of its reserve, upon which it issues 
 two hundred thousand dollars worth of its own notes. Now let us 
 suppose that the American National Bank is short in its reserves, 
 and goes to the National Reserve Association with two hundred 
 thousand dollars in commercial paper for discount. The Reserve 
 Association pays for this paper with its own notes, which are se- 
 cured by the same funds that count as legal reserve for the Austin 
 National Bank. Thus the two hundred thousand dollars in gold 
 which now counts as reserve for the Austin National Bank, would 
 under the proposed plan count as cash reserve in three places. 
 First, it would count as full reserve against eisrht hundred thousand 
 dollars of deposits in the Austin National Bank; second, as full 
 reserve against two hundred thousand dollars of notes and two 
 hundred thousand dollars of deposits in the National Reserve Asso- 
 ciation ; and third, as full reserve against eight hundred thousand 
 dollars of deposits in the American National Bank. In other 
 words, the same two hundred thousand dollars which to-dav acts as 
 reserve for eight hundred thousand dollars of deposits, would under 
 the reform system serve as reserve against two millions of liabili- 
 ties of three different concerns. 
 
 Assuming that the plan were in operation, and that all the banks 
 of the country that are now eligible became members of the Associa- 
 tion, they would at once have the right to borrow from the Associa- 
 tion six thousand millions of dollars, and in addition to this would 
 have the power to accept the paper of business concerns to the 
 amount of two thousand millions of dollars. Bear in mind that 
 this sudden addition to the powers of credit expansion is not 
 
40 University of Texas Debates 
 
 intended only for emergency, but as a function to be exercised 
 by the Association under normal conditions, and in the course of 
 everyday business. Whenever, in the opinion of the managers of 
 the Reserve Association, the public interests so require, in addition 
 to the above powers set forth, the Association may discount the 
 direct obligations of the subscribing banks. To this there is no 
 limit whatsoever. 
 
 One of the leading arguments that has been advanced in favor of 
 the Aldrich Plan is that it will create a stable and uniform mar- 
 ket for discounting commercial paper. Section 30 of the Bill 
 provides for a uniform rate of discount throughout the United 
 States. Without any argument we readily see that this provision 
 is unjust, .for it would compel the small country banks with small 
 resources to compete on the same plane with the large citv banks 
 which have almost unlimited resources. This would literally force 
 the smaller banks out of business. Again, our friends of the affirm- 
 ative fail to consider that the best paper handled bv a majority of 
 our banks to-day is not included in what the Aldrich Plan contem- 
 plates as commercial paper. It has been estimated that hardly 
 one-tenth of the total loans and discounts of the banks of Texas 
 to-day will be acceptable to the National Eeserve Association for 
 collateral. Any reliable banker in Texas will tell you that the 
 bulk of the loans made by the banks of the State to-day on com- 
 mercial transactions, particularly the smaller country banks, are 
 long time loans, ranging from eight to twelve months in duration. 
 We can readily see that the twenty-eight-day discounting privilege 
 of the Association, or even the four months' privilege, would be of 
 little benefit to the local banks in making loans necessary each year 
 to the farmers for producing, harvesting and marketing cotton, 
 grain, sugar and other agricultural products. These processes 
 usually require from six to nine months time, and for this reason, 
 if no other, the smaller banks of the country prefer the longer time 
 loans. The only banks that would benefit by the discounting privi- 
 leges of the National Reserve Association would be the large banks 
 in the two or three monev centers of the country. As I have shown 
 you most of the loans of these banks are on stocks and bonds, and 
 the short time discounting privileges of the Association furnishes 
 them an adequate means to further their speculation in these securi- 
 ties. 
 
 We have heard much the past few years about the shortcomings 
 of our present banking system in the United States, and some have 
 gone so far as to agree with Andrew Carnegie that it is the worst 
 system in the world. But when we learn that the systems in other 
 
Banking and Currency Reform 41 
 
 countries are faulty also, and have just as many panics as we have, 
 and when we remember that this country has had unparalleled 
 prosperity under tho existing system even a fair degree of pros 1 
 perity came to Andrew Carnegie himself we should hesitate for 
 a long time before giving approval to any new untried scheme that 
 is as revolutionary in character as is the Aldrich Plan. We do not 
 contend that the present system is absolutely infallible, and we 
 admit that its growth and career has been irregular and unsys- 
 tematic. But it has gained much from actual experience, and it now 
 represents an almost perfect adaption to the conditions under 
 which it exists. The living organism is now in evidence, and 
 \vhatever it has done in the way of reform should be in the direc- 
 tion of improving and strengthening this system, not destroying it. 
 The people of America under no conditions will consent to a bank- 
 ing plan that will completely undermine our present independent 
 and decentralized system that has played a most important part in 
 the upbuilding and development of the nation. The burden of 
 proof is upon those of the affirmative?' There devolves upon them 
 the obligation not only of proving that their proposed plan will 
 satisfactory remedy all the evils in the existing banking system, 
 but also of showing beyond a reasonable doubt that the objections 
 to their plan as set forth by the negative, are totally unfounded. 
 
 SECOND AFFIRMATIVE SPEECH. 
 
 BY SYLVAN LANG, OF SAN ANTONIO, TEXAS. 
 
 1/r. Chairman, Board of Judges J Ladies and Gentlemen: 
 
 My colleague has already explained to you the evils existing 
 to-day in our monetary system, the plan for a National Reserve 
 Association, and how this plan when applied to our modern condi- 
 tions, satisfactorily meets all our needs. But it does more than 
 this, for in it there are safeguards and provisions which will prevent 
 its misuse and which render ridiculous all attempts of the oppo- 
 nents of the plan to criticize it. 
 
 Standing out as one of the preeminent evils of the present sys- 
 tem, both in the opinions of such experts as Dr. Seligman of Colum- 
 bia and Dr. Scott of Wisconsin, and appearing from the recent 
 hearings of the Money Trust Investigation Commission, is the fact 
 that the money of trie country centers at all times in New York 
 City, for as the banks must keep part of their funds in liquid form, 
 and as they can get 2 per cent in New York on call loans; while 
 if the money were kept at home, it would either lie idle or else be 
 
42 University of Texas Debates 
 
 converted into dead assets "by being invested in commercial paper, 
 the banks naturally send their surplus funds to New York. Out 
 of this condition arises the difficulty of financing our crops annu- 
 ally, as was illustrated last fall, and the strange spectacle as in 
 1907, that when our country is most prosperous, and our crops the 
 largest even then a panic is quite likely to result from the competi- 
 tion between the farmers who need this monev to move their crops 
 and the Wall Street speculators who are using this money, combin- 
 ing to drive up unreasonably the interest rates on our limited, 
 inelastic money supply. It is this condition which any plan for 
 monetary reform must rectify, and a question raised by some per- 
 sons is whether the plan we propose will perform this function. 
 However, when we look at the conditions which draw the money 
 to New York, we shall see how this plan strikes at the root of and 
 will eradicate this evil. 
 
 Our present system requires that all banks keep a reserve against 
 deposits. Small country banks must maintain a reserve of 15 per 
 cent 9 per cent of which they may send to reserve and central 
 reserve cities to receive interest upon and can still count it as a 
 part of their reserve. The reserve city banks, as in Galveston and 
 Dallas, must maintain a reserve of 25 per cent against deposits, 
 12 per cent of which they may send to the three central reserve 
 cities New York, Chicago, or St. Louis, and can still count 
 it as part of their reserve. Though these banks may send 
 the major portion of their reserves to one of the three cen- 
 tral reserve cities, they must keep it in such form that they can 
 get it at any time to meet a demand in any particular locality. 
 Therefore their correspondent banks must of necessity make call 
 loans for them, as otherwise, the money could not be easily secured, 
 and the reserve would not be maintained in a liquid form. New 
 York is our only big city where extensive loans of this nature are 
 made, and the banks to receive the 2 per cent call money rate 
 which they can secure by sending their monev to New York, con- 
 tinually send part of their reserves there, thus furnishing cheap 
 money for speculation and Wall Street purposes, which every few 
 years is bound to culminate in an over-extension of credits and 
 consequent panic, and making it extremely difficult to secure this 
 money throughout the country when actually needed for crop- 
 moving purposes. The fact that the average deposits of country 
 banks in New York institutions is $600,000,000.00 and that on 
 November 1, 1912, only last fall, these banks had upwards of 
 $723.000,000.00 in New York when the monev was badlv needed 
 
Banking and Currency Reform 43 
 
 over the whole nation, amply proves the seriousness of this situa- 
 tion. 
 
 To rectify this evil we point out to our opponents Sections 26,. 
 27, and 28 of the plan by which it is provided that all banks which 
 are members of the Association may rediscount 28' days and 4 
 months paper and also 90-day acceptances and that by turning over 
 this note to the Central Association the local bank receives an 
 amount of bank noten equivalent to the amount of the loan, which 
 amount the bank turns over to its customers. In other wordrf, there 
 will no longer be a necessity for these banks to send their money 
 to New York and loan it out at 2 per cent in order to obtain ready 
 money, for they can secure the cash they need at any time by sim- 
 ply rediscounting all good commercial paper at 6 per cent. How 
 would any common sense individual or institution conduct him- 
 self or itself under such circumstances? When in place of their 
 only being able to keep part of their reserve in liquid form and 
 profiting from it by loaning it out in New York at 2 per cent on 
 call loans, they can always secure cash for their reserve by redis- 
 counting good commercial paper at 6 per cent, will they not keep 
 their money at home where needed, where it will not drift into 
 Wall Street and aid in promoting panics, where it can be loaned 
 out for legitimate crop-moving purposes at a higher and more 
 profitable rate than was secured for the same money when used 
 for call loans, and where it can thus, with the greatest elasticity, 
 expand and contract according to legitimate business needs, and 
 thus prove to be a satisfactory method of relieving the stringency 
 at those two most essential periods during threatened panics and 
 for the annual crop-moving demands? 
 
 Thus we see that by the adoption of this plan the money of tho 
 country will not center into New York to such an extent as it does 
 to-day, and therefore, that all criticisms of the plan in this respect 
 are unjustified. Among all of the arguments and objections which 
 have been brought forward against this plan, there are three which 
 stand out prominently. First, that this currency will not contract 
 after once being issued ; second, that this is just a scheme of Wall 
 Street to gain control; and, third, that the big banks will domi- 
 nate the Association to the detriment of the small banks. 
 
 In answer to their first objection, we point out four provisions 
 which will force contraction and there prevent inflation : 
 
 Firstly, these bank notes cannot become inflated, since they will 
 be merely coterminous with the business to which they relate. 
 These notes are to be issued on 28 days or four months paper which 
 is sufficient in length for crop-moving purposes. So, if an orange 
 
44 University of Texas Debates 
 
 grower in California, or a cotton raiser in Texas wishes to borrow 
 money to move his cotton,, he will go to his local bank, give them 
 his note,, and receive a credit account for this amount to draw upon. 
 This note the bank sends to the local Association which transmits 
 it to the Central Association, which then orders that amount of 
 bank notes equivalent to the amount of the loan be turned over to 
 the local bank which the bank gives to this farmer. After the 
 farmer no longer needs this loan, he goes to his bank, returns the 
 money, and pays off his note. The money is then sent by the 
 local bank to the Association which returns the note it held as 
 security, and thereby, the currency, having thus been returned to 
 the association, has automatically contracted, as it will contract 
 after the need for it has passed. 
 
 Secondly. The law of supply and demand would force contrac- 
 tion. It is an economic principle that the price of any commodity 
 is governed by the amount of that commodity and the demand for 
 it. So, the price of money, that is, the interest rate on money, is 
 governed by the money available for loans, and the bankers will 
 therefore promptly retire the currencv when not needed, for they 
 have no desire to see the interest rate lowered by keeping this money 
 in circulation when not actually required. 
 
 The third provision which will force contraction in the require- 
 ment by Section 41, that a reserve of 50 per cent of the notes and 
 deposits be maintained, or a heavy tax paid in lieu thereof, so that 
 if the reserve fell to 40 per cent there would be a 6 per cent tax rm 
 these notes, which would force them to contract. The additional 
 provision that under no circumstances can the reserves fall below 
 33 per cent and the fact that all bank notes in circulation will 
 bear interest at 1J per cent from 90*0 to 1,200,000,000 and 5 per 
 cent above that amount are additional safe.srnards to prevent infla- 
 tion. 
 
 And, fourthly, we point out that by Section 26 these rediscounts 
 are restricted to commercial paper, and as we shall continue to have 
 our National and State Bank Examiners and our five reports 
 annually from the National Banks, besides additional monthly 
 reports by the Association as to its condition, and a weekly report 
 to the Comptroller of the Currency, the banks will not dare to 
 make loans on speculative securities, which they are not prevented 
 from loaning on under the present laws. And as I have shown that 
 this plan possesses every possible means for a speedv contraction of 
 these bank notes when not needed, yet. at the same time, not rais- 
 ing so many restriction? as to make it next to impossible to issue 
 
Banking and Currency Reform 45 
 
 them and secure the benefits therefrom, and as these rediscounts 
 are restricted to commercial paper, any expansion which is based 
 on these legitimate business demands can not possibly result in 
 inflation. 
 
 The second chief objection to the plan is that Wall Street will 
 gain control of the Association. Control of the Association can be 
 secured in two ways. Firstly, by controlling the forty-six directors 
 of the National Association. Thirty of these will be elected from 
 the fifteen branches into which the country is divided, that is, two 
 from each branch. Now, only fourteen of these directors will come 
 from the seven districts in the. New England, Eastern and Middle 
 Western States, while sixteen will be elected from the eight districts 
 in the Southern and Western States, and that these sixteen will 
 be Wall Street men even our opponents will not attempt to assert. 
 Nine of the forty-six directors will be elected by the various banks 
 of this country, voting in proportion to their stock capitalization. 
 Then, say your opponents, Wall Street with all its capital will 
 surely elect these nine, and thus gain the ascendencv in the Associa- 
 tion. But the combined capital of the banks in the three central 
 reserve cities and also of the banks in every one of the reserve cities 
 in this country amounts to only $425,000,000, while the capital 
 of our country banks amounts to $577,000,000, or one-third again 
 as much. And it will lie within the power of these small country 
 banks, with their tremendous stock majority, to elect these nine 
 directors. That these sixteen directors from the South and West 
 and the nine from the country banks, make a total of twenty-five; 
 or a majority of the board of forty-six even the mathematics of 
 our opponents cannot overcome, But this is not all. The re- 
 maining seven members of the Board consists of the Secretaries of 
 the Treasury, Agriculture, and Commerce and Labor, the Comp-. 
 troller of the Currency, the Governor and his two Deputies. Do our 
 opponents claim that these men, directly in the public eye, will at- 
 tempt to serve Wall Street? If not, we must place them with the 
 other twenty-five, making a total of thirty-two, or more than double 
 the fourteen directors which Wall Street might possibly, but not 
 probably gain control over, and definitely proving that Wall Street 
 will not be able to control the Association in this manner. 
 
 But there is vet a second method pointed out by President Schur- 
 man of Cornell, through which control of the Association will be re- 
 tained by the local banks, and .not by Wall Street. We have seen 
 how the National Directors are elected. Now the directors of the 
 Branch Associations who elect the thirty National Directors are 
 chosen as follows: one-half are elected from the local Associa- 
 
46 University of Texas Debates 
 
 tions without regard to stock ownership; one-third are elected 
 according to the number of shares of the National Association held 
 by the local Association, and the remaining one-sixth are to be 
 elected by these others, and shall represent the agricultural and 
 industrial interests. The directors of the local Associations who 
 elect the directors of the branch Associations are chosen bv the local 
 banks, three-fifths of the directors being elected by the banks 
 regardless of the respective capitalization, while the other two-fifths 
 are elected according to the number of shares which these bank 
 hold in the National Association. So we see that throughout the 
 entire plan, the small local banks are given the power of electing 
 a majority of the directors of each association. Thus the directorate 
 of the National Association rests ultimately with the local banks, 
 or as President Schurman aptly puts teh situation : "That just 
 as in our Federal Government the localities elect members of Con- 
 gress and vote for president in proportion to their population, so 
 also while the Aldrich scheme provides for certain centralized bank- 
 ing functions which are essentially National and vests them in the 
 National Reserve Association which is superimposed upon our 
 existing banks without impairing their independence, the control 
 of the National Reserve Association itself is in the hands of 
 directors elected by the vote of the localities, their electorate being 
 ultimately the local banks." 
 
 Now, who controls the local banks? Are not the farmers and 
 ranch owners the chief stockholders of the country banks, and are 
 not the manufacturers, storekeepers and lawyers the chief stock- 
 holders of the city banks ? Do they not elect the officers and direct- 
 ors of these banks, and will it not also lie within their province 
 to elect the representative from their bank to the local association, 
 these local associations to elect the directors of the branch Associa- 
 tions and the branch Associations to elect the National Directors? 
 To be sure, it is a representative and not a direct vote, but il is, 
 nevertheless, these prosperous farmers and solid business men who 
 will be at the base of this system, and it will be within their power 
 and not within the power of Wall Street to elect the officers who are 
 to administer affairs. 
 
 The third chief objection raised by the opponents of this plan is 
 that the big banks will control the smaller institutions. The recent 
 hearing before the Money Trust Investigation Commission shows 
 how the big banks in New York, through interlocking directorates 
 and the vast amount of cash which the country banks to-dav keep 
 with them, are able to exirt a vast influence over them. We point 
 
Banking and Currency Reform 47 
 
 out that under this Aldrich Plan the small banks will no longer~bc~ 
 under the control of the large New York institutions, for they will 
 no longer be dependent upon them. To-day the country banks 
 send their surplus funds and part of their reserve to New York in 
 order to always be able to secure ready money and to receive the 2 
 per cent interest upon them. But under the plan for a National 
 Reserve Association there will be no need of this, for as these coun- 
 try banks can rediscount commercial paper at 6 per cent and always 
 secure currency when needed, there will be no necessity for their 
 sending their funds to New York banks, they will cease doing so, 
 and naturally will no longer be dependent upon them. Not alone 
 will these small banks cease to be dependent on the bis: banks, but 
 the big banks will no longer be under the same necessity of con- 
 trolling state banks ?.nd trust companies. The reason we find such 
 control is because big national banks need some medium through 
 which to loan on real estate security and carrv on a satisfactory 
 savings bank business, which they can not to-dav. but which the 
 Aldrich Plan provides for, in that under it they can make limited 
 loans on real estate and liberal provisions are made whereby they 
 can conduct an efficient savings bank department. 
 
 But besides the small banks no longer being dependent on the 
 big ones, and besides there not being the same necessity to-day 
 for the large national banks to control state banks and trust com- 
 panies, .even if the big banks wished such control they would not 
 attempt to secure it, for by Section 7' it is provided that if 40 per 
 cent of the capital stock of any subscribing bank is owned directly 
 or indirectly by any other subscribing bank, person, or corporation, 
 then neither bank can vote at all upon their stock capitalization, 
 and these banks, acting together, can only have one vote for the 
 election of directors to the local Association. 
 
 Considering that only by voting in this Association can a mem- 
 ber protect its interests, and considering that if banks, even indi- 
 rectlv, own 40 per cent of the stock of other banks, all of these 
 banks lose absolutely their right to vote at all according to their 
 stock capitalization, and only retain the power of collectively cast- 
 ing one vote for the directors of the local Association, and consider- 
 ing further, that besides this penalty, there will under this Aldrich 
 Plan be no incentive for the big banks to control state banks and 
 trust companies and that the smaller banks will no longer be de- 
 pendent on the large banks, and also that the Association can never 
 pay more than 5 per cent dividends on its stock considering all 
 these facts, no reasonable person can possibly fear that under this 
 
48 University of Texas Debates 
 
 plan the big banks will be able to, or will desire to, control the 
 smaller banks of the Association. 
 
 Honorable Judges, the Aldrich Plan is now before you. We have 
 shown you how the present defects are Temedied and how coopera- 
 tion between the banks, mobilization of reserve and elasticity in the 
 currency and credit facilities can be secured ; how the funds of 
 the country will be kept where needed and will no longer drift to 
 Wall Street, where they can not be secured readily for crop-moving 
 purposes, but remain to aid in creating panics; how the claims 
 of the opponents of this plan, that contraction will not take place, 
 that Wall Street will control the Association, and that the big 
 banks will dominate the smaller ones, is totally unfounded and can 
 not possibly occur. And lastly, we point out Section 58, which 
 reserves to Congress, the direct representative of the people, the 
 right to alter or amend the provisions of this act every ten years. 
 We do not flaunt the stars and stripes and ask you heedlessly to 
 adopt this plan, but looking at it from a common-sense business 
 standpoint it appears admirably suited to meet the annual crop- 
 moving demands and to remedy the other defects of the present 
 system, while retaining an elasticity of currency and structure 
 which will provide a satisfactory method of preventing any threat- 
 ened panics, and of solving other financial problems which we are 
 bound to encounter in the future development of this Nation. 
 
 SECOND NEGATIVE SPEECH. 
 
 BY WINFREE W. MEECHAM, JR., OF ANDERSON, 'TEXAS. 
 
 Mr. Chairman^ Ladies and Gentlemen: 
 
 With the steady recurrence of panics, it has become self-evident 
 that there are certain inherent defects in the present banking and 
 currency system, which must be remedied. But the remedy pro- 
 posed must be one which does not increase, but eradicates the evils 
 one which must be beyond the danger of control by the monied 
 power of Wall Street. The gentlemen of the affirmative submit 
 as their plan for a desirable remedy for the admitted evils of inelas- 
 ticity, and the lack of a proper discount market, the plan of a 
 National Reserve Association. This Association is to be governed 
 by an Executive Committee of nine men, and is to have absolute 
 control over the reserves of the banks of the country. It also has 
 the power to make loans, issue notes, and discount commercial 
 paper in short, it is to be the main unit in the chain of bank?. 
 
Banking and Currency Reform 49 
 
 My colleague has clearly demonstrated to you that the pro^ ' 
 scheme is an undesirable remedy, because it absolutely fails to 
 provide an edequate discount market, and, further, that it does not 
 eradicate the evil of inelasticity, but tends to increase it. And 
 when we consider that the Association is to be the unit of centrali- 
 zation, arid the basis of every commercial and financial transaction, 
 the question naturally arises : Who will control this Association ? 
 In a recent address, Mr. Aldrich said : "I realize as fully as any 
 man can, that no plan where there is the slightest possibility that 
 Wall Street or any other clique or combination can control, can or 
 should be adopted." 
 
 We of the negative, therefore, insist, third, that the plan is an 
 undesirable remedy, because, despite the ingenious argument of the 
 preceding speaker, there is a practical certainty that Wall Street 
 can and will control the Association. Section 9 of the bill pro- 
 vides that the Association is to be operated under the control of 
 fort}r-six directors, three of whom are to be elected by the other 
 forty-three, while the Governor is to be appointed bv the President 
 from three names submitted to him by the Board of Directors: If 
 Wall Street can secure twenty- three of the forty- three directors, 
 giving them a majority, it can control this unit of the chain of 
 banks, and dominate the finances of the Nation. Now, mind you, 
 nine of these directors are elected by stock in the Association. Wall 
 Street and its interests ' are certain to control these nine directors, 
 because the great majority of the stock, which is the basis of their 
 election, is controlled by its interests in the East. But the Eastern 
 and New England States control six directors, and 43 per cent 
 of the capital, while the States of the Middle West control eight 
 directors, and 27 per cent of the capital. By combining these two, 
 we get a total of fourteen directors elected and controlled by the 
 monied interests of Wall Street, with a total capital of 70 per cent. 
 Combining these fourteen directors, controlled by the monied inter- 
 ests of Wall Street, with the nine directors elected by them on the 
 basis of stock, we get a majority of twenty-three directors. Conse- 
 quently, these twenty-three directors will control the election of thp 
 Executive Committee, and will 'dominate the Association for the 
 specific purpose of using it for their own iniquitous purposes and 
 benefits. 
 
 But the supporters of this plan urge and contend that the con- 
 trol of the Association will be in the power of the smaller individual 
 banks, because of their combined capital. Now, two-fifths of the 
 local directors are elected bv the share votes of the individual banks. 
 
50 University of Texas Debates 
 
 and, in turn, the individual banks of a district are dependent upon 
 the Central Association of that district for their reserves. Under 
 the present system, however, Wall Street controls over 30 per cent 
 of the capital stock of the smaller banks, and it is certain that it 
 will not relinquish this control when it enters the Association. 
 Thus, many of the Central Associations will be controlled by Wall 
 Street from their inception, thereby making the combining of the 
 smaller individual banks an utter impossibility, for they must de- 
 pend upon the Central Associations for their reserves. 
 
 Now, let us note the danger of control in the District Associa- 
 tions. The banks of the local Associations are dependent in the 
 matter of reserves and quick cash demands upon the monied pow- 
 ers of St. Louis, Chicago, and New York. One-half of the branch 
 directors are to be elected by capital stock, and one-half bv stock 
 representatives chosen by the local Association directors. But in 
 each district, there will be a number of large banks controlling 
 more capital than the smaller banks combined. These banks will 
 dominate the local Association, and, will, in turn, be dominated 
 by the monied power. Thus the election of branch directors will, 
 in fact, be dominated by the large banks, and the smaller banks 
 must submit to the directors so elected. The gentlemen propose 
 to give the small banks a pretense of power and representation, but, 
 in fact, a pretense only ; for the larger banks of the district will con- 
 trol. Thus, the gentlemen of the affirmative find themselves in this 
 predicament : "If Wall Street and its great interests refuse to come 
 into this Association, there being no way to compel them, it will fail 
 for it can never exist." No ! the danger which Mr. Aldrich fears 
 is there. The plan will be dominated by the monied power of 
 Wall Street in its local, District, and National Associations, thereby 
 rendering the plan vicious and undesirable, and it should be 
 rejected. 
 
 But aside from the danger of control by Wall Street, there is 
 another objection which renders the plan undesirable. We refer to 
 the fact that, if the plan is adopted, it will be a centralized monied 
 monopoly. It means the centralization of our vast banking and 
 currency power in the hands of a. few men. At the head of the 
 entire system stands the Executive Committee of nine men. This 
 committee of nine exercises the powers of the Reserve Board, 
 and it is to be the real head of the svstem. And what are the cen- 
 tralized powers of these men ? They have the power to make the 
 by-laws of the Reserve Association; they make the by-laws of the 
 Local Associations ; they have the power to make the by-laws of the 
 
Banking and Currency Reform .51 
 
 branch Associations in short, these nine men alone are to deter" 
 mine the policy of the entire banking system of the United States. 
 
 Furthermore, these nine men have the power to expel any bank 
 from the Association, although that bank may not voluntarily with- 
 draw from the Association. These nine men may create new dis- 
 tricts at will, and they have the power to change the boundaries 
 ,of the old districts whenever they see fit. We submit that this is 
 a power which should be exercised by those in the local associations, 
 for they will naturally exercise more care and better judgment 
 than nine men located at Washington. Thus, all the power of this 
 Executive Committee of nine men reeks with the carefully concealed 
 idea of centralization centralization to be exercised for their own 
 satisfaction, and for the satisfaction of the interests which they will 
 represent. 
 
 But let us notice what other centralized powers these nine men 
 may exercise. The rate of discount should follow the la;w of sup- 
 ply and demand, but these men have the power to raise the dis- 
 count rate, and to lower it in any community, district, or state, 
 whenever it suits them to do so. Thus, they have the power to 
 raise the rate of discount to 5 per cent in the Knoxville district, 
 when, under the law of business demand, it should be three. Then 
 'again, they have the power to lower the discount rate in the Mem- 
 phis district to 3 per cent, when by the law of supply and demand 
 it should be 5 per cent. We urge that it is impractical to place 
 in the hands of nine men, the power to make a uniform rate of 
 discount, when the economic and business conditions of this coun- 
 try are so variable and so different. 
 
 Another aspect of this iniquitous centralization in the hands 
 of nine men, is found in the relation of the smaller banks to the 
 larger banks. Under this scheme, the larger banks are certain to 
 dominate the smaller banks, because they will be dependent upon 
 the larger banks for their reserves. Thus bank "A" having a 
 capital of $150,000,000, has been acting as the reserve agent of 
 bank "B," with a capital of $25,000. These two banks fall within 
 the same District Association, and it is but natural and logical to 
 expect that bank "B," being dependent upon bank "A" for its 
 reserves, will be dictated to by bank "A," when it comes to the 
 selection of the directors, instead of acting independently. 
 
 Turning now from these considerations of this centralized monop- 
 oly, for whose benefit is this centralized Association, under the 
 control of nine men, to be brought into existence? Is it for the 
 benefit of the people of the whole nation? Is it for the benefit 
 
5 '3 University of Texas Debates 
 
 of every class of business? Or rather is it to be adopted for the 
 benefit of one particular class, and that class the banking frater- 
 nity? An investigation of the provisions of the bill will show. 
 The one fact that stands out most prominently is that the National 
 Reserve Association is to be controlled almost entirely bv the bank- 
 ing community. Upon investigation, we find that all the directors 
 of the local associations will be elected by bankers, and will be 
 bankers. Five-sixths of the directors of the branch associations 
 will be bankers and will be elected by bankers. Coming to the 
 Central Association, which will be the dominant body, we observe 
 a control by the banking community. Fifteen of the forty-five 
 directors of the National Reserve Association are to be elected, 
 one each, by the boards of the fifteen branch associations; but 
 these branch boards are to be elected by bankers, and five-sixths 
 of the membership of each board consists of bankers. Following 
 this process through each election, we find that a total of forty-two 
 of the directors of this Association are elected by bankers, and 
 will be bankers. Is it true, then, that this Association is to be 
 a benefit, controlled by nine men, of, for, and by the bankers? 
 Is it wise to turn the whole financial system of this countrv into 
 the hands of bankers, especially when they are so cjosely allied ? 
 
 We must bear in mind that any change of the present banking 
 system must be for the good of the public as a whole. We must 
 realize that the public deposits of this Association alone will exceed 
 its paid up capital; that the funds which the banks deposit with the 
 Association will be but the funds deposited with the banks bv the 
 public, and that the paper which the banks rediscount with it will 
 be that of the business community. We must not forget that the 
 National Reserve Association is to have a tremendous public power 
 and responsibility, through its right to fix the bank rate of discount ; 
 its power over the foreign exchanges and shipments of gold; its 
 rights to issue the country's only elastic paper currency; its con- 
 trol over banks and its functions of holding a large percentage of 
 the country's reserve money. Here, then, is to be created a vast 
 centralized power, dominated and controlled by nine men, to 
 work its weal or woe upon the business interests of this country. 
 We demand to know, is it wise to place this power in the hands 
 of one class, to be operated for that classes benefit, beyond the pale 
 of control by the people at large ? Would we turn over the entire 
 finances of this country to the lawyers, if they were as vitallv inter- 
 ested in them as the bankers will be ? No ! This is a centralized 
 monied monopoly for the benefit of the bankers and the bankers 
 
Banking and Currency Reform 53 
 
 alone a monopoly which has the power of life or death over the 
 business interests of every community a monopoly which may 
 wield its too great influence in politics, to secure privileged legisl 9 - 
 ticn a monopoly which may laugh at the threats of those who 
 created it. Such a power should not be given the right to control 
 the finances of this country. 
 
 Honorable Judges, we of the negative have shown you that the 
 plan cannot remedy the inelasticity of the present system, but 
 rather that it tends to increase it; and second, that it absolutely 
 fails to provide an adequate discount market, Furthermore, the 
 danger of Wall Street controlling the Association is too distinct to 
 be denied, while the powers of such a centralized financial monopoly 
 are too great to be exercised by nine men. In short, the gentlemen 
 of the affirmative seek elasticity, and the direct result of their 
 efforts is increased inflation; they plead for cooperation of all the 
 banks for the benefit of each, and they get private centralization 
 centralization which binds together, in one solid phalanx, every 
 bank, every commercial, financial, and political interest ^centraliza- 
 tion which takes from the government the right to amend for ten 
 year?, and subjects to the danger of control every individual's 
 interest in the United States for a term of fiftv years. For these 
 reasons, we submit that the plan is un-American, and is not to be 
 desired. 
 
 BIBLIOGRAPHY. 
 
 Affirmative References. 
 
 Laughlin's Banking Reform. No. Amer. Rev., vol. 188, pp. 212- 
 25: vol. 193, pp. 539-50. Independent, Feb. 29, March 14, 28, 
 1912; vol. 72, p. 665. Nation, vol. 76, p. 184; vol. 92, p. 73. 
 Everybody's, March, 1912. Forum, vol. 45, pp. 539-47. Cur. Lit., 
 Feb. '12, '1912. Outlook, vol. 88, pp. 106, 149-50, 340-1, 676-7. 
 Lit. Digest, Nov. 14, 1911, Jan. 20, 1912, Q. J. Econ , vol. 20, 
 p. 135. Pamphlet. "A National Reserve Association and the Cotton 
 .Movement." Banking Reform Series, No. 5. Pamphlets issued by 
 National Citizens' League for the Promotion of a Sound Banking 
 System, Chicago, 111. Congressional Record and periodicals for 
 June-October, 1913. 
 
 Negative References. 
 
 W. R. Hambey, "The Aldrich Plan : A Review of Its Powers and 
 Functions." No. Amer. Rev., March, 1912, pp. 310-18. Jour. 
 Pol. Econ., vol. 16. pp. 94-7; vol. 20, pp. 25, 41. Independent, 
 
54 University of Texas Debates 
 
 vol. 64, pp. 427-8, 1101-2; vol. 72, pp. 555-58. Nation., vol. 36, 
 pp. 164-5; vol. 89, pp. 450-5. Banking Reform, March 16, 1912. 
 Cur. Lit., vol. 50, pp. 584-6. House Documents, No. 291, 62nd 
 'Congress. Everybody's, April, 1912. Moody's Mag., March, 
 April, May, 1912. Speeches by Senator LaFollette, March, 1908: 
 'Congressional Record and periodicals for June-October, 1913. 
 
THE UNIVERSITY OF TEXAS 
 
 DEPARTMENT OF EXTENSION 
 
 (CONTINUED FROM PAGE TWO INSIDE COVER.) 
 
 PUBLIC WELFARE DIVISION. 
 
 It is the purpose of this Division to collect data regarding 
 economic conditions in the State and to furnish the same to citi- 
 zens of Texas through exhibits of photographs, charts, diagrams, 
 statistics, etc., supplemented by illustrated lectures and printed 
 bulletins. 
 
 THE DIVISION OF INFORMATION AND EXHIBITS. 
 
 The Division of Information and Exhibits has charge of the 
 various educational exhibits sent out by the University to fairs and 
 other large gatherings, for the purpose of calling the attention of 
 the people to some of the crying needs of Texas and pointing out 
 the most intelligent method of meeting these needs. 
 
 CORRESPONDENCE DIVISION. 
 
 The University of Texas now offers for home study correspond- 
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 Civil Engineering, Drawing, Economics, Education, Electrical 
 Engineering, English, French, Geology, German, Government, 
 Greek, History, Latin, Law, Mathematics, Mining Engineering, 
 Philosophy, Public Speaking, Spanish, and Zoology. 
 
 The following correspondence courses preparatory to Teachers' 
 Certificates are also offered: Algebra, Bookkeeping, Chemistry, 
 Geometry (Plane and Solid), History of Education, History (Gen- 
 eral), Literature, Physics, Psychology, and Trigonometry. 
 
 Programs and courses of study for clubs or other associations 
 are also offered. Correspondence is invited. 
 
 For complete catalog of the Department of Extension, address 
 Director of the Department of Extension, University, Austin. 
 Inquiries relating to a particular Division should be addressed to 
 the Head of that Division. 
 
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