Randomness (r_ness) wrote,

"There is one form of panic, however, which I believe the Federal Reserve system will relegate to its proper place, the museum of antiquities, and that is the panic generated by distrust in our banking system leading to a struggle for self-preservation between bank and bank and individual and individual and ultimate hoarding by the people. I say ultimate hoarding by the people, for to my mind such hoarding usually follows hoarding by the banks and does not precede it. It is safe to say that if hoarding by banks should cease, hoarding by individuals would never occur, and both, I believe, will be relegated to obscurity under the Federal Reserve system.

"No hoarding can be imagined more injurious than the hoarding of banks when they have engaged in this operation in the past. Each bank retreats into its own citadel at the sound of danger and at a time when it should be drawing upon its reserves to help the business man of the community, it stays aloof, piling up reserves upon reserves like Pelion upon Ossa, and the business men have to care for themselves as best they can."

--Charles S. Hamlin, Governor of the Federal Reserve Board, in the New York Times, Friday, December 4, 1914.

(From http://query.nytimes.com/mem/archive-free/pdf?res=9E02E6DF1438E633A25757C0A9649D946596D6CF,
pointer via http://paul.kedrosky.com/archives/2008/10/09/financial_panic_1.html)
Tags: money
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