Banking and financial crises are a regular part of American history. We have weathered them successfully many times since the Civil War. Somehow, our government has become convinced that America is no longer strong enough to overcome a banking crisis. All we hear is that some companies are “too big to fail” and create “systemic risk” that would result in some unimaginable failure of life as we know it.

One person in a recent audience sent me a letter his great-grandfather wrote in 1907 to his daughter. He was a banker in East Texas at the time, and his daughter was concerned that she couldn’t withdraw more than $35 from her bank. Here is the banker’s description of the 1907 situation.

My Sweet Kittie Baby:

You ask why only $35 can be drawn out of the Fort Worth banks. It is the same way all over the country now. However, we are fortunate here. No limit has been fixed by our home banks, but they are cautious, and the least little run on any one of them would make them adopt the same rule.

The reason is that the whole United States has been on the very verge of a panic for some time, beginning in New York. The ostensible beginning was the failure of the Knickerbocker Trust Company of New York, a very large banking concern. This caused depositors to want their money deposited in other banks; so many calling for their money at the same time is what we call a “run” on the bank.

So now to protect all depositors alike, banks have adopted a rule to let their depositors have only a small amount each day until this nervous feeling is over. The U.S. government is also now issuing $50 million of bonds to sell to get money to deposit in banks to help.

Conditions are improving every day, and hopes are entertained that the worst is already over. These financial panics occur about every decade; the last one was in 1893. The one before that was in 1886 and so on.

Reckless speculation and inflated values bring them on, and it takes skillful management and good “financiering” to prevent disastrous results.

Well Baby, this is enough of finances for one time. This same pressure has caused our loan companies to hold up funds from us, and we cannot get money to make loans. We are doing very little business now. I do hope things will soon change up so we can get money to make loans.

Bushels of LOVE,

Father

As you can see, there is nothing new under the sun. We have been down this path many times in our history. America is strong enough to overcome heavy adversity.

I don’t know about you, but I’m getting tired of hearing how every company on earth is too big to fail. If they are truly too big to fail, then they should be dismantled until they aren’t.

If we need to have a “bank holiday,” then let’s have it. There are thousands of strong banks in this country. Let’s find out who the zombies are, and put them out of their misery.

The healthy banks can pick up the pieces and lead our country to growth and prosperity.

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