Vice President [1921-1923]

The Banks and the People

At a dinner attended by New England Bankers
New York City, NY

New England has represented a great deal in American history. It is not merely that there are located the home of the Pilgrim and Puritan, the tall monument on Bunker Hill and the bridge at Concord, or the old road to Ticonderoga, or the famous Charter Oak, or the home of Stark and of Pepperill, or the land of Roger Williams. Nor does New England hold merely by its great educational institutions, its manufacturing, its arts, and its commerce. The position of New England is determined more by what her people have done for the nation and for the world than by what they have done within the confines of their own six States.

This service has been both financial and personal. When the untamed regions of the nation were opened up for settlement, some of the best blood of New England streamed westward, and has made its mark broad and deep on the history of all the Western States, so that many of their representative men trace some connection to the northeast corner of the nation. The enterprise and business ability which here originated has played a leading part in the building of railroads which span the continent, the opening up of the mineral resources of the nation, the development of public utilities, and, in short, the making of our Western empire. All this has been a prodigious service, nobly performed, worthy of the sons of the Pilgrims and the Puritans. It has lent an untold strength to the guarantees of civilization.

This great service is still going on, and it is this which gives New England a right to demand the means by which this work can be continued. You are without many of the great natural resources which have endowed other parts of the nation. There is little production here of the raw materials which go into manufacturing, and while this country has always been the abode of the thrifty farmer, it is unblessed by those great agricultural resources which are the heritage of other parts of the nation. There are here, however, vast plants of intricate machinery, men and women of great skill, and large capital resources which make the foundation for industrial and commercial prosperity. In these there is independence, but they can only be utilized through the transportation of raw materials in and the transportation of the finished product out, so that the entire future of this section of the nation depends, primarily, on transportation. It is the combination of these circumstances which gives to New England the right to require, in order that it may serve the nation, reasonable and adequate transportation. The furnishing of this is a duty which reaches to the managers and operators of your own transportation systems, and to the managers and operators of those other transportation systems which ship in and out of your territory. I speak of this as one of the fundamental requirements which, while bounded by a small locality I is nation-wide in its effect; while it relates to the operations of a comparative few, yet will make by its success or failure the prosperity or the destitution of millions of Americans.

This is a very pertinent example of the interrelationship of our modem economical life. There can be no permanent prosperity of any class or part. Such a condition can only be secured through a general and public prosperity. This means that to secure this end there must be a general distribution of the rewards of industry. Wherever this condition is maintained there you have the foundation for an increasing production and a sound financial and economic situation.

One of the strongest reasons for supporting American institutions is that under them this condition is more nearly attained than under any other form of government that has ever met with any permanent success.

You are assembled here representing banking institutions. Too often the uninformed think of a bank as the possession of a few rich people, and as the creditor of the people at large. You who have had any experience with banking know that it is the opposite of this which is true. The resources of banks are not the resources of a few rich, but the resources of the people themselves, small perhaps in any individual instance, but, in the aggregate, very large. Nor are banks exclusively a creditor class. It is usually true that they owe to their depositors more than their borrowers owe to them. Every banker knows that to depend on the business and patronage of the rich would be in vain, that if any success attends his efforts it must be by serving and doing the business of the people. The stock is generally owned by the people, the deposits are always made by the people. This is the reason that banks partake of the nature of a public institution and perform real public service. They are the sole means by which modern commercial activities can be carried on. They afford the method by which the people combine their individual resources, providing a collection of capital sufficient to extend the necessary credit for financing the whole people of the nation. They hold great power and are under the very gravest responsibilities. A bank is not a private institution, responsible to itself alone, or to a few. It is a public institution, under a moral obligation to be administered for the public welfare. In so far as this standard is accepted and followed, it is my belief that a bank will be prosperous; in so far as it is disregarded, it will be a failure. Any power which is not used for the general welfare will in the end destroy itself.

There is need of a more sympathetic attitude and cooperation between the banks and the people. Every such institution ought to realize the necessity of serving the public to the extent of its ability. A financial institution which takes advantage of no man’s necessity, which assumes no unreasonable risks for the sake of unreasonable gains, which is able to know the personality of its customers as well as the value of its collateral, becomes an instrument of great value, and a contributor to a marked degree of economic contentment. Such an institution is doing the work of the people.

This condition has not yet been universally established, but it is being established. Nothing can tend more to promote it than to have the man in the shop realize that transportation and financial activities are being carried on for his benefit; that the railroad brings raw material so that he may earn a livelihood by making them into finished products; that the bank exists in order to furnish credit from which he receives a weekly wage, while those products are being sent far away and sold to the people. While the man in the bank needs to realize that his success lies in the freight-yard, in the manufacturing plant, on the farm, and in the mine as well as at the discount window. If all this were to be translated into one word, I should say it was the need of vision, need of a recognition of our interdependence, need of less destructive criticism and more constructive action, need of that spirit which has given character, fame, and fortune to New England, whether it has guided the plough or inspired the pulpit.


Calvin Coolidge, The Price of Freedom, Charles Scribner’s Sons, NY, 1924.