National Republican., 1883-12-27
A anrAr sArreuARp.
Mr.. Thompson's Remsdy for Financial
Panics-A Plan clearly Outlined.
Nan YORK. Independent

Men York Independent.
Mr.. John Thompson, the vice president OF the
Chase National bank Of this city, read short
paper before the Bankers association at their
meeting In Louisville, in which he proposed
remedy for financial panics The character Of the
remedy appears in the following preamble and
resolutions:
"whereas the advantage and the necessity OF
providing for an increased or extra issue of cur.
rency,. which will meet and break the force OF
financial revusions and protect business interests,
has been practically aud successfully demon
strated In England; and
tirely wanting in any provisions ofthis character:
Therefore, be 1t
"ResoiUcd, That this convention recognizes the
necessity OF Legislative action TO provide for tho
protection Of the vast and continually increasing
monetary interests of this country In times Of
financial revulsion, such as reour periodically In
"Resolued, That congress should enact law in
Yestng the secretary OF the treasury the highest
financial officer. with full power to receive any
United States bonds, not exceeding In amount
100000 900, and 10 Issue therefor currency notes,
equal Ia amount TO the par value osthe bonds de-
posted, and accrued interest on the same. Inter
est on the bonds while on deposit to accrue to tho
treasury. Deposiiors TO be allowed to redeem
bonds at any time without notice. Bonds so do.
posted 10 be subject TO call for redemption upon
sixty days notice from tho secretary, and TO be
forfeited 70 the treasury upon failure to respond
authority 80 delegated, 70 aci ~ and with the ad.
vice and consent OF the plssident Of tho United
wisdom OF congress may provide to guard against
Its improper exercise.
"Resoipcd. That the executive council of this
association are hereby requested TO adopt as they
deem best the needfui measures for properly lay
ing this matter before congress"
The direct and immediate fact which confronts
debtors in q financial panic is what is called a
tight money market" These debtors have lia-
bities which they must Immediately meet; and
whether they have adequate assets or not they
cannot Immediately command the monetary re-
sources with which TO meet these liabilities. The
universal cry Is for money; and yet the money Is
not forthcoming. The banks, for their own safety,
contract rather than expand their accommoda-
tionsto their costumers. Men lose confidence In
each other. Those who have money hoard 1t
rather than take the hazard of losing IL. Prices
fall, and the whole business community Is in COM
motion, and each individual in trying TO take
care Of himself, only increases the commotlon,
Thus things proceed, at an enormous disaster
to private fortunes, until the panic strikes bottom.
The policy of the Bank of England, when such
panic appears, which has often been successful,
is TO issue extra amount OF bank notes, and
thus to fill up the vacuum caused by the impair
ment OF individual and local bank credits, and in
this way break the force of the panic and secure
qniek return to commercial confidence. This
gives business men something with which they
can pay debts, and this is precisely what they
want Mr. Thompsons proposition is to secure
the same result By authorizing the secretary the
treasury TO issue currency notes In exchange for
government bonds to an amount not exceeding
$l00000,000 The ideas, as expressed in his second
resolution, would be a novelty In this country
and yet 1t by no means follows that II is bad
idea.