The new dominion. [volume] (Morgantown, W. Va.) 1876-1904, 1893-12-23
Springer ON Banking.
New York Evening Post.

uppermost OF ali nnanclal topics IN
the national councils. Silver pur-
chases had been favored in the West
and South By reason of a supposed
shortage ofcurrency. People thought
that they could see an increase of
money if the mints were at work
coming dollars on government ac-
count, or if the Treasury was print
ing legal tender notes based upon
silver bullion. They did not see that
the silver so purchased merely dis
placed gold. leaving the total amount
OF circulation unchanged except as
We parted with superior kind OF
money to make room for an inferior
kind
The idea that we must have addi-
tional supplies Of money remains as
potent as ever, and this idea is found
ed in reason. We must have addi-
tional supplies of money when they
are wanted We must have them as
they are wanted. Moreover, we shall
have them when and as they are
wanted. If nothing else is offered,
we shall take gold. We have impor-
ted SCI 100000 of that metal the
present year. 1t is true that we had
previously exported$70, 900, 900. Both
movements are copious illustrations
of the fact that nation can get all
the money it needs, even if it has a
stiff, infexible, Anticipated banking
system. Therefore we need not be
alarmed if Congress does not favor
us with an improved banking system
in hurry We shall still have the
worlds gold reservoir to draw from
the same from which England draws
her supplies. But the demand for
something different. the demand for
paper currency at par with gold,
which shall accommodate itself to
the wants of the business eommun-
ity, will continue and will become
more and more urgent until it ia
complied with.
The Eueniag Post published last
week an interview with Mr.. Springer
of Illinois, the chairman of the House
committee on banking and currency,
giving his views of what ought to be
done in order to give the country an
elastic and abundant currency II
is perhaps not surprising that Mr.
Springer should have completely
missed the thing he was searching
for, 1. e., elasticity. The present ma
tional banking system is not elastic.
It's currency does not expand when
expansion is needed. On the con-
trary, it shrinks when expansion is
needed. Now, Mr. Springer thinks
that the system is non elastic because
the national bonds are a diminish
ing quantity and because they. are AT
a high premium in the market-the
rate of interest which they pay be
ing accordingly very low. So he pro
poses to take as basis of circula
tion an inferior kind of bonds, such
as those of counties and municipal.
tiles. This change, he thinks, would
bring into existence an elastic cur.
rency.
Mr.. Springer has missed the point
completely in this: that it is bond
security, and not the kind of bond
security, that makes the bank eur
rency stiff and ipflexible. The ties
timony of bank officers and experts
on this point is now almost unani
nous We take the first which come.
to hand. In the current number O
Rhodes's Journal Of Banking is {
thoroughly good discussion of this
question by Hon A, b. Hepburn, ex
comptroller of th, currency. Tht
article is entitled Substitutes fol
Money" Touching the matter o
elasticity Mr.. Hepburn SAYS:
But no currency can be elastic
which is based upon stocks or bonds
If, before issuing notes, bank i,
compelled to invest as much or NOR,
money in the purchase of securities
as basis for its note issue as tn,
bank notes, which it is in turn au
thorized TO issue, amount to, thei
elasticity is destroyed. In order u
respond to the increased demands o
the people, banks should be allowed
to create money-to issue note
against credit" etc.
There is the whole question in
nutshell A bank is started to lent
, money to the public. Bond securit,
implies that this money shall b
locked up in permanence by the pur
chase of stock-exchange securities
. Elasticity is destroyed ipso factc
But, says somebody, bonds are nee
essary as security for the notes. All
it is question of security, is it
Then we have to choose between on
kind of security and another kind
and if we can somewhere find secur
ity plus elasticity, we should give
the preference over security joine
to stiffness and infexibility. Nov
, Mr.. Hepburn, in the article fror
which we have quoted, adds his tes
,, timony to that of many other author
tiles by advocating the safety. fun
| plan. AN annual tax he says, &c
! one-half of l per cent. imposed o
the outstanding circulation of tn
: national banks from the time of thei
organization would have redeeme
every note of every failed hank an
paid the entire cost of the nation,
: banking system during u period {
thirty years, with something of
msrgin over. The experience Of thi
T ty years ought to be and is sal
9 criterion on which to base Legislation
I, as to the future"
j AT tho raennt ha n L orc, ,.onvantir