New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1898-06-17

To the Editor OF The Tribune.
Sir: BY some strange oversight in looking ov.,
my Tribune failed 20 read the editorial ar.,c,.
Of May q, criticsing the Banking bill now befor.
the House of Representatives. II has lust bs..
brought to my attention. and beg the prylley.
of your columns to endeavor to correct vb.,
seems to me Misrepresentation on the sub,ec,
because know how sincerely anxious you ar.
for better financial state OF things In the CON,
try.
The absolute necessity for some change in ON,
financial methods led to the calling of the ,wo
monetary conventions held at Indiananoi.
The delegates to these gatherings were expe.
rienced and able business men from all section,
OF the country. They were not controlled Nv
bankers but their members were for the ,aos,
part men OF large industrial or commercial AZ.
fairs. They believed that necessary reforms 4,
our currency and banking laws should be maa.
and were vital TO the safety OF the country
These conventions resulted In a N ost care,,
and thoughtful study Of the situation. The hin
accepted at indianapolis would have been OF the
very greatest value, hut II involved more prac
teal changes than Congress would entertain
at present.
After many months OF consultation the Com.
mttee Banking and Currency in the House
have agreed 10 the bill for currency reform re-
ferred to In your editorial. 1t is not perrec,
bat 1t is a large step forward and most I'm.
portant in committing the country to a wiser
state OF things. It divides and s!mplihes the
work OF the Treasury. 1t virtually places US on
a permanent gold basis It provides for the
gradual withdrawal Of the greenhacks withou,
any Jar TO business and provides for banking
issue based on positive assets. such as the best
experience Of the world has proved most safe
and efficient
The great volume Of demand notes issued By
the Government payable on sight, and which in
time Of need can be presented In large quaint.
ties have been such an element OF danger as
to cause the very tmdty and contraction OF
loans on the parts Of the bankers when any bad
symptom came to which the editorial refers
The bill provides that the burden OF caring
for these greenbacks shall be assumed by the
banks. and although the obligation is a serious
one. believe that the banks will assume II and
be able TO prevent the difficulties which your
writer fears.
The principal criticism made In your editorial.
that II Is within the power Of the banks 10 con.
troll the volume OF the currency by increasing
their reserves and refusing discounts, does not
seem to me 10 lie against the bill before the
House OF Representatives much as against
tho existing system. Arbitrary action by bank
ers to create money famine is so obviously
TO their own disadvantage. in leaving their capt.
tai idle and destroying their profits. that hard
~ think il merits serious discussion In New.
York. Just so far as such danger exists,
however, It is much greater with a rigid volume
OF Government money than under the proposed
system OF a banking currency. Unless the Gov.
eminent given power TO issue greenbacn
without limit when the banks were supposed to
be restricting loans II would be much easier for
them TO lock up out Of the hands Of the people
the gold. silver and greenbacks. whose volume
IS known. than to attempt the experiment o!
fighting against an issue OF currency upon com.
merclal assets which would become profitable
10 the banks which refused to enter the COM
bnetion and might avail themselves Of the high
interest rates which has been caused b. such
manpuaticns.
A bank exists as a clearing house for the ex'
changeable wealth Of the country In large
cities and densely populated communities banks
receive deposits for the money. and pay It
out on checks These checks. as evidence OF de-
post, form the greater part OF the cur
rency of the country. banknote is nothing
but a certified check issued for the pur-
pose OF convenience in the exchange OF COM
modltes The value Of the certified check lies
in the fact that II is a certain and safe represent
tative OF money or negotiable capital bank
note is substantially the same instrument OF ex-
change There is only one reason why the issue
Of a banknote should be more carefully guarded
This Is the reason OF public confidence IN
handling the notes without making particular
inquiry as to the responsibility Of the issuer
The National bank notes. to those who used
them, were so vastly better than the old dis
credited issue of State banks before the war
that It IL no wonder strong prejudice has
grown up in their favor. There is great con-
fusion and uncertainty. however, in regard TO
all the present methods OF the Treasury and the
movement of currency.
The new bill includes many valuable features
OF which YOU would approve. Your possible OBJ
lection is TO the substitution OF the issue OF cur
rency by the banks base on commercial assets
This ; n fair PRESTON. Answers 10 the folow'
ing Wi throw .sht on 1t:
First-Are the measures proposed In the bill
before the House of Representatives an improve
ment on the present National bank method
with circulation based on Government bones!
Second Have these measures been confirmed
by The experience Of other countries where pahA'
ing is conservative ard reliable?
Third-Would they be economical?
Fourth-Are they adapted 10 the peculiar
wants OF this country
Fifth-Lastly and most important would 'hs
notes issued by the banks under this act be ao-
solutely secure?
ANSWERS
First-The present National system has proved
Of value. especially in taking the place or 'ns
vicious and unprotected issue Of state banks
prevailing prior to 1861; but it is rigid. arbitrary
and unelas.ic and by its provisions has fai'ea
to meet the reasonable demands OF the Sou'h
and West, where checks deposits are ho'
largely used. and where the need OF proper
facilities is greatly felt. The lack OF such iacN'