Crawford avalanche. (Grayling, Mich.) 1879-19??, 1898-01-06
Plan OF Currency Reform.
\ cy.fnOfon correanr naenco.

appointed under authority OF the con'
vention of business men held in Indianap-
oils last January, has been made public
1t retains practically unchanged the ex-
listing metallic money. The existing gold
standard on which business has been
done since 1870 Is maintained, on the
ground that Industrial interests demand
certainty as to what the standard shall be-
TO this end, ii is urged that the United
States should remove all uncertainty as
to the meaning of 'coin" IL It's obliga-
tons, thereby saving the taxpayer by the
ability to borrow at low rate of interest
No attempt Is made to remove the exist
ing silver dollars, nor to change their
legal-tendcr quality; on the contrary
place Is provided for them in the circula-
ton by forbidding the issue of any paper
money other than silver certificates in
denominations below $40.
1t Is regarded by the commission as
dangerous to maintain the present prac-
tice of using government demand obliga-
tons as money. They were issued be-
cause there were no resources in the
Treasury; and so they deprecated, drove
out gold, furnished Huctuating stand
ard, increased the national debt enormous
ly, caused change in prices whenever
the credit of the paper standard fluctu-
nted, and by causing unexpected changes
In the level of prices gave rise to extra
ordinary speculation, increased the sever
ity Of commercial crises, and placed the
small producer at disadvantage with the
large operator.
For these and other reasons the COM
mission strongly urge the government to
withdraw it's demand obligations now
used as money, decline to provide gold for
exporters and put the burden and ex-
pense of maintaining a redeemable paper
circulation upon the banks. In order to
meet the demand obligations, the pres
cnt reserves of gold in the treasury fur-
nish sufficient sum to be set aside in the
Division OF Issue and Redemption; and to
meet possible contingencies the Secretary
of the Treasury is authorized to sell
bonds whenever the reserves need re-
Punishment In this way, or from sur
plus revenue, the demand obligations
THAT is, United States notes and Treas
ury notes of 1S90 can be removed in such
a way that the cost to the country can be
reduced; while this will also give the in
estmable advantage of ceasing to use
demand debts as money, simplifying our
currency and adding to confidence in the
certainty of our standard. BY the plan of
the commission the withdrawal of govern
ment paper is so arranged that contraction
cannot possibly take place; If United
States notes are cancelled their place Will
be taken by the gold paid out for them,
or by the expansion Of bank notes (under
the new system proposed).
The demand obligations of the United
States were not money based on prop
erty; they were only a debt. On the
other hand, bank note is never issued
fraud, of course, excluded except for a
consideration in negotiable property OF
equal or greater value. The bank note
comes forth as the sequel to business
transaction, and is based on the active
property of the country, which is passing
between producers and consumers. The
currency Of the country, moreover, in
creases as the transactions of the coun-
try increase; hence the rigid unchanging
issues of the government make them an
inelastic part of the circulation, while by
the very process of their issue bank notes
alone can he automatically adjusted to
the changing transactions of the bust
ness community.
In amending the present national bank
ing system. the commission were actuated
by a desire to secure absolute safety to
the note-holder; to make the notes uni
form and of equal currency in all parts of
the country to create an elastic system,
which, while expanding in response to
increasing transactions, should healthily
contract when transactions diminish; and
which would help in u better distribution
of banking facilities throughout the
Western and Southern States.
In view of the scarcity of United
STATE bonds they cannot long be regard
cd as Il basis of circulation. Moreover,
any bond security Of high character
yields low rate of interest; and in q
time of stringency, when borrowers need
loans and the market rate of interest is
high, there is no inducement to buy these
bonds to increase circulation. Hence, I'M
der the present system, when notes. should
be most needed, it is least profitable to
issue them. While providing for a par
tial use of bonds for securing notes (25
per cent. of the capitaD the Commission
proposed that notes beyond this should be
issued on all, instead Of part of, the
resources Of bank; and within u few
years that no special bond security should
be required. Banks may issue notes up
to 60 per cent. of their capital without re-
straint; for issue beyond 60 per cent. and
up to so per cent. they pay tax Of two
per cent; for those beyond 80 per cent
and up to 100 per cent, they pay n tax
of per cent. These notes would be q
prior lien upon all the resources of the
bank, and, in addition, upon the stock.
holders liability. Moreover, all banks
issuing notes contribute per cent. OF
their circulation as permanent guaranty
fund. For daily redemptions, banks
should keep 5 per cent. redemption fund
in the hands of the Comptroller of the
Currency. Banks Of $4,000 capital may
be established in places of 1000 inhab-
itants; and branches of banks are also