The Anaconda standard. [volume] (Anaconda, Mont.) 1889-1970, 1898-12-30

clause which authorizes the secretary
of the treasury to make loans at his
own discretion to meet temporary de-
ficits. In fact. under the laws now in
force, a secretary who desires to main
tain the gold standard need have no
difficulty In doing so. But, I'm the alb
sence OF an explicit legislative man
date with respect To the duties OF the
secretary I'm this matter. II Is possible
for an executive so disposed to over
throw the gold standard, even thong
no change be made In the law. There
thu remains In the situation an ele-
ment OF uncertainty which Is needless.
and which cannot but prove harm
ful.
As respects the needs for elasticity in
the note system. next to nothing has
been gained. In the first place. we still
retain for our bank circulation the sys-
TEN of bond security. n under that
system IL is I'm the nature of the case
extremely difficult, II not impossible, TO
secure in the currency that prompt n
easy adjustment of volume To need
which constitutes genuine elasticity. In
defense OF this statement much might
be said. but II may suffice to call at
tention TO a single consideration. III
bank circulation Is to be elastic. the as
sets which are required as security for
that circulation must be such as a bank
ordinarily has In Its possession; since.
i'm a stringency when expansion Is need
ed. the bank already has its
locked up. and consequently cannot
without great difficulty get hold OF new
assets. But government bonds are not
a kind of assets which banks will, or
usually ought to. have on hand I'm con-
siderable amounts. The special office OF
banks Is to provide funds for the every
day business of the country, l. e.. to in
vest their resources, not in n supply or
go. a. ...aa The hnaNa 90 an tnnaathlA
issue OF notes. but in commercial paper.
grain bills. and the like. As a result OF
all this. the amoun OF notes which, un-
der our system, most banks issue, Is
that amount which can be kept in cir
culation substantially all OF the time.
Fluctuations I'm the need for such notes.
there is almost no attempt To meet.
In the second place. we have not at
tained in our circulation even that de-
gree of elasticity OF which a bond Sc
cured system Is capable. AT the outset.
we disregard the fundamental principle
hat in order TO be elastic, a circulation
should be profitable. That this Is a
fundamental principle needs little proof.
The necessity OF p~roitableness to secure
expansion, is ~self-evident. In securing
contraction. on the other hand. profta-
bleness. Is less necessary, is not less
effective: for. in making each banker
anxious 20 expand his own circulation.
III ltdOS MIN DTnIlBNlg ~ tuu ntiut tht
issue OF his neighbors in order to make
room for his own. Thus. from the sim
gle fact that the circulation Is fairly
profitable. are derived two opposing
forces which work respectively for the
expansion and for the contraction Of
the currency as n whole. Further. the
relative strength OF these opposing
forces is largely determined. as II
should be. by the needs OF business. II
more notes are wanted in the ordinary
circulation. they will be swifter In going
out, and, since they will not naturally
get into the hands of bankers. slowe
in being sent home 10 the issuer. III. on
the other hand. fewer notes are needed.
they will be slower in going out and
more prompt In coming back. since,
when idle. they will naturally accumu-
late in the banks. and by them will be
sent home. IL Is thus evident that a
reasonable degree of prohtableness Is a
most important requisite OF an elastic
currency. Now IL Is a commonplace
hat our bank circulation Is not a pro-
ntable one. Most banks deposit bonds
TO the least amount permitted by law,
and do not always issue even the guam
tlty Of circulation corresponding there
70. II Is true that conditions have in