The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-01-12

groundwork of a final plan that may be
evolved from them. The suggestion that
the treasury should be separated into two
divisions-one of revenue and another OF
issue and redemption - follows Secretary
Cages idea. The treatment Of our mass of
heterogeneous currency, a subject as DELI
cate and complex as any the commission
mad TO deal with, Is perhaps open to criti-
clsm in one or two particulars, but as it
concerns facts as they are. rather than
IDEAL conditions, it remains for such criti-
cism to point a better way.
me most serious problem-in fact, the
only one aside from the maintenance of a
standard-with which the commission had
TO deal was that of reducing the volume Of
demand obligations issued by the govern
ment and the establishing of a banking cur
rency which not only would fiji the vacuum
caused by the retirement of the g~reenbacks,
but at the same time supply urgent needs
or all sections alike. Without going into
details it can be said that the banking cur
rency proposed by the commission Is safe.
The restrictions thrown areund its issue
and redemption guarantee stability. The
only question is the Application of the plan
outlined by the report nd also by the bill
embody ng its provision. since int. o4uced in
Congress. Now. the only reason for an
elastic currency is that the scattered
threads of credit. as represented by the in
dustrial activity in varying periods of a
community, are best enhanced by the mobil-
ization of such credit in a central institu-
ton which is recognized as being worthy of
II. In other words, the credit of a bank
makes its promises to pay universally ac-
ceptable, and its notes, bearing this pledge.
perform q function that an individual can
not we'll duplicate. But it follows as a
corollary that there should never be an
oVersupply of this credit. Otherwise II not
only defeats its own mission, but leads to
confusion and worse. Quite as necessary,
therefore. as the method of issue of these
notes is the manner in which they are TO be
retired. Whether. the redemption at sub
treasures (which means practically redemp-
ton in New York city, as outlined by the
monetary commission will accomplish the
purpose is doubtful. The objection 10 the
present currency system is that it drives
money 10 tho DTnaf nanfarG IF nnfar for
retirement came direct there might be no
danger in the new plan. but passing from
bank TO bank on the way it is very much
TO be feared that the redemption would be
prolonged over an indefinite period. there
fore defeating one of the chief aims of the
bill. Second thought would suggest tfat the
ton after having done their work. and that
other banks should be able To liquidate them
immediately. once they were paid over as
deposits. This is done i'm the Canadian Sys-
tenn. where banks force all notes other than
INTO their Tossess O.. II e advantages OF his
are obvious. The Suffolk system was even
more complete and satisfactory. Perhaps
the commission argued that the tax on ex-
ira bank circulation and the facilities of
modern would regulate the mat
ter. but an ideal credit currency involves a
redemption that absolutely prevents a glut
or money at one center and a famine at an
other.
Some will argue that the plan of the COM
mission throws the burden of general gold
redemption on the treasury rather than on
the banks. Without discussing this point at
length it will be conceded that between the
treasury and the banks there will be no
division. Unless specifically pledged by law,
banks here and in other countries will never
assume the burden of supplying gold in re-
Spouse to international demands when the
public treasury is open for that purpose.
The banks can protect their gold when nee
eSSary much easier tlan the government.
This is a delicate point and will require
careful handling if we are to have financial
laws OF the character outlined. But the
commission nnnHnr { fn haxra fhrnuyp ant
safeguards around the treasury now abso-
lutely lacking.