The San Francisco call., 1899-01-01
CURRENCY
REFORM" IS
THE SUBJECT
Comptroller Dawes
Address.
LEGISLATION is REVIEWED
RECOMMENDATIONS OF THE
PRESIDENT APPROVED.
Means by Which the United States
Government May Be Enabled
to Check the Endless
Chain" System.
Special Dispatch to The Call.


on Currency Reform" He said in
part:
cat the election of 1896 the chief issue
before the American people LOT settle
ment was that of the maintenance Oh
the. gold standard and a sound gov
ernmental currency. The commercial
crisis of 1898 with the consequent re-
duction in Governmental revenues hao
developed an inherent weakness In our
present monetary system, Whlcn peIore
that time had been latent. This weak
ness was largely due to two causes
first, the dispropQrtion existing between
demand governmental currency naplll-
ties and the gold held by the treasury
for their redemption; second, the TACT
that these demand currency liabilities,
like greenbacks, being once redeemed
in gold could be paid out again for
government expenses, thus making pos
sible q further presentation for gold re-
demption, and creating what has be-
come commonly known as the endless
chain
"As pointed out in the Presidents
last message the proportion or net goid
holdings to demand currency Liabilities
of the treasury November l, 1898, was
2535 per cent, as compared with 1880
per cent on November l, 1897. Recog-
nizing these conditions the President III
his last annual message to Congress
makes a recommendation which, II
enacted into law, would break the end
less chain and still further strengthen
the condition of governmental cur
rency already so greatly improved by
the treasury operations OF the last year.
His words are as follows: In my Judg-
ment the present condition or the treas
ury amply justifies the immediate
enactment of legislation recommended
one year ago, under which a portion of
the gold holdings should be placed in
a trust fund from which greenbacks
should be redeemed upon presentation,
but when once redeemed should not
thereafter be paid out except for gold
This is the Interpretation placed by
the President of the United States upon
the nature of the demand of the people
in 1896 for monetary reform; and While
not denying as his message shows, the
necessity of other legislation, which ne
leaves to the wisdom of Congress, he
strongly urges its enactment into law.
ITO press the consideration of other
proposed remedies at this time Will
prove a hindrance and obstruction to
the adoption of this recommendation
which is plainly a step in advance.
After this recommendation is enacted
into law those who have what seems
to them a more complete remedy can
then present it for consideration. There
are many sincere and able men who
maintain that the Government can, to
it's own advantage and for the common
good, avail itself indirectly of the note
Issuing function of national banks.
They believe that this can be accom-
plished by removing the present re-
striction required as security for bank
notes. the specific deposit Of Govern
ment bonds, so that the banks will as
sumo the burden of gold redemption of
Government notes in order to secure
the profit from the issuing of bank Cir
culation to take their place.
1T must be remembered, however,
that the present condition of the reve
nues, finances and credit of our Govern
ment clearly indicate that there is no
excuse to be found in governmental
necessities for any legislation which
would be unwise if the interests of the
people and business community alone
were considered. If the improvement in
governmental currency could not be Sc
cured except by radical change in
banknote currency there would be
ground for a demand for the concur
rent consideration of governmental and
banking currency legislation. But when
the Improvement of governmental cur
rency is possible otherwise the chances
for it should not be jeopardized by the
refusal of the advocates of bank-asset
currency to present their case upon its
own merits alone At present among
those who favor a system of banknotes
secured by the commercial assets of
banks there does not seem to be that
definite agreement upon and acceptance
of terms which will enable any of these
plans to receive even the united sup
port Of those who believe in tie Drac-
ticability under our banking system of
bank-asset currency. Some of the plans
of one year ago differ from those advo-
Gated to-day. The two bills having their
source in the House Committee on
Banking and Currency differ materially
from each other and neither commands
the united support OF that committee.
Each of these bills differs from other
plans suggested. Evidently time must
elapse before even the friends of this
particular kind of currency can be
united on a measure. l maintain that
the fundamental proposition which un-
derlies all present bills providing for
bank currency without Government
bonds as security, namely, the prefer
ence of the note holder over the de-
positor in the distribution of the assets
of an insolvent bank, would work
grave injustice upon the depositor class
of the country, with results in the high
est degree injurious to the whole COM
munity.
IF the preference of the bank asset
note holder over the depositor provided
for by pending plans be decided unjust
and impracticable and an additional tax
upon circulation be proposed to remove
this injustice, new elements of unceI-
tainty are introduced and the question
must also be discussed, whether, in new
estimates of the tax upon solvent par
ticipating banks necessary to make up
the losses on the notes, we have any
right to assume that all or large pro-
portion of the sound banks will go into
the uncovered note-issuing business;
and If only few banks issue notes how
we could prevent that few from being
the smallest and weakest banks in the
system; and how, If a few banks and
weak banks only issue notes at first
the tax on such circulation to make
UP losses can be held down so as to
invite that general participation in as
set-note issuing by sound banks for
purposes of profit, which would be es-
sential to the absolute safety of the
notes.
"Thasa and MANY other ouestions