The representative. [volume] (St. Paul, Minn.) 1893-1901, 1900-05-31

under odr contsol. A il u, howeysu
We can accomplish something. Whom
through the introduction Of water b,
others. the level rises shove the three
foot limit. We have but to open our Ell
pipe and drain on water until the desir.
ed level 4 reached. Similarly. when til,
level falls below three feet we ma,
raise It by admittins water through til,
pipe under 9frtontrol. working thus
consciously nd/ nethodicelly. with til.
end Of meintaialpg the nxed level. ~
could do SoMethng toward accomplish.
ing our pul2okA despite the opposing
forces indiceteA while, by assuming
control Of III Ne pipes. We could dc
everything.
Similarly. thopkh many factors Of oul
exchange medtn& are under control d
private indiAidg&ls> and interests, ex-
banding today and contracting tomor-
row, but. % the whole. contracting
more than they expand Though the ex-
pansion Of industry and the muitiplica-
ton Of exchanges demand exactly the
opposite course9: the public. through ito
control of government paper money and
public taxation and expenditures, can,
by expanding when others contract and
contracting when others expand, in case
they unduly expand, go far towards
maintaining a level of general prices.
The remedy proposed, though applied
thus moderately. would act as an injec-
ton Of oil into the troubled waters Of
our sea Of prices.
How next should the expansions and
contractions be effected? The call-bond
method has been suggested. BY this
the price level would be raised to the
norm by buying outstanding bonds,
thus liberating cash; when too high 1t
would be dropped to the norm by selling
bonds payable on call, thus calling in
cash. = -.--ss'.. sebs.a. -
Again. to maintain the normal pr1ce
level, safe securities of any kind may
be bought and sold by government. Bet
ter still, the Experiment may expand
the currency bM issuing paper. money.
promises not to pay but to receive, and
contract by fecs3ving these promises in
taxes laid on ground rents, monopoly
incomes and in4kritances of large prop
critics; remittinG at the same time
tariff taxes, stamp taxes, personal taxes,
ETC.. -, :.
A fourth method is that of govern
ment banking, BY the transmission Of
money through the mails the govern
ment, through it's public postofilce, now
exercises an important function once
largely monopolized by banks and ex-
press companies. The demand for post
al savings banks has grown SO strong
that the postmaster general, even of the
present Sound money administration,
strongly recommends its adoption. The
next step beyond postal savings banks
would be the postal bank of discount
and deposit, furnishing money on safe
paper at or per cent, figures which
sound money" authorities now admit
to be not unreasonably low. While
he adoption Of this measure by govern
nent need not mean the monopolizing
BY 1t of the business of deposit and dis
count banking. any more than the estab-
ishment OF the postof1ce money order
system meant the monopoly by the gov
Of the business of transmitting
money, 1t would mean the breaking of
he banks monopoly of this business
Ind would make possible so large con-
rol of the credit system by the govern
nent as would greatly facilitate the
of stable average price.
At the outset government postal banks
IT discount and deposit might we'll be
employed only in times of emergency
viz: on the approach OF crisis or
'anic. Sound money" authorities are
low admitting that panics are unneces-
ary. Prudent government banking
would render them impossible. It is a
commonplace that American banks to-
lay, in order to protect themselves
rom the fury OF panic, do for the pub
ic exactly the wrong thing at the time.
'agehot explain I'D fully in his Lombard
Street that a panic, instead of being
'arvec should be fed-literally choked
o death with foans. American banks
a''itually Employ the opposite treat
nent. and contract their credits and
oans in the faceq of panic because they |
eel they must Aprotect their reserves"
Is a check to panic this is like throw |
ng kerosene upon burning BUILDING.
% save themselves they sacrifice the
ountry. Here ;. boundless field would
G found fof the operations of the gov
bank
II the suspension Of the Peel act and
he extension to the Bank Of England !
+ permission to initiate the currency
nth its notes of credit can prevent a
risis, much less panic; and il the
ale of gold f1cm the New York subj
could stop the Black Friday
anic when that financial cyclone was
nder full Roadway, much more could
re discount Of good commercial paper
revent both crises and panics III the
nited States. Since, however. the
anks admittedly cannot supply these
recommendations and thus harmlesslv
raw of the electric fluid which other
Use generates financial tornadoes. it