The sun. [volume] (New York [N.Y.]) 1833-1916, 1901-12-05

contributed By the banks themselves,
sndits Management created through the suf-
fra9e OF all. IL would represent the interests
Of the whole country. With limited powers
Of control over Its membership in the In
forest OF common safety, confined In its
dealings to the banks n TO the Govern
ment, 1t would become the worthy object
of a perfect public confidence. BY the
concentration OF unemployed reserves
from sections where such reserves were
not needed, IL could redistribute them in
part as loans where most needed. and thus
bind together Tor a common strength and
protection the loose, unrelated units, in
whose separation and ISOLATION the greatest
weakness OF our banking system Is now
to be found.
THE CURRENCY.
Having presented az above the the defects
Of our banking system in their larger as
poets, ! venture now 70 speak OF that i'm
portant medium Of exchange designated
the currency, meaning by that word paper
money, whether issued by the Government
or by the banks under the powers con-
ferrcd upon them by the law. Excluding
Treasury notes OF 1900, now in cour-e OF
extinction. silver certificates and gold
certificates. which represent actual coin
held for their reclamation. there are now
extant in the public service SAC, OO0, 900
OF Government notes t~greenhacksl and a
little more than $40, co0, 900 OF national bank
nOlff. " VI lNfN@ Nfl Mltn tNDlOtlC
propriety be called money-real money.
They are alike promises to pay, and their
value rests upon the ability OF the maker
Of the promise TO perform the obligation
set forth In the promise. Under the pro-
visions and conditions of the law az il now
stands, the limit in volume of these obli-
cations Is substantially reached. As to
tho greenbacks, their amount In fixed by
statute, while In the case Of the bank notes.
their volume Is practically limited and con-
- IL -. ~ IL - 4 H.. - -
bonds. This IL 40 because bankers will not
any more than other men assume respon-
sibility or risk without material motive,
and the present as well as the prospective
price of United States bonds robs banks
Of any motive for the issue of bank notes.
To speak exactly on this point. the care
fully prepared tables of the Government
actuary show to a national bank doing
business In a locality where the rate of in
terest Is 4 per cent, an advantage equal
to seventy hundredths OF 1 per cent. per
annum on note issuing, while in a 0-per-
sent locality the profit is fifty-one hun
dredths, and In an s-per-cent. locality II Is
thirt y-one hundredths.
These figures c~onclusively show the
absence Of inspiring motive In the direction
OF any material increase In bank-note
circulation. Ii is, therefore, apparent that
unless conditions change or legal restric-
lions be modified. the country's supply
of paper money can not be responsive
10 any material increase in demand. At
this point IL Is also wise TO keep in mind
that our population. now a~ggregatinR
about rs, 900 900, will in the next fifty years
increase to q probable 1870 .0OO,OoO If the
present volume Of paper money is no more
than adequate TO the present population
and TO current domestic trade, II is evident
that timely provision must be made for n
possible increase 10 meet the onlarging
requirements Of larger population aud in
creasing trade. The question Is not remote.
IL is immediate. If, then, II be conceded
that our present system is faulty In that il ia
inhexible. not responsive in possible supply
TO future requirements, in what way can
the element Of supply be made adaptable
to demandy
In what has been already said under the
head Of Banking, II has been truthfully
shown. | think, that In its broader sense
the currency which our larger internal
uses consists OF transfer orders
or checks. drawn against CREDITS supplied
by banks. In furnishing these credits
the bank finds its profitable occupation,
and In their use those who carry on trade
or prosecute industry and enterprise find
their needs on the whole we'll served. Now,
there Is no difference whatever in principle
bet the banks obligation to paw,
expressed bv a credit on their books, and an
obligation expressed in the form Of a motto
PAYABLE to bearer, which may De transfcrred
from hand TO hand. If IL be Of public
advantage that ban credit be made avail
able through the machinery of checks or
transfer orders to those who can make the
more convenient use Of the credit in that
form, there can be no primary reason why
to those who find their requirements better
soryc1 bv the banks credit in the form
OF bank notes they should not be issued
There is, however. a secondary reason
why the quality and character OF notes
so Issued should possess higher elements
of ~ ability ard safety than are exact.d
w. open credits on the hooks Of the bank
This reason Il apparent To every one. II
j. found in the fact that the relation be-
tween the bank and it, borrowers il volun-
tary on both sides. ard may IN terminated
M the choice Of either. The bank note.
however. passes from one 10 another bv a
principle Of quasi pressure. Operating
IN the smaller transnctioLS, circulating
often far srum its place Of issue. the test Of
mi ion or payment can not always
and everywhere 10 promptly applied.
II would appear ughi ard reasonable.
then. that th" governing power should
surround the bank credit, utilized in the
form Of bank notes. with such necessary
guards and gIarlftera ~ may b" required
10 make them safe. free from risk Of lo-s. ia
M. hands 81 those who hiN" N'tle "huioe
~ 60 whether OF not th"y VIII receive them
o. exchange Tor their wares ur toe payment
of wage Having dpre flis. the Cavern
maut's responsibility may rghtfuily ho
cad 90 terminate"
The requirement now made Nv tie law
for the dsIsn-it 1T I 'l'ri - fics bonds with
tla 1pa t-Ip-r ut thr .f'i States ~ touu-
dfiou pr,orirli 'o tlr ir-u" 90 clrDulIiIUs
f,ts- iy thr btrk fun i-hr- 'n. i--. rcd
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