The San Francisco call., 1901-11-30
ELASTIC CURRENCY PLAN.


n that one of the first bills submitted to Con-
n gress when it assemblies will be the Lowering
BILL reported at the last session by the House Com
mttee on Banking and Currency, and designed ito
make the currency responsive to the varying needs
OF business at all seasons and in all sections" The
bill was carefully prepared by the committee last
winter but completed too late for action at that
session Il reported however, in order that it
might be brought before the public and discussed by
those interested during the vacation The trainers
sanguine it will be approved by the country
and they expect to submit it as soon as Congress
ganizes and urge its immediate consideration.
The object OF the bill is to give greater elasticity
to the circulation of national bank notes and to
able the banks under suitable safeguards to expand
the of paper currency during the season
when the crops are being moved and at other times
when the business of the country demands it. The
operation OF the bill is to be gradual so as to permit
of something in the way of experimental stages be-
fore the full amount of the ultimate expansion in
tended is to be permitted. Thus it is provided that
for period of three years national banks to be
permitted to issue unsecured notes to the extent of
10 per cent of their capita that is notes resting
upon the assets of the banks and not secured by de-
posts OF Government bonds This issue is extended
after three years per cent, and after six years
to 40 per cent If it should be found after three years
of experience that the results would justify the
tension, further legislation would be necessary
The phrase unsecured notes" is technical term,
used to distinguish the issued upon assets
der the bill from those issued upon bonds. AS mat
Ter of fact they are to be fully secured for they
to rest not only upon the of the bank but upon
guarantee fund in the treasury, to which every bank
will contribute legal tender money equal to per
cent of its issue Moreover all the unsecured notes
are taxed to the of per cent per annun and
the proceeds of the tax added to the guarantee
fund Finally. the notes safeguarded by further
provision that the Comptroller of the Currency shall
have the right deny bank the privilege of issuing
such notes if the general state of circulation of
foreign exchanges lead him to deem such issue in
expedient.
1t is believed the tax imposed upon the unsecured
notes will automatically lead to their retirement
whenever an excess of them has been issued. Thus
they will be put into circulation only when the de-
mand for currency raises the rates of interest stuff
ciently high enable the banks to pay the tax with
out loss and will be Immediately Withdrawn when
that condition changes
The measure is SO radically different from that
which prevails that it is to meet with good
deal of opposition. 1t appears, however, to be the
best plan yet devised to attain the desired objects.
A currency more elastic than that which we now
possess has long been felt as of the urgent needs
of our financial system. The new measure would
permit national banks in any important section of the
country increase the amount of currency in circu-
lation there any time without having go to the
expense OF obtaining it from the great financial
ters That in itself would be considerable gain to
the business of the country Unless therefore, some
better plan can be suggested it will be we'll worth
while to give the Lowering bill test. Congress has
been backing and filling our currency problems
too long. 1t is time for action.