Barre evening telegram. (Barre, Vt.) 1898-19??, 1902-11-17
Convention FavOrs a More Elastic
Financial System.
IS A CHANGE ADvISABLE1
CoiO0el NJ. It. Herrick of Bankers
association Reviews Work of Ma
ti0nal Conference In New Or.
leans-His Suggestions.

l ASohhtIS QdS
returned home from the convention of
that organization at New Orleans, and
III discussing the work Of the meeting
and proposed plans looking to an ex-
pansion of the currency Colonel Her
| rick said:
ut was evident that the majority of
those attending the convention were
against branch banking and asset cur
rency. 1t was also evident that the
convention was in favor OF more elias
tic and emergency currency.
'In my opinion the bankers as a class
favor in the interest of emergency cur
rency an expansion of the present bond
system SO as to include state and mu-
nicipal bonds.
1.-The wants for SO called emergency
currency are SO well known in the
financial world that our efforts need
only be made in finding it. Among the
many plans suggested the one that ap-
pears to me the most advisable to ad.
vocate, especially when considering our
present system of paper currency is
that the government should be placed
In position whereby it may issue
emergency currency upon the deposit
of state, county and municipal bonds.
For such currency liberal rate of in
terest should be charged not under or
per cent Possibly this rate should
not be definitely fixed by legislation
but arranged from time to time as the
exigency might demand by the secre-
tary Of the treasury and the comptrol-
Ter Of the currency or board at Wash
ingtOn, Of which they should be mem
bers.
As to a Currency Change.
"On an economic basis so called as.
set or credit currency would probably
be the best. but our people are educat-
ed to the use of the present secured
currency, partial to it also from past
experience, and it is doubtful whether
we could change them to another form
even If it were attempted. The present
mode consider the most easily attain.
needed legislation before another finan-
cial depression.
'The security would be beyond ques-
ton, as the restrictions upon eligible
bonds could be so made as to satisfy
the most conservative. For example,
the Indebtedness for village, say from
$1,000 to $1,000, would be limited to s
per cent of it's tax duplicate, and this
might be graduated, giving the largest
cities 10 per cent of their tax dupli
cate, the cities between the largest and
the villages to be rated on some scien-
tific basis based upon their wants ac
cording to population. Another restric
ton that might be added in case this
should not be considered ample would
be that no bonds should be accepted
where the credit of the city or village
was below some liberal standard, say
AZ or 5 per cent.
"If this plan were adopted and the
bonds of any city held by the govern
ment should overreach the indebted
ness permitted under the plan, the de
posting bank would at once be notified
to either exchange the bonds or redeem
the currency. This would give us also
an intelligent standard for municipal
indebtedness and moral restriction a.
to it's limit.
Substitute For "Asset Currency"
eff we could promise ourselves such
results as this and considering the ben
eft it would be to municipality to
have it's bonds benefited by such use
as thereby have an influence in reduc
ing their rate of interest, it would then
become debatable question whether
OH an economic basis it would not be
desirable to elect such currency In
preference to the so called asset cur
rency.
"Again. the great influence in hoard
ing money is because the banker feels
that he has no available resource for
adding. to his currency in an emergen-
CIV. In credit currency based Oh the
capital of the bank a conservative limit
would be so per cent of the banks
capital. This limit alone would still
be menace in times of great need.
Taking, for example, bank where it's
deposit liability is twenty times its
capital and allow it only 21a per cent
additional reserve to what it now has,
and the menace of limit would still be
present.
"Under the plan Of accepting bonds
for such currency it would not be nee
essary to place any limit as to the
amount any one bank or any number
of banks should have. If it was found
that limit should be necessary for
the reason that there appeared to be
danger of too great an expansion, the
rate of interest or tax could at once be
raised, which would have the immedi-
ate effect of contraction, thus keeping
the volume always within safe .and
conservative lines. ~
Experience of bankers. however, I
think, will confirm my belief that If the
government had been in position dur
ing the panic of 1898 to issue such cur
rency and thereby let the banks, who
are the principal hOarders of money, !