The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-05-14
A VALID CRITICISM

In another column may be found an
article by Mr. T. B. Walker on the Fow-s
Ter banking and currency bill. Mr.. Walk
er's objections TO that measure seem to
rest chiefly upon the failure Of the bill
to specify with sufficient clearness the
kind Of assets that should be employed as
the basis of circulation g.. -......
The Fowler bill Is no doubt faulty in
this particular. Bank assets may or may
not be sound basis OF circulation. Bank
assets may consist Of those forms Of Sc
curity which Mr.. Walker approves and
which are generally regarded by the
financial world as proper basis of bank
circulation, namely approved state, county
and municipal bonds, and railroad or 9TH
er industrial bonds which have been main
tanned at q certain price for a definite Pc
Rod, and which seem, certain to, be sus-
tanned at substantially the same degree
Of value and stability. But bank assets
also consist largely Of commercial paper,
and to some extent Of mortgages and
other forms Of property which are much
less readily convertible, much less stable
command confidence in the value Of the
currency issued against them. Such as
sets are not to be approved as basis Of
circulation and in that the Fowler bill
fails to prescribe clearly as to the char
acter of bank assets which may be made
available as basis for circulation it is
at fault.
SS {r,s hot P4r f1o or4-f
alton Of commission holding long ten
ure Of office which is supposed to exercise
supervision over the issue of bank cur
rency, and which would, Of course, be ex-
pected to scrutinize the basis of that is
sue, and to establish standards for the
maintenance Of uniformity Of value among
the issues Of various banks. But there is
nothing in the bill which specifically pro-
vides for the careful determination of the
character of assets employed. 1t is ap-
parent that such care must be exercised
and that the basis of circulation used by
different banks must be uniformly good or
the currency issued thereon cannot be, ex-
pected to command the same degree Of
confidence at all times and be uniformly
good coming from different banks.
It is true that the bill provides for a
| 5 per cent guaranty fund, and also that
| upon the issue is imposed tax Of one
| eighth Of one per cent on 20 per cent of
the total issue authorized, and five
eighths of one. per cent on all Of the bal
ance. which is expected to provide for the
administration Of the law. and for the re-
demption of the outstanding currency of
| failed banks. But this is to- meet emer-
encies and does not contemplate anything
further. The regular redemption Of the
currency 1t rs specifically pro-
vided, shall be taken care Of by the
banks themselves. and the assets upon
which the currency is issued must be Of
| such a convertible character and Of, such
stable value as to meet any reasonable or
even possible demands -;
Mr.. Walkers recommendation is an
amendment Of the national bank act which
will permit the employment of both gov
eminent bonds and other frst-class Sc
curities in equal amounts as a basis OF
circulation. This would answer so long
as government bonds are available, but
government bonds are being retired very
rapidly and will ultimately disappear. The
government will, in the course of time
and in comparatively short time, pay its
4 debts and will have no bonds outstanding
other forms of security must then be
made to serve as the basis Of circulation
And this is what the Fowler bill aims tc
accomplish. That it is subject, however
J in many important particulars, to severe
criticism must be conceded. It is meas:
ure which will not be disposed of withou
considerable debate and careful consider.
alton, and The session Is apparently so neal
its close that there Is no probab ity y thai
n 1t Will be- able to secure the necessary
i consideration at this time. s'.se Isl "a
The laugh seems to be on Private
Boardman who was so neatly trapped b,
Senators Diederich and Beverage into eat.
ingwith great relish the very army rationi
I that he said were not ut for consumption
The democratic ATTEMPT TO create pol,ti