The sun. [volume] (New York [N.Y.]) 1833-1916, 1902-12-08
The only proper way Of supplying the need


u by a bank asset currency.
Let II be observed. TO begin with. concern
ing the first plea, that other countries are not
free from financial disturbances in the de-
gree that is claimed for them. Panics, due to
the breaking down of credit. are known in
every civilized land At the time Of the
Glasgow Bank failure in Scotland in 1878
time money for long periods, secured by
the best railroad stocks and bonds in Eng
land, loaned freely upon the London Stock
Exchange at 10 per cent. To-day. in the
same great market. a very high rate Of
interest Is exacted for loans on kafiirs and
other stocks in the same class rs ndustrials
here. II Is true that in England, France
and Germany the frequency OF money
panics tends to lessen and that the rates
for the use of money are more stable
than they are with us. Why is this so?
First, because the finances Of these small
and compact nations are, in each in
stance, rigidly and automatically controlled
by a single great note-issuing institution,
whose managers hold constantly before
their minds the necessity of keeping in
readiness at all times a supply of money
=, nj cient for the legitimate business OF
their country. and who are not. there
fore, like American bankers, enormous and
at times mprident lenders on speculative
collateral. Secondly. because the cur
rency Of these foreign countries il not,
like ours, redundant. A small change in
the private or bank rate Of discount in
these nations produces as great COM
motion there a. a gigantic fuctuation
does here. and the comparatively gigantic
huctuation is required here because a
greater volume of money is in existence
here. requiring a more drastic application
of power TO expand IL or to contract il.
The establishment of bank asset cur
rency in this country would. so far from
obviating the possibility of money strin-
gencies. only increase il, since it would
add to the inherent and fundamental diff
Guilty of present circumstances. The banks
under an asset currency arrangement
would find themselves in the dull seasons
q the year with far more money on hand
than ever. They would do with this money
what they always have done with IL in the
past that IL, loan IL freely and encourage
speculative Use Of II, keeping to them
selves, of course. the intention Of with
drawing the funds whenever the situation
became dangerous OF whenever demands
for money arose from legitimate business.
With the huge imitation of the circulating
medium imposed, speculation would as
sumo great proportions; the money Of the
banks would finally he used up just a. in
former days. and then when general bust
ness again became active and the banks
called in their loans, speculation would re-
new its historic tumble, crying for more
"a to faH
would be the same old story, only Of
greater folly and graver disaster.
The reply To the second argument in
favor of bank asset currency Is comprised
In the foregoing We are not in need of
more money in the United States. We
have immensely more money now than
any civilized nation and the root Of our
troubles is that We do have it and that il
came very suddenly. II makes little diff
ference how much of this increased money
supply is in actual gold. Gold can pro-
duce imitation quicker than anything else
The so-called money stringcncy of the
present hour-for it is a strngency only
speculative collateral in Wall Street has
been brought about simply by an enlarge
ment Of credit and a general elevation of
prices that, like all such mutations in the
past. must go on demanding still larger
credit more money" and higher prices
until il smashes. A scheme for an issue
Of bank notes based on the general asset,
Of the issuing banks does not differ one
whit from the old greenback idea, ex-
cept that banks rather than the Govern
ment will print their names upon the bills;
and If it is tried il will not be in operation
twenty-four hours before good round
proportion Of the bills will be- at a discount
varying with the names Of the banks they
bear. PHILIP kING.