The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1902-06-19
ASSET CURRENCY.

ASSET CURRENCY.
At the outset of his address Mr.. Dawes
discussed briefly the arguments in favor of
asset currency, which, he said, began to be
agitated in 1894. One of these, he said, grew
out of the rapidly growing disproportion
between the currency liabilities of the gov
eminent and the gold reserve for their re-
demption. This, he declared. was settled by
the law retiring greenbacks and building up
the gold reserve so that at the present
time the exchangeability of the govern
ment's credit forms of money is not ques-
toned. In discussing another argument for
asset currency-that based on the decrease
of government bonds which secure the
present national bank-note circulation-Mr.
Dawes spoke interestingly and forcibly of
the functions of a national bank. The OBJ
ject of a national bank, he asserted, is not
to issue notes. but to collect the savings of
a community and loan them in bulk TO
those who build up the communicative
manufacturers and business men. THE
most important function which the bank
exercises in a community declared the
speaker, lis that of producing purchasing
power" which il accomplishes by building
up deposits of which IS per cent. may De
loaned while at the same time the depositor
may issue his checks against his deposit.
why that deposit credit in solvent banks
of the country" said Mr.. Dawes, amounts
10 over nine billions OF dollars, whereas the
entire circulation of the government only
amounts to 81 250, 000,OCC And so We who are
criticising the present plans for asset cur
rency at this time seek to inquire into the
effect upon that great deposit credit of the
United States against which checks and
drafts circulate to the extent of 30 per cent
of all the circulating money in the country,
as TO whether we will do anything TO
lessen the confidence of the people in
whether we will do anything TO
lessen the confidence OF the people in the
stability of the circulating medium of the
banks and thereby contract this greater
circulation upon which the prosperity of
the country Is just as dependent, and more
dependent than it is upon the particular
state of the government circulation at any
particular time. Is this currency which
they propose to issue under these plans
safe as matter of business, not as a mat
ter of theory
THE FOWLER BILL.
Here Mr.. Dawes took up the principal
features of the Fowler bill, discussing first
the tax by which national bank circulation
under it is to be regulated. He declared
that il is impossible under an optional
system of banknote issue to determine
how much of a tax is necessary TO make
the notes safe. If large number of banks
decided TO take out the circulation the
tax would be smaller, but if a small num-
larger The speaker reasoned that the re-
suit would be that the strong banks OF
the country would decline to enter into a
scheme under which they might be called
upon to strengthen the weaker institutions.
How many banks asked the speaker,
will be attracted into the system If you
offer this inducement OF uncovered circula-
ton al the present time. and what tax
Will be necessary 10 make these notes
safe and If you can't tell what tax Will
he WI = Ia
tax limited? The answer Is that by the
limitation OF that tax the responsibility of
these banks Tor these notes Is limited ana
that the stronger banks VIII not issue the
notes and thereby become responsible for
the issues of the weaker banks on the
subject of an elastic currency Mr.. Dawes
spoke with exceptional vigOr. lie said:
we need elasticity in our currency,
There Is no question about that. But we
do not need IL If in seeking II We weaken
the safety Of our circulating medium, and
no one can appreciate better the dangers
10 business of all kinds from any attack
upon the safety and solidity OF our cir
culaung medium than do the bankers OF
Indianapolis who helped TO start that agi-
tation which eliminated in the passage of
the gold reform law. Above all things
II Is necessary that confidence be main
tanned in the safety and solidty and in
tegrity OF the money with which our bust
ness Il done. We have no quarrel with the
political economists as TO the desirability
or certain reforms, but We say that before
We take any steps in connection with alter
ing the system under which these notes
are absolutely safe that they must be
backed by argument which will con-
Tince US as business men. bankers, as
citizens that these notes are absolutely
safe and that there will be no danger under
the issuance OF these notes OF lessening
the confidence In the safety and solidity
OF our national banking system and our
national banking circulation. How about
this question OF elasticity? We have the
most elastic currency the world has ever
known In this check and draft currency of
the United States" In support or this