New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1903-06-18
AN ELASTIC CURRENCY.
Controller Ridgely Speaks on Gofd
ReserUe Bank Note Plan.


serve amounting to a certain percentage OF the
issue. instead of by government banks. In ad-
dition there would be a guarantee fund formed
by the deposit before issue of per cent of the
notes. and maintained by a circulation tax
He said in part:
For more than forty years have mad in
operation without essential or radical changes d
national system Of banks with the power Of issu-
ing circulating notes The system mas Wen Hb S-
pose FOR which il designed. The notes issued
30 holder Of a national bank note has ever lost
doifnr except by its accidental loss or destructlon
and they have been as free from forSerleS ano
counterfeits is possible with any issue of paper
currency There mas however oeen one ri'd hi u
ming. and that is the entire lack of any eastlelty
dicted when the act was being considered and aer
the establishment of the national system.
1t is unavoidable defect In any system OF
TEN cannot De made elastle OF IN any Way iG
sponsive in its volume 10 the factors and con9l-
changes are necessarily too slow and complcat ea
price Of bonds which may have no relation what
ever 70 the supply of and demand for circulating
United States bonds at the time of the passage OF
the bank act were so great that it probably was
elasticity for the sake of the greater advantage.
Of forty years to guide us and the necessity of
providing market for bonds almost removed, it
Is certainly wise 10 try TO make such changes as
ss,bia jf 81 can he done without in anv way i'm
'Lsi a., ooS I,isfiee of The Totes There is no
other way good; in fact. there is no other good
means Of banknotes if they can be made quickly
available when and where needed and /. as quickly
the demand for them ceases.
ssry To utilize The present bono secured currency.
We should not if we could attempt now to rad
The most conservative and practical suggestion
bank circulation but to allow the banks issue
in addition TO the present notes certain percent
against which the banks should be required TO
hold in gold or us equlNaient the same Iet IS
add to the laws and regulations in regard to re
and means for redemption and retirement This
redemption machinery can and should be made
and frequent redemption Of these notes. 1t IS also
Part Of this plan 10 PLcylde q gg@ftee l e ea I've
notes. Each bank will be required 10 pay into
thev are issued and his fund is to be maintained
cover ID nIdreserve notes proposed varies from
. 20 per cent. Fifty per cent could De per
ed s set but 0 as IS f9u and it S may be
well 10 begin with the smaller amount
SMALL TAX NEEDED.
It has been frequently shown from the figures lures
parativey small tax will produce suaIaIee Iui F
which will make every bankn9te absolutely SAFE
Know me n naII 0 I inso1l-ent He NAV he sure
81 viii be redeemed for itssf nj face value IN gold
or It's equivalent. The smallest tax which Is pro
poSeG 6 fSg ee % This s2 dan he 50 small
that any bank can afford 10 pay II without raising
the question TO whether it is paying TO gG'.r-
antee the circulation Of a weaker ban NIX, OF Ilo Il
turned into the Treasury of the United StIgS as
al present or used TO guarantee the reoeliplioh
But the argument most frequently seen IN IlS
press and heard in conEeFsat9n agss viii LEAD to
2 great imitation of the currency IhlS IS a IoSII
5eaa to fnfation. it is such fatal objection that
the plans sh2uld at once he a2aIet Ia mails If
After going through all the dangers aq CI sI,.
the greenbacI and silver craze and having ITnnlH
established financial system on INC goIG SIAM ~
ard il would be the height Of criminal folly 10 IN
troduce any change in our currency laws Ml-1n
consider carefully. however the provisions utluy
%e9 ' a1a aboTe all if W bear in mind that
these notes are not TO be counted as bank reserves
tnar ' M smpe reserve in gold or its equivalent
against them and further IsJ PTamTton that
the notes carnot stay out any longer 1hah IleS an
be forced 10 the conclusion that there is no danger
OF undue imitation On the contrary. Ils fetoTs
which lead to contraction than 10 expansion. 6oh
are necessary in any good currency ana Ia IaC,
If there is any difference. contraction Is MOI
necessary than expansion OF al I,o51ld be
such that when there is no strain JheIt ~
be a be EFT in circulation furnish current
cash Then. when the dsmand inGftT Isl, lg 2IIoy
The trouble with cur presen, hanotes is that tina
traction being actually limited by statute TO 8
cDa"po per month
IDEAL BANK RESERVES
The gold coin and eeestes and r the f sef ba
reserves As soon as it can be done; the green
hacks should be redeemed and TTeG reid ' ad ao
also disposed Of. and nothing hul s34 anu I' :.
rerriScates used as bank reserves When this IS
etandsrd basis and our financial system he such
as We should have TO take our proper place As me
leading commercial nation Of the world Banknotes
are not money all but mere promises TO pa
money which are used for currency. They should
T7eyer under any circumstances. be counted as re-
serves for either national or state banks. ! mere
could hardly D. greater mistake than to ever use
banknotes rs reserve. Not that they are not good
ment for any one 10 send banknote home for re
denption. and puts an end TO all p3sS6ilily OF
she Inducements for redemption they should be
The COMPOSITE result of each bank supplying to
tts own customers what currency they need. anu
not needed is the best way regulate the amount
se y fe+teI tban any regulation by statute
by any officer Of the government. Such d eur y
Mon @sTts ~ he co1Intrv i would lessen the
nlSlahl pa IN -, ,iai ,ffairs
and would be OF strength in case 81 threat
ened actual trouble It would be better than an
emergency circulation; it would prevent many
.Thicb might arise II would lessen the danger Of
both expansion and contraction and prevent lnfa-
s s 10 tre5eTnn,ioD E,oYjs not he made The
si for ,i5ue infation Of credits or used for spec
rlstion II would only be used Cor those Legitimate
and only to furnish the cash long it
needed for cash transactions
NO DANGER OF FRAUDULENT oyERIssUE
Objection is frequently heard TO a great number
Of small banks widely scattered. issuing uncovered
notes. On thorough consideration this objection
does not seem 10 be serious. and there are some
counferbalancing advantages. The notes being
furnished by the government, there is no danger Of
Fraudulent overisSue. The proportion Of uncovered
notes TO the capital Of the hank proposed IS
large and the regulations could De made such as
10 remove the temptation organize the banks for
the note issue only The constant redemption
spoken Of so often would check this Those. OF you
who remember the time when you had notes out
which YOU were constantly looking have present
ed for redemption doubtless realize that such
are source o. considerable anxiety and solictude
ALL ks ire a allowed q al u3lin-