Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-08-22
CURRENCY REFORM
Prospect for Legislation Not
Very Bright.
THE CLEVELAND BOOM
TAMMANY NOT YET COMMITTED
TO THE Ex-PREsIDENT.
What a Leader of That Organization
Says on the Subject Of
Candidates.
HE CLEVELAND BOOM


Special Correspondence OF The Evening star.
NEW YORK, August q. 1903.
The prospect for reform of the currency
laws during the coming session OF Congress
does not seem to be very bright, although
business interests here are urgent in favor
of some measure of relief. Imitation OF the
currency is not desired by the conservative
banking interests, Notwithstanding the fact
that the opposition to reform is apparently
based on this idea. A general impression
prevails outside of New York that the only
demand for an increase in the volume OF
the currency is confined to Wall street, and
that the sole object of the financial COM
munty here is that the increase may IA
cilitate speculation. That this impression
is an erroneous one Is we'll known to all
familiar with banking and finance, but men
whose sole occupation is politics have sue
ceeded in creating among the masses this
very false impression.
In reality Wall street uses very little
money, in the general acceptance OF the
word in it's operations, and 1t is fact,
perhaps not generally understood, but none
tie less true, tnat the Dest bull markets
the country is deprived of the possibility OF
times When money rates have Deen sum
at q per cent or even more. Wall street al
ways gets money for its purposes, and when
stringency comes 1t is not Wall street but
the country at large which really suffers.
When money becomes scarce and financial
machinery is blocked the only centers in
the country where prompt though artificial,
but none the less useful, relief can be Sc
cured are those where clearing houses exist.
In such emergencies in the past clearing
house certificates have been issued in New
York, Boston and Philadelphia. and they
have served their purpose efficiently. To
the extent of their issue the currency has
been swollen, and as the occasion for their
usefulness passed they have been retired.
Emergency Currency.
Banks taking out the certificates have de-
posted ample collateral with the clearing
house and have paid per cent interest on
the same while they held them. Except as
the banks in the cities named have been
able, through the use of these certificates.
to afford relief to out-of-town institutions,
the country is deprived of the possibility OF
relief, no matter how great the emergency.
The proposition to permit the issue of emer-
gency currency by any national bank on
conditions not vastly different from those
in use by the clearing house institutions is
merely an extension of benefit to country
institutions which the large cities have long
enjoyed. In practice it is probable that it
would be reSorted to about as often as the
clearing house certificates have been used
In the great centers, and that has been on
only three occasions in more than twenty
years.
The question now being agitated is not a
creased quantity but elasticity in the cur
rency which thoughtful men advocate, and
a moderate degree of elasticity can be Sc
cured by merely removing the obsolete pro-
vision of law which restricts the retirement
of bank notes to three millions in any one
year for the entire country. Once issued
they must, because of this restriction, re-
main out indefinitely. Banks refuse to
cause of their inability to withdraw them
afterward With the banks free to issue
and retire notes and customs funds left in
the channels Of trade, a considerable meas
ure of relief would be afforded when the
yearly strain comes from the withdrawal
of currency to the west and south for NOV
ing the grain and cotton crops.
In times OF great stringency in the money
market tradesmen and business men of
moderate means suffer the most, while the
mllionaires go unscathed. The purse
strings are frightened by the money lenders,
and business men cannot obtain loans
cept at exorbitant rates. Prices of stocks
fall in the market because holders cannot
obtain loans and are forced to throw them
overheard. often at heavy loss. The need
of currency reform of some sort would,
therefore, appear to be imperative.
Though the Panama canal project may
not be abandoned, the belief prevails in
local banking circles that the necessity of
financing the deal has been obviated during
the present year at least. There is mani
tested among foreign bankers feeling of
satisfaction that the treaty has not met the
approval of the Colombian legislature. This
feeling is induced, not because there is
any opposition among local interests TO the
project itself, but because 1t relieves the
financial situation of the drain which prob
ably would have been imposed upon It, had
the treaty gone through according to sched-
ue. Had the necessity of negotiating an
exchange operation for $50 900 900 been sud
denly precipitated upon the market, as
might have happened in case the treaty was
approved, the foreign exchange market
o. h1 tic ,fa,rn
able to the local situation, and possibly pre-
vented the drawing of gold from Europe
later in the fall in case it may be needed
Generally speaking, the outlook for easy
money this fall is quite favorable
Tammany Not Committed to Cleveland.