New-York tribune., 1903-01-01
CURRENCY LEGLSL.4IION.
IN acceptable Measure Should BE
Like q Loving Cup, Not ing.

To the Editor of The Tribune.
Sir: The bill lately reported to the House of
Representatives by the Committee Banking
and Currency has two aspects-one in which the
banks are interested and one which concerns
the business community. If these two interests
are divergent conflicting it is evident that
the larger, which is the commercial, should
govern. But as the banking interest is special
ly engaged in the money business and as the
commercial interests look at money only
factor in their problems it happens that the
consider alton of money legislation is almost ex-
ciusively absorbed by the smaller banking
circles. If the suggestions of professional
bankers give the right proportion TO the needs
of the business public as is not infrequently the
case, then harm results from thus delegatng
the question to their care
In examining any banking and currency meas
ure the test should be whether not it does
justice between those who are engaged in the
money trade and those who use money in their
business The former are the lenders, the lat
ter the borrowers. There should be no oppres-
sion on either side, but perfect cooperation.
In the bill under consideration the chief pro-
posal is to give the banks the power 70 issue
unsecured currency up to % per cent of their
capital The question then arises. How does
this affect banks on the side and business
interests the other?
1t is evident that this privilege would be
source OF profit to the banks. Being a legal
right and perquisite, every national bank would
endeavor to issue and keep af1oat it's full al
iowance, just as it now keeps as close as posi-
BILE to the legal proportion of reserve. So it is
indisputable that the bill in this aspect would
be acceptable to the banks. The recent high
rates of interest make this very evident.
To the business public a different set Of ques-
tions arises The first thought may be that so
many more loans by banks only increase their
power over the commercial community. Under
existing conditions they compelled at times
when merchants and others need money to
tract their loans sharply How much greater
would be their power if they could create more
money to the extent of % per cent of their
capital This money. too. would be in the most
explosive form which credit money can as
sumo. If one hundred and fifty millions of un-
covered gunpowder is scattered in every ex-
change over the country, what guarantee can
there be that some will not drop into 1t
lighted match in the shape of some unlocked for
mischance, which will produce a universal ex-
plosion? What would the banks do in case of
general demand upon them to redeem this
money? Would they not follow the present
method of calling loans. letting paper mature
and be paid, and selling securities? Does not
this method produce distress and high money
rates?
The merchant begins to doubt whether he
wants to the proposed bill enacted into
law He says it contains provision for relief;
does not correct any of the evils under which
he has suffered and seems to be only for the
benefit of the banks, and not OF those engaged
in business It does not contemplate stability
OF protection, but only imitation with its neces-
sary consequences
The power to issue uncovered currency for
these reasons does not attractive to him.
and he thinks it must be a suggestion originat-
ing with the banks. This calls to mind that one
Of the Arabic fables of Bidpai entitled "The
Horses, or the Folly OF Taking Advice from
Interested Persons" which was circulated dur
ing the early controversies between English
merchants and the Bank of England. The IA
bic that when the Sultan Amurath "
was preparing for war against the infidels he
told his in order to try his discgetion, to SO
and buy for himself horses and equipment for
the field. The young man appeared at court
the next day, when the Sultan asked him how
many horses he had bought He replied that
he had consulted with all the horse dealers, who
had earnestly advised him to buy two dozen.
which he had done. by the beard of my an
cestors" exclaimed the Sultan thou hast
proved thyself unworthy of the throne of 9th
man. Thou goest to seek counsel of them whose
provide for thyself, how shalt thou be able to
watch over the treasures of the faithful" This
story substituting millions for horses. was ap-
piled te the infatuated dealings of the govern
ment of England with the Bank and with
moneyed men. The business men of to-day
should consider the caution Of the old Sultan
and ask themselves whether in banking legis-
lation they are not seking counsel of those
whose gain is their loss
The proposed bill is not the only alternative
One recent dispatch from Washington contains
the information that some Representatives favor
legalizing clearing house certification. and are
of the opinion that such measure would GER
tainly pass the House. a bill containing pro-
vision of this kind would give the banks way
ia ease themselves without calling loans and
distressing business men. 1t would give relief
and protection not imitation. By it the banks
v,ouI do their share of the work of maintaining
stability. and not throw the whole burden on
oop,r7erce and trade. An accepta bic banking
measure should be like a loving cup, with han
dies on all sides not like jug with one handle
The commercial community should take to heart
tho story of the Sultan's son, who consulted the
horse dealers to find out how many horses ne
should buy. ECO-'
Ee,y-York. Dec "a 1902.