The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1903-07-24
CURRENCY LEGISLATION.

will be the next Speaker of the House Of
! Representatives, with the result that Mr.
! Cannon has agreed not to obstruct the
passage Of bill to reform the currency
! MI. Cannon, It Is said, does not approve
| of some of the proposed financial meas
,ireH. but he indicates that If there be
a substantial sentiment next fall in ia
vor of the currency legislation he will
not be found standing in the way of 1t.
1t goes without saying that there is a
| strong sentiment now in favor of such
| legislation, and the President seems to
| feel that there is a necessity for 1T. The
business of the country has grown enor-
inously, and there is an active demand
| for money in excess of the supply IN
! less some relief comes many believe that
! there will be trouble next year, and trou-
Bile in the business world next year will
mean trouble for the Republican party.
| The two measures in contemplation are
| the Fowler bill. which provides for bank
note issues based upon the assets Of the
| bank, and the Aldrich bill, which provides
for the substitution Of State and railroad
bonds In place of United States bonds as
security for government deposits in the
banks The former is the House bill and
the latter the Senate bill, both of which
failed in the last Congress. Under the
Fowler bill the banks could issue cur
rency In times Of great need and call
in the notes when the emergency demand
was over Many conservative people OBJ
ject to this form of currency, consider
ing the banks liability III the form Of
notes more dangerous to the bank itself
and to the community than the same la
bilty in the form of deposits. But the
New York Evening Post, which is re-
garded as something of an authority on
financial subjects, says this is superst-
ton handed down to us from former
generation. I'm fact" adds the Post. the
note liability is less dangerous to the
bank than the deposit The danger In
either case consists in the chance OF a
demand for payment made suddenly and
unexpectedly. In every emergency the
notes lie scattered in the hands of the
public The very occasion which calls
them out is demand for purposes of
circulation. So long as the emergency
lasts it will be difficult to collect the
rotos for presentation at tho banks
counter. Deposits. on the other hand ex-
list in solid masses. They can be drawn
er bloc. In times of emergency they are
liable to be so drawn. The bank, II
called upon to pay Its deposits in an
emergency, would be very glad for its
customers to be drawing its notes instead
of its reserve of legal tender. check
drawn for $4,000, for example, If paid in
cash, weakens the bank by so much. If
paid in the banks notes. there has been
mere change in the form of liability,
which can have no disturbing effect on the
cash reserve until the notes have per-
formed their office in the circulation and
return to the bank. which will commonly
be some weeks later"
The Post concludes, therefore, that the
theory that any note issues in excess Of
fifty per cent, or some other per cent, Of
a banks capital, ought to be heavily
taxed. is based on a misconception, or on
popular doubt as to whether all banks
could use their new powers wisely and
conservativey @
In the city of Richmond we deposit our
money In the bank. taking no security
whatever therefor, and We check on the
bank and pass our checks around In pay
ment of accounts, and no questions are
asked. The depositor feels confident that
his money in bank Is safe, and the person
who receives the check feels confident
that 1t will be cashed on presentation.
And SO we go on using our checks as
so much currency, for they are frequently
passed from hand to hand without being
cashed in for days and perhaps weeks.
Yet these same people seem to have grave
doubts as to whether or not currency
issued by such banks would be safe, They
have no doubt about a bank deposit,
| which is not secured, but they have Sc
rious doubts about a bank note, which
would be secured by the assets of the
| bank. ..
| The great need of this country is
plentiful supply of bank notes 1t Is
| the business OF the bank to lend money
| and to supply the need for currency.
Under proper restrictions such a currency
would be made entirely safe, and the
beauty of 1t would be that it would re-
spond naturally to the demands OF trade.
expanding as the demand increased and
contracting as the need contracted. But
when the government undertakes to sup
ply currency the reverse of this condl-
| ton exists. In times Of prosperity when
| there Is greater need for money In legit-
innate trade, the government is boarding
money and has no natural means OF put
ting it back into circulation. Time and
again we have seen in q currency famine
the government drawing money, which II
did not need out of the channels OF
trade. and then resorting to some extra
ordinary measure TO give 1t back to the
people, II the government would only
get out OF the banking business and let
the banks perform this natural function.
currency famine would be unknown.
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AN INTERESTING STRIKE
The situation In the government print