Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-01-26
BANKERS At BANQUET
Address by Controller Ridgely
Of Treasury Department.
USE OF CREDIT NOTES
q. S. TREASURER ROBERTS DIS
CUssES GOLD CIRCULATION.
Remarks by Representative Fowler
and Babcock-Relations Of District
and National Government.

which came from many prominent In the
world of finance The table. which was l.
shaped, was set in one Of the suite OF par
lors and the room was handsomely deco
rated. the prevailing color scheme being
red and green. In front Of the presiding
officer. Mr. E. Southland Parker, one OF the
vice presidents, was q mass Of American
beauty roses and red carnations while the
candles on the tables had pink shades. The
walls Of the room were hung with smilax,
and these details as we'll as others OF the
ARRANGEMENTS brought to the committee IN
charge-Capt John H. Moore. A. r. FOX
and w. V. Germany expressions OF COIL
mendation.
Among the guests Of the association was
Comptroller Ridgely of the Treasury, VINO
was introduced to the audience by MT
Parker. the toatsmaster, IN inc happ'o'l
fashion.
Mr.. Ridgely's Address.
Mr. Ridgely received a hearty greeting as
he arose to speak to the toast OF ne
hank issuing credit notes." He said In
part:
.The objection which Is probably most
frequently heard against any change In the
currency laws, and especially against al
lowing the banks to issue credit notes, or
what is commonly called asset currency.
is that it will, or may, lead to an 1nnatlon
of the currency and credits Many rear II
will produce such an imitation as Will be
very dangerous. Careful consideration OF
this question will, however, show that TINS
fear Is based on most fallaclous reasoning
and an entire misrepresentation or the use
which can be, or should be, made or BANK
notes properly protected by reserves ana
easy facilities for redemption. and which
cannot be used for bank reserves. There
are two general uses which can be made or
money or currency in circulation: First. for
bank reserves against deposits or note CIR
culation: second to supply what cash ls
needed for current transactions Bank notes
should never be used for reserves. but
should always be used for current cash
business.
Bank reserves should be gold or some
paper certificate which can quickly be con-
backs are in circulation and the United
States keeps large gold reserve for their
redemption they may be considered as
practically gold certificates. and used as
reserve against deposits or notes. We also
use the silver dollars and silver certificates
as bank reserves. and will probably have
to continue to do so. Through the mis-
takes Of our silver legislation we have this
silver on our hands, and the government
will for many years have to bear the bur-
den Of It, Having once shouldered 1t and
provided for it. we should make the best Of
it. If the government makes the silver dol
lars specifically redeemable In gold. as 1t
should, we may continue to use the silver.
either as coin or certificates as bank re-
serves. The gold coin and certificates and
clearing house certificates are ideal for this
purpose
THE proper use Of bank notes. however,
Is to supply what currency is needed for
current cash transactions and never for
bank reserves.
Popular idea Perverted.
"If as is proposed. and as should be done,
the use of the bank notes is confined to
supplying the currency needed for current
cash transactions and their use as reserve
prohibited, there will be no dangerous or
undue imitation. Owing to the government
paper notes and coin certificates we have
had In circulation for a generation the
popular idea of paper currency has become
perverted. The government has the power
to issue and keep in circulation a given or
| fixed amount Of currency. 1t can be issued
| by paying it out for the expenditures Of
| the government AS 1t comes back it can
| be paid out again. and when revenues ex-
coed expenses currency can be deposited In
! the banks and so kept In circulation. The
| bulk Of our paper money for forty years
has been government issues kept In circula-
| ton in this way. and 1t has come to be as
sumed that If any given quantity of cur
rency of any kind Is authorized 1t will be
! issued and maintained in circulation. This,
however. is not true of bank circulation
not available for reserves and for which
prompt and constant redemption Is assured.
A bank has no such means of putting its
notes In circulation as the government. Its
expenses are comparatively very small. and
| ii can only pay out it's notes for value Of
some kind. If paid out in exchange for the
note OF customer or in payment of a
check against a deposit notes will only
| stay out as long as they are needed for
| cash transactions. AS soon as this demand
| slackens the notes will come back to the is
suing bank or be deposited in some other
bank. This bank will nay them out at
| once if there Is a demand for them in cur
| rent cash business.
TT is fundamental principle OF bank
note circulation that there Is no difference
between a bank note credit and deposit
credit. 1t Is exactly the same thing. and It
Is only question Of the convenience Of the
customer of the bank as to whether he
leaves the credit deposit to be checked
against or takes the circulating notes Of
the bank away for use cash. 1t is not
so much privilege of the bank to give it's
notes as 1t Is privilege for the customer
to take whichever suits him best 1t is i'm
portant that we should thoroughly under
stand. first that there is no difference be-
tween bank note credit in the form Of q
circulating note and deposit credit ac-
count subject to check. and second, that
bank notes which are quickly and easily
redeemable and not available as reserves
VIII not stay In circulation in greater vol
actions.
Reasons for Change.
There are special reasons why it Is nee
essary to make some change in our cur
| rency which will make 1t more flexible and
elastic. We have In circulation a vast
quantity of government notes and silver
| both coin and certificates. which are prac-
tically fixed In volume and almost totally
| inelastic. 1t therefore falls on our bank
notes to furnish all the elasticity for the
whole system. and we should therefore give
| them the greatest possible measure Of this
| quality. Every business man in the coun-
try, whether his business is mining man.
| ufautcring. commercial or financial. finds
| 1t threatened every autumn by the annual
currency disturbance. The danger is great
| est when business Is best and most active.
as was the case last year, and It may be
| worse next fall II we get no relief It is
an actual disgrace to US and to our flnan-
cial system that this should continue There
should be no occasion for the large trans
fers OF currency from one part of the coun-
try to the other. It cannot. perhaps, all be
| stopped. but much Of It can II the local
banks are given facilities for supplying the
currency needed. A proper bank note cur
rency Will not accumulate In such GUAM
titles in our financial centers. as 1t will not
be available for reserves. but will at all
times be better Distributed ho cop,D1,ttA