The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-05-12
BANKERS TALK
ON CURRENCY
Secretary Gage criticizes Our Pres
ent System and Approves an
Asset Currency.
Jas. B. Forgan of Chicago Declares
More Elasticity Is What
Is Needed.
Former Controller of the Currency
Charles G. Dawes Counsels
Conservatism.

Sherman, Tex, May 12-The Texas
Bankers association met here to-day and
listened to the reading of mum Der OF
letters from prominent bankers in other
states.
| One Of the letters was from ex- Secretary
of the Treasury Lyman J. Gage, who dis
cussed the question, Is the money sup
ply Of the United States sufficient"
| II answer the question: he said, 'by
expressing the very grave doubt whether
1t be adequate in volume, and clear con.
viction that It Is not economical in charac-
ter. The provision for supply ought tc
have reference to recurring needs, re.
spending in volume when occasions for use
of currency are the greatest and retiring
naturally: as the requirements grow less
iexacting."
He argued for credit or asset currency
saying that he was well aware that deer
prejudice exists against either: "but ar
honorable history of such currency fol
a generation in several states, and his.
tory of several generations abroad, fully
justify the belief that, with some reason
| able and just guards around it, we car
gain the advantage Of an adequate cur
rency without any risk Of disaster or the
loss of a single dollar.
He asserted that the following PROPOSE
ton could be successfully supported:
First-Such currency is required in
the interest of the whole country.
Second-The protection of the note
holder against depreciation or loss may be
made entirely adequate.
Third-There need be no dangerous
credit expansion thru bank note issues If
reasonable limitation be imposed as to
volume and a proper system of central
redemption be provided.
FOurth-Such a currency would go far
toward arresting the annually recurring
anxiety occasioned by the impairment of
bank reserves, called into temporary use,
as they are, to serve as medium of cir
culation in the movements of crop har
vesting.
Fifth-It would tend to steady the rates
of interest in the central cities, and pre-
vent the violent and costly perturbations
between money as a drug and; money
impossible to borrow and thus save the
individual investors the great losses now
so frequently experienced by reason of
fluctuations in the money market.
Sixth-It would be in the interest es-
pecially of the agricultural classes, af-
fording them as it would an adequate
supply of a safe circulating medium OF
exchange and payment, on terms more
favorable than they. could otherwise en-
joy. 3 I
Mr. Forean Agrees.
Another letter was from James B. For
gan of Chicago, who discussed the same
/.
The supply of money periodically oscil-
hates between over abundance and mad
equacy, in accordance with the demand
for 1t. which varies with the seasons. The
supply being arbitrarily fixed in quantity,
bears no relation to the varying demands
OF commerce and there is not even an at
tempt in our monetary system to adjust
the supply to the demand.
For some years it has been apparent.
both from statistics and from financial
conditions, that the circulating medium
OF the country has not been increased in
proportionate ratio to the expansion of
bank capital and deposits, the develop
ment OF commerce and the increase of
population. Notwithstanding the efforts of
the secretary of the treasury to keep the
different kinds of government money cir
culating and to encourage national banks
to Increase. their circulation, it Is evident
that the supply has become Inadequate to
the requirements of commerce during the
season when the maximum amount Of it is
wanted
To add to the money now In circulation
more Of the same kind until the supply
shall equal the maximum requirements of
commerce, without providing means for its
contraction when these requirements are
at their minimum, would only perpetuate
the evils Of our present system What we
require is q, more elastic currency
Il believe that the privilege of issuing 4
limited amount Of asset currency may be
safely granted to national banks under
proper regulations. Mr.. Fowler's bill now
before congress is based on correct prin-
ciples but Is deficient in its details. What
1t needs is to have a committee of bank
ers elaborate out of 1t the details of q
practical plan. ~.
The Dawes Plan.
Former Controller Of the Currency,
Charles G. Dawes, Of Chicago, In letter,
urged that in the passage Of any provi-
sion for the elasticity in the currency the
following principles should be kept firmly
in mind:
"First-There should be no radical ex-
periments made and we should risk In
no degree whatever the absolute safety
and solidity Of our present bank note cur
rency in order to secure additional fuidity
'Second-If we can safely inject an eIe-
ment of elasticity into our bank currency
we should see to 1t that we are not fur
nishing a currency which can be used as
a basis of current business and speculation
in times like the present, thus adding to
the perils OF panic instead of mitigating
them.
Third-We cannot secure elasticity in
any asset currency issued by. the national
banks of the United States to be so linn
tied In the. amount of its issue as to be
undoubtedly safe without the imposition
OF high restrictive tax Of not less than
4 per cent and probably S. per cent thus
providing for its; circulation only in times
OF the high interest rates which accom-
pany enforced contraction Of banking and
business credits in panics and crop NOV
ing periods
GREEK NOT REQUIRED