New-York tribune., 1906-07-08
CURRENCY Reform.

This being the open season for state banking
association meetings, we are beginning to hear
complaints-more or less definite-about the I'M
wieldiness and inelasticity of the currency sys-
TEN. These complaints are not in themselves
Ill founded or unreasonable. Our currency sys
TEN is a patchwork inheritance. 1t represents
not the compact and logical development of a
consistent plan, but a rough attempt to meet
emergencies as they have arisen. 1t has not
kept pace-and could not keep pace-with
changing conditions because it is a composite,
compromise between conflicting ideas and forces.
The federal government is today neither def
nitely in the banking business nor out Of it, and
this indeterminate role, though it may have polit
icaI advantages, destroys initiative and compels
the Treasury to follow drifting and waiting
policy.
In any campaign for reform the rigidity Of the
currency system must be taken for granted.
Pressure for changes must come from without
and those who urge amendment should be armed
with suggestions which the public will accept as
rational and feasible We think that most OF
the recent agitation for currency legislation has
lacked effectiveness because it has merely
pointed out defects and offered no substantial
remedies. At times when the shoe has pinched
there have been remonstrances from the banking
interests but when the pressure has been tenn
porarily relieved the fight for better conditions
has been abandoned. Last winter the Chamber
OF Commerce authorized an inquiry and Mr..
Schiff and Secretary Shaw exchanged letters on
certain phases Of the currency question. No
agreement resulted and the controversy lapsed.
Mr.. Vanderbilt at the meeting OF the New York
State Bankers Association the other day, made
fresh plea for a more elastic system, and though
his suggestions were a little vague they had at
least the merit of recognizing the fact that be-
fore anything can be accomplished the banking
interests advocating changes must get together
end present concrete and workable programme.
The argument is often made that the currency
system must be grieyously at fault because the
rate Of interest on call money in Wall Street
may rise within a month from per cent 20 40
or go. It will hardly be held, however. that the
banks suffer from this huctuatiOn, since a soar
ing interest rate means large profits to the bank
ing institutions which loan funds to Wall Street
SPECTATORS 1t may even be conceived that the
banks encourage fluctuations by which they d.
rectly profit. Mr.. Vanderlip lays more stress,
however, on the inability Of the banks to furnish
the S150,000,000 in currency needed each year
to move the crops without creating a temporary
currency famine in the big money markets He
favors the removal of some Of the present re-
strictions on the issuing power Of banks. and
even suggests that the government abandon it's
indeterminate role in finance and go back to the
pre-Jacksonian practice OF direct control through
the establishment OF United States bank. This
proposal is logical enough, but from the polit-
ical point Of view it is hardly practicable as an
immediate reform, since it involves a reconstruc-
tion of our financial system from cellar to gar
ret. The average American voter feels himself
pretty much at sea when asked to deal with
financial problems and will insist on the very
gradual reformation Of financial system whose
l. G-4l
has been seduIously taught to value.
Mr.. Vanderlip is entirely right, however, in
pointing out the necessity OF concerted action by
the banking interests if the present system is
TO be amended. If they can submit an intelli
gible and simple programme to the public and
to Congress, there may be no great difficulty in
securing legislative action.