The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1906-12-12

ly wrong appliances subject us to. the
attempt to dispense with them and to
substitute a circulating note system eco
nomieally sound, would likely meet with
such considerable opposition that it will
for the present prove almost useless to
make the effort.
Under these circumstances it will be
well enough if at least a beginning be
made in the right direction and toward
such a beginning the propositions en-
braced in the recent report of a special
committee OF the New York Chamber of
Commerce, and which 1 would commend
to your attention and study, point the
way.
The New York Plan.
This proposition in some essential de-
tails, appears considerably preferable to
the plan framed by the American Bank
ers' association committee, recently pub
llshed. Under the New York plan we
shall obtain a circulating medium, which
because of the graduated tax upon cir
culation it embodies, will possess ele-
ments of elasticity which under the Bank
ers association plan will be found want
ing. The latter, in its present form,
simply amounts ton an expeden by
which the banks acquire the power to
secure funds at a cost of about SO per
cent interest II you leave it to the banks
to issue circulating notes at fixed tax
of 215 per cent which plus the expense
to maintain reserve as proposed and the
cost of the redemption, will make the
total interest cost about 3la per cent, you
will have, because of this fixed cost, a
circulating medium, which, / fear, will
prove more rigid and irresponsible than
anything We now have. Solely through
the imposition of a carefully graduated
tax. not too low in it's minimum and
rapidly advancing upon the issue of in
creasing amounts of circulating notes, can
we obtain the elasticity, which is needed
1t Is most regrettable that the Bankers
association committee, with the New
York chamber of commences proposition
before 1t, rejected the very wise provision
for graduated tax; it proves only once
more that we shall never succeed in OBJ
tanning practicable currency reform I'M
til the banks learn to understand that
while no one will begrudge them a 1egiti-
mate, reasonable profit, currency reform
must primarily follow lines which will
be certain to meet, in a sound manner,
the requirements of the material interests
of the country. represented in it's agri-
culture, its industry and its commerce.
Leaving aside and correcting this most
fatal defect in the Bankers association
plan, there is much to recommend IT,
though personally / hold strongly to the
opinion that it will prove unwise, IL not
dangerous, to clothe six thousand banks
or more with the privilege to issue in
dependently purely credit currency no
matter how complete the safeguards may
appear proposed to be thrown around the
exercise of the privilege. A single default
in prompt redemption will be likely to
create prejudice against the entire volume
of the outstanding credit currency, with
consequences so serious, that no charm,
however remote ought to be permitted to
be taken In this respect. This risk can
readily become removed, if the national
banks, who in the first instance will be-
come the beneficiaries of legislation au-
thorizing the issue of credit currency,
shall themselves, as a body assume any
eventuality, by becoming Jointly respon-
sible for all the credit currency which
passes into the hands of the people, in
stead of the latter assuming a risk to
which, however, remote it may be, they
should not become subjected.
Plan for Central Bank.
The establishment of a great central
bank which has been suggested, is, with
the past experience in the two banks of
the United States, stll wildly in the
minds of the people, not an attainable
project. The prejudice against the con-
centration of large funds, with the polti-
cal and other power this is certain to pro-
duce, has increased and not diminished,
nor would the several thousand national
banks be willing to surrender their valu-
able privileges as government depositares
and bank note issuers to a central insti-
tuition 1t should however, with appro-
pirate legislation for authorizing the ere
alton of an asset-currency upon some such
plans as has been proposed be practicable
to establis ha central association of the
national banks. which is to possess no
other function than to issue to the banks
in the association the circulating notes,
to which, under the stipulations and re-
frip In lof ic 30
be entitled.
If I should be asked how such an asso- /
citation is to be administered, my answer
Will be that this could be be accomplished
through a governing body, consisting of
forty-six national bankers under the
Craftsmanship of the Comptroller of the
Currency. The members of this govern
ing body should be appointed by the Pres
ident of the United States, at stated
periods one from each state. Membership
in such a body would be a civic honor
well worth while the aspiration of the
best minds of our national bankers With
the system and supervision which such
an association will provide, it will be
practicable to create an economically
sound, and, because of the joint liability
of the banks, everywhere acceptable cir
culating medium, that will readily ex-
pend and contract with the demands of
trade and commerce. Both excessive and
unsound superabundance of money, as
well as unjustifed unscarcity, such as
we are now witnessing, and which, IL per-
mitted to run into extremes cannot but
become inimical to the prosperity of the
country, can thus become prevented.
Defects of Treasury System.
In the limited space of time l have the
privilege to claim from you l cannot we'll
, attempt to give, as l have just DONE
more than outline of the fatal con-
ditions under which are laboring, and
of the remedy, which it appears practic-
able to apply, but the comparatively little
/ have said would be incomplete did /
not also point out the defects in our ex-
THE CRYPTIC KEY