New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1906-10-05
FOR CURRENCY REFORM
rUO PLANS PRESENTED.
roumittee Suggests Central Bank
or More Banknotes.

AMY month. OF careful investigation and
=, currency conditions in this country and
-.ir, lands the special committee OF the
70 - =, Commerce OF this city appointed last
on~ ms has compiled a report making suggestions
s;,s currency reform, which. IL Is thought.
e. ~ carefully considered by business and
-.ss The committee, the members OF which
Tobn Clanin, Frank A vanderlip. Dumont
-. I.idor Stratus and Charles A. Consnt. sought
..stions by circular letter from members Of the
As-.rs houses 81 the chief cities. and held con-
,,,o,s with leading bankers OF the United
60 end with the heads of the principal European
.ts n issue. and as result OF these inquiries
- rsns were finally decided upon. either OF
- IN the opinion OF the committee. VIII, II
'so,,es. remedy the weak points IN the currency
,rsfen Of the United States
tn. reno-t begins with the statement that the
,.-sr, system is defective in one most important
-, namely its infexibility, and that in con-
1870. the country's business interests are at
60 seriously hsmpered. This defect is due. tho
snort states 10 restrictions which are unreces-
.-pv nlaced by law upon the use OF bank credit
TIE observations OF the COMMITTEES lead II 10 believe
...t nresent unfavorable conditions in the money
So, result from legislation which the country
-. o,,g-ovr. and It recommends 10 Congress the
..ss,ry OF new legislation. which will supply the
ccntry with elastic currency. responsive 10 the
carving needs OF business
IN The opinion OF the committee the best means OF
,-o,idng an elastic credit currency the volume OF
,-4i,b could never be excessive would he the Gre
..ion n = central bank OF issue under the control
- ,bs government. The committee also recon-
uends that II the idea Of a central bank OF issue
.Aould fail 10 win the approval OF Congress and
,he country legislation might be enacted which
v,oud permit any national bank the bond secured
circulation Of which equals 30 per cent OF its cap
,rsl 10 issue additional notes equal in amount 10
q ner cent Of its capital. The report Of the COM
,y,,ae suggests that the solution OF the problem
borld be worked out by the bankers Of New York.
,bo in their efforts for reform will be encouraged
nv The representative business men OF the entire
country.
Summary OF THE REPORT.
A summary OF this report, including the important
,,7,ures and recommendations. together with the
considerations upon which they are based, follows:
We find that our currency is seriously defective
that It's volume Goes MOI vary win ti.t i
90 that the business q TIE country Is sIlts halsly
exposed the evils Of redundant ana OF De
creases as II does every autumn when the crops
are harvested. our banks are opHeeo 70 pay ouI
lawful money from their reserves. and In conse-
ouence raise their rates OF interest on oeinaha
an time loans These operations are q source or
20 ~ e7s snIirs country They work injury 10 our
merchants. manufacturers and 10 cur farm
e men sn0 hand q" The Supply Of currency is exces
sive il usually is in the spring the consequent
maly low rate OF interest and so tends TO excite
8 dangerous speculative spirit in our markets and
Ne Believe that this oscillation between periods
Of contraction end imitation is directly caused by
cur-ency. due restrictions which are placed by
Law upon the issue OF bRnknofes. Under the exist
ing Law national banks increase their issue OF
only In proportion as lney increase their hold
,ngs OF The United States bonds which de-
posted as security, and they cannot ct Will regain
possession Of the bonds by the deposit Of lawful
money for the retirement OF their notes. On &C
count OF the investment considerations regarding
bonds which involved IN the issue Of national
bank notes We and that this class OF currency,
which IN most other leading countries possesses
& 1e.l 6exlb.ty. is here issued and retired ut
terry without regard 10 the countrys varying needs
tr currency
NOTWITHSTANDING the inadequacy Of the bond Sc
cured ciresla ttca Of national banks. our de-
.he-ators have brought US 10 the conclusion that
Fo11 unw-se 70 disturb this circule ton or TO
recommend any substitute for IL II now exists.
for sleh s course would lead 10 ineQuitRble de-
peasuo1 o. the United States bonds out
Standing IN opinion, however future issues
a. BASIS Tor banknotes. for the great increase in
ue pond secured circulation that has taken place
me existing system OF note issue without adequate
resumption might become dangerous.
We nave had brought before US for consideration
I've classes q remedies for existing evils-hrst. rad
leaI measures involving the creation of corpora
IONS with powers and privileges unlike those now
Possessed by any American institution; second.
measures which would enlarge the privileges OF cor
loFstons already in existence. We have deemed IL
PES 10 select from each Of these classes the one
s..eh ne believe 10 be the best II the country
sIsaoy for a radical addition TO our financial sys
eHa we believe that the worlds experience proves
.tyone question that central bank Of issue con-
.u4eo by the government, ought 70 be established
y however the people OF the United States shrink
rom the creation OF such institution. be-
aese mat the wisest alternative is q simple meas
llonal banks IN such that their right OF
ssue shall not vary with their ownership Of United
states bonds, and under such conditions that the
..leInehi OF their notes when not needed shan be
esrtan and automatic