Rock Island Argus., 1906-12-04
CURRENCY REFORM.
Serious Defects In Present System
Pointed Out.

| especially call your attention to the
| second subject-the condition of ouI
| currency laws. The national bank act
has ably served a great purpose in
| aiding the enormous business develop
ment OF the country, and within ten
years there has been an increase in
| circulation per capita from $21.41 to
S33.OS. For several years evidence has
been accommodating that additional leg
islation Is needed. The recurrence of
each crop season emphasizes the de-
fects Of the present laws. There must
soon be a rev's Sion of them, because to
leave them Sthey are means to incur
liability of business disaster. Since
your body adjourned there has been a
fluctuation in the interest on call mon
ey from per cent to 80 per cent, and
the fuctuation was even greater dur
ing the preceding six months. The sec
retary of the treasury had to step in
and by wise action put a stop to the
most violent period of oscillation.
Even worse than such fluctuation Is
the advance in commercial rates and
the uncertainty felt in the sufficiency
of credit even at high rates. All COM
merciaI interests suffer during each
crop period. Excessive rates for call
from the interior banks into the specu-
lative field. This depletes the fund
that would otherwise be available for
commercial uses. and commercial bor-
rowers are forced to pay abnormal
rates, so that each fall tax, In the
shape of increased interest charges, Is
placed on the whole commerce OF the
country.
The mere statement Of these facts
shows that our present system Is seri-
ously defective. There is need of a
change. Unfortunately, however. many
of the proposed changes must be ruled
from consideration because they are
complicated. are not easy of compre-
hension and tend TO disturb existing
rights and interests. We must also
rule out any plan which would ma
terially impair the value OF the United
States per cent bonds now pledged to
secure circulation, the issue of which
was made under conditions peculiarly
creditable to the treasury. 1 do not
press any especial plan. Various plans
have recently been proposed by expert
committees of bankers. Among the
plans which are possibly feasible and
which certainly should receive your
Is that repeatedly
brought to your attention by the pres
ent secretary of the treasury. the es-
sential features of which have been
approved by many prominent bankers
and business men. According to this
II
ted to issue a specified proportion of
their capital in notes of a given kind.
the issue to be taxed at so high a rate
as to drive the notes back when not
wanted in legitimate trade. This plan
would not permit the issue of currency
to give banks additional profits. but to
meet the emergency presented by times !
of stringency.
"Spasnns of High Money"
I do not say that this is the right |
'ystem. l only advance it to empha- |
'ize my belief that there is need for |
he adoption of some system which |
hall be automatic and open to all |
ound banks, so as to avoid all posi- !
,ility of discrimination and favoritism |
such a plan would tend to prevent the |
pasms of high money and speculation
which now obtain in the New York
market, for at present there Is too
much currency at certain seasons of |
he year, and its accumulation at New
'ork tempts bankers to lend 1t at low
ates for speculative purposes. whereas
t other times when the crops are be-
lg moved there is urgent need for a
\ I,YaA to-,
supply. 1t must never be for
often that this question concerns busi-
ess men generally quite as much as
ankers- Especially is this true of
tockmen, farmers and business men
! the west, for at present at certain
easons of the year the difference in
lterest rates between the east and the
-eSt is from @ to 10 per cent. whereas
! Canada the corresponding difference
but 2 per cent. Any plan must, Of :,
purse, guard the interests Of western
nd southern bankers as carefully as =,
guards the interests of New York or !,
hicago bankers and must be drawn
'om the standpoints of the farmer and
lie merchant no less than from the :,
of the city banker and the :.
,untry banker ,
The law should be amended SO as
,ecifically to provide that the funds
erived from customs duties may be
eated by the secretary of the treas :,
" as he treats funds obtained under
e internal revenue laws. There :,
lould be a considerable increase In =
lis of small denominations. Pernis- :,
chnrr1d ha hor nj | =
ry under settled restrictions, to re- \
-e their circulation to larger =
Mount than three millions a month. =,
DHHIDDINE TLDIEE