Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1906-12-04
CURRENCY REFORM.
Serious Defects In Present System
Pointed Out.

| especially call your attention to the
| second subject-the condition of oul
| 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
$33.0S. 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 Sion of them, because to
leave them Sthey are means to incur
liability of business disaster. Since
your body adjourned there has been a
huctuation in the interest on call mon
ey from per cent TO 80 per cent, and
the fiuctuation was even greater dur
Ing the preceding six months. The sec
rotary 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
mercial interests suffer during each
crop period. Excessive rates for call
money In New York attract money
from the interior banks into the specu-
latiye field. This depletes the fund
that would otherwise be available for
commercial uses. and commercial Dor
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
md business men. According to this
plan. national banks should be permit
ted to issue a specified proportion of
their capital in notes of 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.
"Spasms of High Money"
I do not say that this is the right |
system. l only advance it to empha-
size my belief that there is need for |
he adoption of some system which |
shall be automatic and open to all !
sound banks, so as to avoid all posi- !
,ility of discrimination and favoritism |
such 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
FORK tempts bankers to lend it at low
ates for speculative purposes. whereas
t other times when the crops are be-
ng moved there is urgent need for
arge but temporary increase in the
supply. 1t must never be for
often that this question concerns bust
ess men generally quite as much as
Especially IS this true of /
tockmen, farmers and business men
j the west, for at present at certain
easons of the year the difference in
interest rates between the east and the
rest is from 6 to 10 per cent. whereas
] Canada the corresponding difference
but 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 !.
1untry banker.
The law should be amended so as
politically to provide that the funds :
erived from customs duties may be
Gated by the secretary of the treas !.
" as he treats funds obtained under :
Ie internal revenue laws. There !,
lould be a considerable increase in ;,
lis of small denominations Permis- >.
on should be given banks, if neces- :,
Try under settled restrictions, to re- a
re their circulation to larger 9
Mount than three millions a month.
PHILIPPINE TARIFF.