Omaha daily bee., 1906-09-23
ILEARINC HOUSE CURRENCY
Henry W, Yates Debates Topic in the
American Banker.
{ CR-TARY sHAws PLAN IMPOSSIBLE
Arguments In Favor of Credit Cur
rency FsIIscious aud secret
Emergency Issue is Out
of the Question,

In the American Banker for September
10 the views OF MIR. Henry w Yates of
Ome ha on the clearing house currency
question are set forth at some length. The
ticle In the Banker follows:
Suggestions made by. Mr. Henry w
Yates president OF the Nebraska National
bank of Omaha Neb.
Under date Of August 2S 1906 Mr. Yates
writes follows:
- notice that you are. inviting com.
i ne upon the report Of the committee Of
G-rning asset or credit currency. 1 enclose
herewith my reply to letter from Mr.
bankers conventions which have at
Nnded and where the question has been
uecidets In opposition to any scheme OF
the Ct, acter here outlined.
- b.ieve the arguments advanced in
Iavor OF a credit currency to be fsllacous.
MI Nanderlip IN a recent address declares
That there is no logic IN saying that, be-
money in Wall street that the seat of
difficulty must be Wall street The trouble
Fundamental and Is inherently related rei to
our unscentifc currency. In view OF the
actual facts OF the case, and the daily OBJ
IN Wall street, II is difficult to take Mr..
Nanderlip seriously. No system Of circula-
ing conditions. and IL our system OF cur
rency Is thereby proved to be unscientfc,
then gold ought to be abolished as money
scientific Of systems.
The authority, to Issue clearing house
circulation heavily taxed has been advo-
Gated by me for years, and was outlined
in bill introduced in the senate in 1894
much impression upon those most vitaHy
c9nctrned VINO seem to work or advocate
almost any other kind OF a scheme"
Emergency Currency.
The following is from a letter addressed
20 Mr.. J. /. Hamilton. president OF the
Ame rican Bankers association, by Mr..
MY Dear Mr.. Hamilton: Your favor OF
August II is received, and I have read. with
clearance currency regret very much
that i am not able, to concur with you In
the advisabilty Of the scheme. have for
years, at several bankers conventions, OPP
posed the issue of any kind of credit cur
rency, and have seen no reason to change
Z! do not think an emergency currency,
which might never however be used.
any general kind of currency scheme would
be for the best benefit OF the country
enclose you memorandum OF the last paper
l. wrote upon the subject but bt course
there are many others In the same direc-
tion.
ton will go slow before endorsing any
scheme OF this kind. There Is an ample
amount ot gold IN the country Tor our nnsl-
iced by the government arc already I'M
moderately large"
The clearing house currency, which, as
Mr.. Yates says, he has advocated for
years. Is described In the following para
Sepaso Esmker q 8fpsT S. 1905
reply 10 Secretary Shaw's proposal for an
emergency circulation:
Il Secretary Shaw wants, he Gays, "a cur
-~ency which would not advertise It's ex-
issenSe or our extremity Ky The somRrotSss
istence."
Now, in the first place. the idea that an
emergency currency could be secretly Is
peS during Rsnic esnnot be
fact the situation Is ssssserat ted and hence
session of what belongs to them.
on the other hand. It is the publicity of
tspm d n to Charter clearing house GER
tifcates has always had a quieting effect
Just as has also been the encouragement en-
The bare announcement Of the suspension
don, and business resumed Its ordinar,
channels in q brief time without the ply
ilege being exerclsed by the Bank of Eng
What are clearing house certificates
against which the secretary SO strongly
by resolution direct their manager to re.
ceive from any OF their number. and hold
niercial paper as may be approved Of by
committee appointed for this purpose
Is t drsctsS 10 issue interest Bearing
certificates In convenient denominations for
sum less than the face OF the paper, and
generally from 70 TO 30 per cent thereof
These certificates he IL directed to receive
In place OF money In the payment Of clear
ing house debit balances.
They cannot circulate as money, and
naturally they are retired by the banks
primarily responsible for them early
as possible. for no bank would care q
have such paper outstanding for any
length OF time
Such paper as these certihcates-guaran
teed in addition as they may be by ths
various banks composing the association
in proportion to their capital and surplus
supply n security of the best possible quail
ity upon which there could never be ans
losa.
temporary Issue OF bank notes upon
pledge OF these securities could be author
ized with absolute safety.
f Legislation Required.
The legislation required to accomplish
this result need. not be any long com
pllcated measure like some which hsv'
been introduced in congress. but may b
very simple and directly 20 the point
Amend the national currency act as fol
lows;
u. Authorize clearing house association.
possessing an aggregate capital Of, say
S5e0o00o0. to tissue certificates under th'
usual rules and regulations provided ~
the purpose.
Upon the deposit OF these certificates
e. =