The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1906-12-28

Immediately after the reassembling Of
Congress, Representative Fowler. chair
man OF the House Committee on Banking
and Currency, viii endeavor TO have an
agreement with the Speaker and House
leaders as to time for the consideration
Of the currency reform bill, reported from
the committee
This bin follows closely the recommen-
dations OF the currency committee OF the
American Bankers Association II Will
he recalled that the President was careful
not 10 indoTse the bankers plan specific
ally in his annual message, and there is
considerable difference OF opinion in
Congress as to the wisdom Of all Of Its
details
The things to be desired are perfect
security, combined with such automatic
elasticity as viii enable the volume OF
currency To respond TO the needs of the
country. thus preventing the high rates
that annually prevail during the crop
moving period. and when country mer-
chants must borrow money TO nil up
their stores for the holiday trade.
MIR. MOrawetz's scheme.
Mr. Victor Moraweiz. chairman Of the
board Of directors OF the Atchison, To
peka. ana Santa Fe Railroad. has pro-
posed d plan which will be brought to
the attention of Congress, and which
some experts think meets the require
ments o. safety and elasticity more com
pletely than the Bankers Association
plan.
he proposes that The national banks
shall be given authority 10 establish q
joint issue department, governed by a
board of managers, elected by the banks.
and authorized TO issue joint notes TO
each bank, to an amount not exceeding
its capital. upon payment TO the joint
issue department of contribution to a
joint redemption fund, and upon delivery
Of bonds or other approved banking col
lateral 20 further secure the notes. The
redemption fund is never 10 be less than
the Secretary of the Treasury shall re-
quire, and IN no event less than . per
cent of the outstanding notes.
The Joint issue department would be
required to establish agencies for the
issue ana redemption of notes, and cOun-
try banks would De permitted 10 take out
notes through agents.
AIr Morawetz would have the present
law as 10 bank reserves remain un-
changed with the result that the volume
Of notes would adjust itself to the needs
Of the country. because when the notes
were no longer needed they would find
thci- way 10 the banks. and the latter
would Immediately present them for re-
dcmpti0n in order 10 secure additional
reserves of lawful money. The greatest
advantage Of this plan is that il would
afford a means for the gradual transition
from the present bond-secured circulation
without any shock to the business OF the
country, and would obviate the neces-
SHY Tor the United States maintaining "a
perpetual bonded debt for no other rea-
son than to afford d basis for bank-nOte
circulation.
Provision Against Imitation.
An important feature Of the AIorawetz
plan is that proposing that the Secretary
OF the Treasury. or the managing board
Of the joint issue department, shall have
authority 10 require the banks TO in
crease the redemption fund At any time
This is intended to prevent any undue
Initiation of the currency.
II any clique Of banks should attempt
TO put out an excessive amount of notes
the managing board, representing all the
banks, could Immediately check them by
requiring an additional contribution 10
the redemption fund. If the board did
not act the Secretary Of the Treasury
could do so.
This provision. while important To as
sure the public that the n0te-issuing
power would not be abused, would prOba-
bly, never have TO be used, it is said, for
the reason that il is TO the interest Of
each bank TO maintain its reserves at
the highest possible level, and, as these
notes could not be counted in reserves,
they would remain in circulation only
until they had reached d bank, when
they would be turned in for redemption
AT once. with the consequence that no
more notes would be outstanding at any
one time than could be absorbed in the
legitimate business OF the country.