New-York tribune., 1906-12-06

tion when the entire issue OF hitlkIotes a %
credits can he determined only NJ ny t'lsI a,,n
what extent the existence OF state e resti5
banks and trust companies VIII aHoru d iesLihSS
place for such an Issue is another matter. whicn
cannot be computed hIiii nun, ,ain ,I,.ttcrs &c
estimate il not OF conjecture i must not be tor.
gotten that given pene1nyag 3 Teniant over tna
prevailing when money is scarce VIII NOT WORK tle
fourth Of t6e bank circulation is based on credits
as would result II all bank circulation were of the
The circulation Of the country has increased dur
ing the last five years more than s5NOOU3 or
10000 per allnun ana business lhtepesiS @ s3
certainly kept pnee With this increase ana ln'eieSe
~ wo" az H H' snv credit currency legislation so re-
ated s1n % ev s to nS render impossible the
maintenance of more than S200Og0. .
tst,on Of sS eOoOoG in the amount that may he de-
posted by national banks for the retirement Of
ensue. 1 very seriously doubt the proposition and
30 sooner was the new issue of Panama bonds
advertised in July, 1905 than banks throughout me
they might sell their bonds process which. but
for the provision limiting the amount OF retire retire
to me pSs evS times When deposits have
consols national bank circulation has been retired
andes ana se bsnE have Sought st 6e made
Of government money on the ground that mere Wa5
have tried to retire their circulation as to use
the bonds on which the Circulation was paseu ~
II may he said of such course that it is nat
for the suggestion on page 81 hereof that it would
be wise to clothe the Secretary OF the lreaslry
81 erc' I,,nitation thereon as in his Judgment will
best conserve the business interests OF the couh-
try.
CENTRAL BANK NOT FAVORED
Several other plans have been proposed for sup
plying the element of elasticity m our cnrfency rene
ciers have recommended a central government
those Of the principal financial countries of Europe
The abolition Of the independent treasury would
be of course involved in such plan Government
money would be then reSulaIly ly deposited IN this
central bank from which disbursements would be
made. and the government supervisor OF ana ana
interference with the monetary operations ana
the financial condition Of the country would be
effectuay eliminated.
At first blush this seems desirable, but in prac-
satisfactorily than the present system Snch a
bank would Of necessity be governed by a board,
side interests. They would he responsible 20 no
administration, TO no political party and each
board as an aggregation 1t is doubtful whethSr
such institution could he managed less Selfshly
and more I'm the interest of the people generally
than the Treasury Department has been conducted
which # ever has been subjected The Treasury
has always been the bloody angle Of criticism of
administration. but critic has ever chaSed
the head of this department with cupidity With
operations having selfish ends IN view
free from operations having tor their end larger
dividends but there is little justification for such
If some method could be devised by which the
ildliOlldi !9dnhB OF inc country tOuiu De nlaue 10
cooperate. The major portion OF legitimate criti-
cism 10 which present system is now subjected
operate in the slightest degree is fe%dent
New York city for instance has the only call
TO secure cooperation between the financial insti-
call money. as have already shown on the morn
ing Of certain day was u per cent. with some
loans high Il per cent, while in the afternoon
II dropped 10 "a per cent During part of the
previous season millions were loaned at l per cent
and some below, and later in the season the rate
touched 100 per cent 1t must he manifest to lay
men even. as we'll as 10 hnanciers, that such want
of cooperation resulting in such fluctuaton in in
terest rates. offers little 10 the hope
banks for falling to cooperate. for have been e
Another indication Of the want of cooperation.
not only in New York city, but quite as much
throughout the country generally, is discoverable
worse in New Work than eIseWheTe elthongh tbo o
city Repeat tedly within the last years surplus
reserves have been practically exhausted in mid
summer; and sometimes the aggregate surplus re-
serve Of the associated hanks in New York CITY
has only equalied that reported by single insttu-
uon I must not be understood expressing an
opinion that this condition indicates any want Of
jtlsin, hut 10 know that If there tho
slightest measure Of cooperation between the ma
would be gathered IN midsummer 70 provide for in
creased business operations incident to the crop
moving season ana the revival of commercial actv-
fly annually witnessed during the autumn and
winter months.
CAN COOPERATION BE ENFORCED BY LAW?
Whether cooperation can he secured by statute
vii - SCIt C az MiGh st.entS OF the stiaioli
uon OF Congress two possible plans First, grad
tion to this plan is that conditions vary with diff
ferent seasons. Sometimes the crisis Is deferred
ing the spring. Second. better plan in my iudg-
ment would he to clothe the Secretary of tho
treasury with authority 10 require all hanks. AT
certain times liked by him. TO slightly and grad
within their vaults with corresponding au-
thority to release the same from time to time
IN his judgment will best serve the business inter
cftS of IN" country
In quarantinine against yellow fever, the govern
discretion to tho Secretary # the Treasury through
yustifes The statement that tho sriericam people
hold the Secretary of the Treasury quite largely
true he should have measure of discretion ana
ac,",iig I|4ulSiie 10 enable hlm TO rum TINS eN-
Wen as IN IN" capacity of an expert health officer?
Suppose the national banks were required cit hcr
hy statute or by direction Of the Secretary of tho
Treasury TO increase their reserve. ana 10 carry
the same IN their own vaults. in an amount equal
TO ! per oent or their capital stock every fifteen
months would work no hardship upon any institu-
OF reserve money with which To meet the demands
OF inercasGr bushes II is probable and under
banks would lind such contraction profitable. for
interest rates during the summer would not he
likely then drop excessively low and it is equally
high I'm the fall and winter.
1t may be said that the banks can now strengthen
their reserve during the summer their own mo-
ton The best answer TO this is the admitted fact
that they do not do it 10 any considerable ~
tent. and for the reason already pointed out want
of cooperation. No bank, nor the banks of
any city, Will contract their reserve when ~
other banks are loanng the last available doll,r O.
al tho best rate obtainable however low that rate
may he.
National bank circulation might be made tho
basis OF contraction instead Of reserve. Suppo=.
the Secretary of the Treasury had authority to
order the national banks make deposit to the
credit of the redemption fund OF amount equal
per cent o! their circulation every fifteen days
during the above mentioned period. This would
result IN a contraction Of national bank circulation
amounting to $G0,0@,00 and by requiring the bonds
e. remain deposit this amount could again
issued during the fall and winter necessity re-
qulreQ