Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1906-12-05
CURRENCY REFORM.
Serious Defects In Present System
Pointed Out.

second SUBJECTIVE condition of our
currency laws. Tie national bank act
has ably served a great purpose in
aiding the enormous business develop
ment Of the country, and within ten
circulation per capita from $21.41 to
e33.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 revision Of them, because to
leave them as they are means to incur
liability Of business disaster. Since
your body adjourned there has been
f1uctuatiOn in the interest on call mon
ey from . per cent to 80 per cent, and
the 6uctuation 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 suficiency
Of credit even at high rates. All com
merclal interests suffer during each
crop period. Excessive rates for call
money in New York attract money
from the interior banks into the specu-
lative field. This depletes the fund
that would otherwise be available for
commercial uses. and commercial Dor
rOwers are forced to pay abnormal
DO Col 10, In, DO
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. l 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
consideration 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
plan, national banks should be permit
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 bytimes
Of stringency.
"spasms Of High Money"
do not say that this is the right
system. l only advance 1t to empha
size my belief that there is need fol-
the adoption Of some system which
shall be automatic and open to nj
sound banks, so as to avoid all posi-
bility Of Discrimination and favoritism
Such plan would tend to prevent the
spasms Of high money and speculation
which now obtain In the New York
market, for at present there is toe
much currency at certain seasons oil
At,n n,l Inti %
Yor, tempts bankers to lend 1t at low
rates for speculative purposes. whereas
Mt other times when the crops are be
ing moved there IS urgent need for ;
large but temporary increase in thu
currency supply. 1t must never be for
gotten that this question concerns bust
ness men generally quite as much a
bankers. Especially is this true o
stockmen. farmers and business mel
In the west, for at present at certain
seasons Of the year the difference il
interest rates between the east and TIL
in Canada the corresponding difference
is but = per cent. Any plan must. U
course guard the interests of western
and southern bankers as carefully Il
It guards the interests Of New York o
Chicago bankers and must be draw
from the standroints of the farmer ant
the merchant no less than from tn
standpoints of the city banker and th
country banker.
The law should be amended so a
specifically to provide that the fund
derived from customs duties may b
treated by the secretary Of the treas
ury as he treats funds obtained unde
the internal revenue laws. Their
should be a considerable increase i
bills Of small denominations. Permis
sion should be given banks. IL neccs
sary under settled restrictions, to IT
tire their circulation to large
amount than three millions month