The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1906-12-12
.SCH|FF TELLS OF
CURRENCY EVILS
Condemns Overnight Relief of
the Money Markets
MAKES SOME SUGGESTIONS
Thinks Capital Would Favor Inherit.
ance Tsx-Lays the Blame for
Much of Present Trouble
On the Bankers.
MAKES SOME SUGGESTIONS

|
of affairs, were explained to the members
of the Illinois Manufacturers association
at their annual banquet here tonight by
Jacob II. Schiff, the New York banker.
Mr.. Schiff, who was the guest of honor,
! spoke at considerable length. His sub
ject was Currency and Other Reforms,
and the speaker declared that the over
night announcements of relief, the Secre-
tary of the Treasury is in the habit Of
making, are neither good finance nor fruit
full of good results to the material in
terets of the country"
The announcements from Washington,
according to Mr.. Schiff, are the conse-
| quence of undesirable methods for which
| existing laws are responsible. The rem
| edy, the speaker said for the evil, is the
enactment of legislation which will pro-
vide that the revenues of the govern
| ment shall on collection be deposited
| with national banks in proportion to their
| capital upon security acceptable to the
Secretary of the Treasury upon the pay
ment of a uniform rate of interest, the
| same to be determined by the Secretary.
Mr. Schiff spoke as follows:
| / feel highly complimented by the in
vitation you have extended to me to adj
dress you at this, your annual meeting.
| Aware that your association is one of the
most influential commercial and industrial
| organizations of the middle west, l have
willingly accepted your courtesy, for
| desire to meet the men who, to so great
| an extent, are among the potent factors
| making for the prosperity of our country
| and for its commercial supremacy. TO
| present to you my views-for what these
may be worth-upon some of the great
| questions and problems of the day, upon
| the right solution of which our own veal
and the happiness of those coming after
us may depend to a considerable extent,
| is | feel. an opportunity l must not per-
| nit to pass.
BY early training am banker. When,
| almost half a century ago, | first began
| to earn my spurs, the banker was con-
sdered somewhat above the ordinary; of
late, however. the prestige he had en-
| joyed is somewhat on the wane because
of the prejudice which now induces people
| to look with suspicion upon all things
| financial. particularly so long as these
| things do not improve their own finan-
| cial status. The fact is, however, the
banker. who respects himself and wishes
| to be respected, must not nowadays rest
| upon his laurels; he must do active mind
and other work. without reference to a
| eight hour day. Personally, / may say, In
| all modesty, that my own mind Is at all
times considerably occupied with the
problems which existing conditions bring
| upon us. and for a considerable time L
| have given much thought to the question
| of the currency. As a consequence the
| conclusion has forced itself on me, as It
| has upon others. that the problem of the
| Improvement of our circulating medium
should claim the earnest thought of ex-
| perienced men, imbued with the desire to
! render service to the country, and fol-
1 lowing your invitation, | am with you
this evening to speak to you of some of
| the considerations which have presented
| themselves to me.
Sefishness Is Handicap.
| Not that I shall likely be able to tell
you much that will be new to you, but
when so much is being said written and
! printed in regard to the currency, which
! is wide from the proper mark, when
| so many national bankers of might and
/ influence. who prosper under the special
/ opportunities present conditions make
/ them, oppose every proposition for
! change and will look only upon sugges-
! lions for an improvement in the circulat-
! ing medium from the point of view of
| their own direct interests, 1t may perhaps
not be for naught to tell you who are
not bankers, but who represent a class
which, as | believe, suffers as much as
any of the large interests of the coun-
try from prevailing conditions how simple
OF solution the entire problem would be
! If common sense and unselfshness would
alone be permitted to dictate the remedy.
There is nothing intricate in the bank
| note problem. Let us take your own
case. You are manufacturers; you have
a certain capital, which is invested in
| your plants. and you also have, to a
/ Or a
I of working capital. To make and finish
/ your product you frequently need addi-
tional capital which you have to Dor
row temporarily for payment after you
have marketed your goods. To obtain this
you go to your banker, who is willing
to accommodate you; but while his cap
/ ital may be large, he has many dealers
! to whom he must lend, and for this his
own actual resources do not suffice. He
deals. however, not only in money, but
also in credit, and he will say to you, or
ought to be in a position to say to you.
81 cannot give you actual money, gold
/ or legal tender notes; this, as far as L
can prudently part from it. I have al
| ready loaned out but what | can do is
I to give you my own notes, acceptable
/ everywhere as money. because it is known
, that they will be redeemed by me upon
presentation" As this serves your pur-
| pose you accept loan of the bankers
goods you pay your debt to the banker,
who in turn with the money received
from you withdraws his own circulating
notes and cancels them. This is all there
is, should be. to a bank note If we
divest the problem of the economic prin-
cipes which underlie it and which in is
suing notes need to be carefully looked
after to make bank note circulation safe
beyond any peradventure.
nr;ft C.oo, c+r,ioL. D,t,
We have. however. in the last four de-
cades. drfted far from the simple and
straight path, have resorted to every
kind of makeshift and heresy, and are
calling those dols-money. We began by
permitting the non-interest bearing obli-
cations of the government to continue
in circulation. as legal tender. long after
the necessity for unjustifiable a cir
culating medium had passed. We enlarged
upon this under the stress of the civil
war by permitting the banks to buy the
bonds of the government and on the
basis of these holdings to issue a circulate
ing medium, in its character of advantage
to no one except to the government,
which does not need this aid. and which
ought not by such means obtain loans
at rates of interest not commensurate
with the real value of money, and to the
banks who gain the interest upon the
government bonds they acquire and de-
post as a basis for their circulation.
How you. a 8 manufacturers or the trad
err or the agricultural producer. are
helped by these uneconomic. crude and
uniustifed methods of creating n circu-
lating medium. is question which few