The herald and news. [volume] (Newberry S.C.) 1903-1937, 1907-12-06
ELASTIC CURRENCY NEEDED
! DECLARES THE PRESIDENT.
Thinks Provision Should Be Made
for an Emergency Issue Upon
Conditions Carefully Pre-
scribed by the Govern
ment.

Scr1bed by tne GoVeLn-
ment.
Touching upon the question Of cur
rency reform President Roosevelt IN
his message to congress says:
"In my message to the congress a
year ago I spoke as follows Of the
currency:
"'I especially call your attention
to the condition Of our currency laws.
The national bank act has ably serv-
ed great purpose in aiding the enor-
nous business development Of the
country, and within ten years there
has been an increase in circulation
per capita from S33l.41 to $33.08. For
several years evidence has been ac-
cumulating that additional legisla-
tiol is needed. The recurrence Of
each crop season emphasizes the de-
fects of the present laws. There
must soon be a revision Of them, be-
cause to leave them as they are
means to /incur liability Of business
disaster. Since your body adjourn
ed there has been a fluctuation in
the interest on call money from 2
per cent. to 80 per cent, and the
fluctuation was even greater during
the preceding six months. The Sec
| retary Of the treasury had to step in
and by wise action put 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 suffciency
of credit even at high rates. All
commercial interests suffer during
each crop period. Excessive rates
for call money in New York attract
money from the interior banks into
the speculative field. This depletes
the fund that would, otherwise be
available for commercial uses, and
commercial borrowers are. forced to
pay abnormal rates, so that each fall
tax, in the shape Of increased inter
est charges, is placed on the whole
commerce of the country.
" The mere statement Of these
facts shows that our present system
is seriously defective. There is need
Of a change. Unfortunately, how
ever, many Of the proposed changes
must be ruled from consideration be-
cause they are complicated, are not
easy Of comprehension, and tend to
disturb existing rights and, interests.
We must also rule out any plan
which would materially impair the
value of the United States 2 per
! cent. bonds now pledged to secure
circulation, the issue of which was
made under conditions peculiarly
creditable to the treasury. lido 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 yckr attention by the
present secretary Of the treasury,
the essential features Of which have
been approved by many prominent
bankers and business men. Accord
ing to this plan national banks
should be permitted to issue speelS
fed 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 by
times Of stringency.
"'I do not say that this IS the
right system. I only advance 1t to
emphasize my belief that there IS
need for the adoption of some system
which SHALL be automatic and open to
all sound banks. so as to avoid all
possibility of discrimination and
favoritism. Such a plan would tend
to prevent the spasms Of high money
and speculation which now obtain IN
the New York market; for at pres
ent there is too much currency at
certain seasons of the year, and its
accumulation at New York tempts
bankers to lend it at low rates For
speculative purposes; whereas at
other times when the crops are being
moved there is urgent need for a
large temporary increase in the cur
rency supply. It must never be