New-York tribune., 1907-11-25
MANY CURRENCY PLANS
FOUR GROUPS OF THESE.
President qnd Secretary Cortelyou
GiUe Them Much AttentiOn.

GiUe Them Much AttentiOn.
| Washington, Nov A-Details of many new prof.
ects for improving the currency being submit
ted to the President and Secretary Cortelyou, and
are receiving such attention the other exigencies
of the financial situation permit Secretary Cor
telyou is good listener, and usually dgests quick
ly the essential points of the various plans which
are submitted TO him. Measures relating directly
! TO the currency which are being discussed among
! bankers and incoming members of Congress may
| be roughly grouped under four heads-a central
bank of ISSUE central organization of the exist
ing national banks. the issue of additional crcula-
ton against various classes of bonds other than
United States bonds, and the issue of circulation
upon general assets. with the security of a guar
anty fund
! The project of a central bank based the gen
eral outlines OF the Bank of France or the I'm
peral Bank of Germany has apparently been at
tracing attention of late than at any previous
time in recent years. Senator HansbrOugh of
North Dakota, who is a member of the Finance
| Committee has announced that he will introduce
bill for such institution. Mr. Wexler vice
president of the Whitney Central National Bank. of
New Orleans. is openly in favor of a central bank
and says that the New Orleans press, taught by
the strain of the cotton situation. is generally with
him.
Those who favor central bank point TO the re-
crisis best evidence OF the aid which it
could have afforded had it been in operation Their
view is that the national banks would have been
able TO rediscount their paper at such institu-
tion and obtain its notes to any amount necessary
to relieve the currency strain 10 is considered
somewhat significant in some quarters that Mr.
Ridgely. the Controller of the Currency has just
declared for a central bank of issue, after having
in previous reports recommended only a general
credit currency for the existing banks The utter
ances of Mr.. Ridgely not. however. considered
to commit the administration, since Treasurer
Treat has different plan which he is advocating
whenever he is invited to deliver public address
on the subject.
OPINIONS DIFFER AS TO DETAILS.
1t is 20 long since a central bank existed or was
seriously discussed in the United States that
there is much difference OF opinion to the de-
tails OF the organization Those who advocate II
generally insist, however. that the Secretary OF
the Treasury and the Controller Of the Currency
should be ofiico members of the board of direc-
ton. and that the President should appoint or ap-
prove the selection OF the head of the bank The
provision OF the German bank charter in regard
to circulation finds good deal of favor-that after
certain fixed limit of circulation additional issues
which not covered dollar for dollar by gold
should be taxed at the rate of per cent Others,
however prefer the greater freedom of the French
system, where the volume OF note issues is prac-
tically under the control OF the bank and where
the accumulation OF a large reserve permits the
bank to maintain rate OF discount much lower
than that of the Bank OF England the Bank of
Germany while other countries are in the throes
OF financial convusion.
The project OF combination among tho national
banks. through their clearing house committees
otherwise. 10 guarantee a special circulation in
case OF emergency = embodied In several plans
which have been submitted 10 the Secretary OF tho
Treasury. While these plans are declared by ex-
perts 20 have some degree OF merit. IL is feared
that they too complicated TO receive serious
attention in Congress. So far as the plans require
voluntary action by the banks this might be diff
cult to obtain far they compel action by
law, Il is felt by some that such a policy would
be drastic, IL not unconstitutional, in compelling
the banks to make Of their assets which
they might not desire TO make.
RADICAL DIFFERENCE or OPINION
Most Of the plans presented at previous sessions
of Congress have dealt with the question OF In
creasing the elasticity OF the circulation issued by
national banks by permitting issues other Sc
curity than United States bonds There is radi-
cal difference of opinion. however. between the
two schools OF thought 10 the nature Of these
additional issues. The plan proposed by Repre-
sentative Fowler chairman OF the House Com
mittee Banking, provides for issues on the gen
eral credit Of the bank which has provision for a
guarantee fund raised by taxation on circulation.
This guarantee fund is TO be employed when neces-
sary redeem the notes of failed banks. IL is
the contention of Mr.. Fowler and others who
favor this plan that tax Of about one-twefth OF
per annually the circulation would meet
all losses but, In order TO insure absolute safety.
they propose that the tax shall be very much
larger than this.
The principle of the Fowler bill is In harmony
with two other measures which attracted con-
siderable attention a year ago-the bill OF the
special committee of the New York Chamber of
Commerce, which was ndorsed unanimously by
the chamber in November 1906, and the plan of
the special committee OF the American Bankers
Association which was indOrseG almost unani-
mously at the annual convention of the associa-
ton at Atlantic City in September last. The plan
of the Chamber OF Commerce committee proposed
issues on the general credit of the bank 10 the
amount of per cent of capital under each Of the
rates of taxatlon-2. and per cent-and to the
amount OF 10 per cent of capital at each OF the
rates of and 6 per cent This permitted total
issues to the amount OF So per cent OF capital or
about $3.50, 100000. but it contended that no
more than half of this. taxed up 10 the rate OF 4
per cent. could be kept in circulation under or
binary conditions. The plan OF the Bankers Asso-
ciation provided for issues to the amount of %
per cent of capital under tax of 2la per cent
and 1872 per cent Of capital under tax Of per
cent The bankers plan. therefore, permitted
larger issues upon average lower rate than the
Chamber of Commerce plan. Both these proposals
are declared by their advocates TO be very con-
servative. Both plans require a certain percentage
Of bonds 10 be held by national bank in order
to obtain the additional circulation. the object of
this provision being 10 prevent any decline in the
market value OF bonds by the development of a
preference for the form of circulation. Prac-
tically all the bonds pledged by the banks TO
secure circulation would be taken care of under
either Of these two plans.
GUARANTY FUND TO oBvIATE TROUBLE.