The sun., 1907-11-04
CREDIT CURRENCY HHE CURE
CONGRESSMAN FOWLER EXPLAINS
BKS PLAN OF RELIEF.

Jersey. chairman Of the Banking and Cur
Eency Committee Of the House Of Repre-
santatives. discussed yesterday in an i'm
terview tho present financial situation.
Underlying business conditions. he said.
were essentially sound. He continued
The cause Of the currency stringenCy
IL That there is scattered broadcast through
out the country, at the mines. in tho wheat,
corn and cotton fields. in the pockets Of she
people. tills Of the stores or locked up,
about 81, 800 .OOO. 900 of the reserve money
OF the United States. most OF which. under a
proper condition. would be in the banks,
serving as reserves.
Temporary relief will be through the
forced use Of current credit in the form
Of clearing house certificates. cashiers
! checks and due bills of business houses
and manufacturers during the next ninety
days.
Permanent cure TDurt come through a
system Of credit currency expanding and
contracting with the ordinary demands
of the smaller trade precisely ss checks
and drafts do in the broader field of COM
merce.
We have now proceeded far enough into
the present financial crisis TO get "a pretty
clear perspective Of the real situation.
"First--The condition is now general.
reaching every nook and corner Of the
country.
-Second--If tho gold certificates, the
United States notes and silver certificates,
or the reserve money which the hanks OF
the country have sent into the wheat fields
of the West and Northwest, into the corn
fields OF the West and South weht. into the
cotton fields Of the South and into the
coUrtry districts Of all sections to settle
VI the years business say. if these
ressrres nov scattered broadcast over the
land we're in the banks, where they properly
belong. there would have been no money
panic this fall
The proof Of this assertion is conclusive.
During the past four months there has been
sent from the banks into the country dis
triCts approximately $500. 900 900 Of cur
rency. OF this amount $3.50 O8O 900 approx
imately was reserve money; that is, gold
certificates. United States notes and silver
certificates. II this $3.50. .OO0, 600 OF reserve
money were now in the baDks IL would
serve as "A basis of more than ~ ,25O,OOO
credits or loans and the present CRISIS
would have been averted. This result
could have been accomplished without in
Creasing our bank reserves 10 the extent
OF one single dollar, without increasing the
liabilities OF the banks OF the country 10
the extent Of one single cent.
III the banks Of the country in which
the $3.50, O,OOO,OO0 had been deposited had
been authorized, az they should have been
to create hank note credits as we'll ~ bank
book credits, and they had proceeded to-
convert this s25O.OOO,OO0 Of bank book
credits into bank note credits, the banks
would not have been affected in any degree
or in any way whatever and the whole
country would have been amply supplied
with currency with which to transact all
the fall business.
How could this have been done? Simply
by authorizing each hank to issue cashier Il
checks payable 10 bearer. which IL a current
! credit; that ie. a credit that passes 10y mere
! delivery, requiring no Endorsement. by
| this process tho $3.50 900 go OF bank book
I credits would have been converted into
| bank note credits. and as the reserves re-
| Quired for both forms Of credits should
b. the same. there could have been no
| change whatever in the situation. The
| bank debt 10 the same the amount Of the
reserve H. tho same. II has been only "A
matter of bookkeeping.
The only relief we shall now get is COM
! ing and must come from enforced current
! credits Just as IL did in 1898 Every bank
ing centre in the United States has already
| adopted clearing house certificates as a
way of escape. But every clearing house
certificate is a credit note and based upon
identically the same security and principle
as the credit currency ! have been advo-
eating for the last twelve years. The banks.
business houses and manufacturers Of
undoubted standing In the country should
boldly and brsvely do now just what they
did in 1888
at may be said that these forms Of cur
renoy are contrary To law. Yes. hut ne
cessty knows no law The bankers and
business men are going to disregard the
law and save the business of tho country
from utter ruin by issuing enforced current
credits In such form and quantity as the
occasion requires. trusting that Congress
will be wise enough TO pass such laws a.
will preclude the same necessity Ia the
future. .-.
Permanent cure can only come through
an issue Of credit currency adequate 10
meet the requirements of trade and cur
rcnoy redeemed in gold coin. This prinoi-
pla Is followed by every civilized country
in the world except our own.
The banking power Of the United States
in 1890 was about sS.O0O. 100000 and now
exceeds SO, 6,OOO. 900. .0OO-or equal 70 the
entire banking power OF the world in
1890, which Mulhall placed at Sl6, ,9SS ,0e0, 900
To-day the banking power Of the entire
world outside OF tho United States Is only
S2l, ,e52, 200 OOO and Of this amount 20 per
cent, or more than "a, 900, ,O00. COO, IL in cash
ier's checks or current credits-that Is,
credit currency; and yet while the United
States has three-eevenths Of the banking
power Of the entire world Il has not one
single dollar OF current bank credit, al
though the other four-sevenths Of the
worlds banking power has the advantage
of $4,000. 100000 current credits or credit
currency.
-On the same basis We are entitled to
have 5000 100000 OF current credit or
credit currency. II this principle were
broadly adopted In this country. as Il should
be, our bank reserves might he increased
from an average Of 0 92-lOO per cent. to about
20 per cent. and our banking liabilities
remain practically the same.
Can any one give single reason why
we should use a cheokboOk for credits
to order and not Use a current credit Of
the same bank upon which we draw our
checksl IL not the cashiers check Just
as good ~ our check upon the same bank
indeed FAR better-when protected, az IL
should be, by a guarantee fund deposited
with the United States Government many
times more than ample to insure It's re-
demption In gold coin?
III the banking institutions Of the country
could exchange 81 900. .O0O, 900 of cashiers
checks for 81 900 900 600 Of reserve money
now hoatinR around In the mines. wheat.
corn and cotton fields and this 81 900. 900. .e0O
added 20 the o. 900. .0O0. 900 In the banks
on July I. 1907. our bank liabilities would
DO increased only about per cent. while
our reserves would be increased 100 per
cent. and instead Of our average reserve
being about 10 per cent. II would bo 10
per cent. and this end alone II sufficient
20 Justify the adoption of the principle
OF current credits In this country.
Scotland has a credit currency issued
hp thu hanlxa that amanda and rOntroOs,