The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-11-24
LAM VIOLATED
BY ROOSEVELT
Chairman Fowler of the House
Banking and Currency Com
mittee, ASSailS President.
BAD MATTER MADE WORSE
NO POSSIBLE EXCUSE FOR BOND
ISSUE.
BAD MATTER MADE WORSE

New York, Nov. Representative
Charles n. Fowler, chairman of the
house committee on banking and cur
rency. today gave out the following
statement regarding the issue Of Pan
anna canal bonds and treasury certif
Gates:
Personally said Mr. Fowler, land
from a party standpoint, it is unpleas-
ant for me to disapprove the action of
the Republican administration, but my
study of the questions involved, and
my duty to the public, compel me to
set forth the reasons why the action
of the administration is surprising, ex-
traordinary, unWarranted and most IN
fortunate.
Butted in After Crisis Had Passed.
"On Friday, November 10. the crisis
of the present currency panic had been
reached and successfully passed,
through the splendid achievements OF
the American bankers in bringing gold
TO this country to the extent of about
$40 1000, 600 at very great cost to them
sslFes for il was purchased generally
I'll a premium of about per cent and
also by responding to the business ne
cessities of the various localities in is
suing clearing house certificates and
cashiers checks in denominations of 81,
81, 50 and SO, as well as the larger de-
nominations. At this juncture, when
the financial and currency situation was
already well in hand, the administra-
tion interviewed against the opinion or
the best judges of the situation. There
fore. primarily. the effect of the gov
ernments action must be most dis
turbing factor although the bankers of
consequence from the movement.
Did Not Need the Money.
IN the second place. the government
did not need the money, as it has $780,
O00,0 900 TO its credit which is taken from
the people through taxation. There
fore. the interest bearing debt of the
government should not have been in
creased $3.50, OO0. 000-especially when
such increase of debt is clearly in vio-
lation of the intent and purpose of
law, and in the third place because the
action of the treasury is a most violent
violation of economic law for which the
people must yet pay the penalty.
First, let US deal with the $4,000, 90
of . per cent of Panama bonds, which
are to be used as the basis of additional
bank note circulation. The government
has, as stated, s240, 900, 900 in its treas
ury or to its credit and therefore, it
did not need the proceeds to pay for the
construction of the Panama canal or
to meet the current expenditures of the
government. And even if it did, it
could not take any part of the pro-
ceeds of these sales for the present, as
the banks could not afford to exchange
their reserve money for bank notes.
Bad Matter Made Worse.
And further, because instead of there
being margin of gain there must nee
essarily be an actual loss of capital
in the transaction. Again, by this hy-
pOdermic injection of another 100000 600
of fixed immObile currency into our
sodden mass of bond-secuTed bank note
circulation, which never responds to the
varying conditions of commerce be-
cause not directly related to the bust
hess of the country, we have made a
bad condition worse. Think of pushing
further a principle of currency eXpan-
sion which. although our business was
constantly expanding from 1882 to 1891,
fell from 1852, O00. 900 in 1882 TO $125,000-
600 in 1891. Why? Simply because it
was improbable to hold the bonds for
that purpose. Aye. a principle which
has proved its utter lack of adoption
to our needs since 1891 by showing an
actual contraction during the fall Of
many of the intervening years and an
actual expansion during the spring
months of many others.
Reaction Sure to Come.
"Again-we shall find when the reac-
ton comes and the changed condition is
reflected in our reserves beginning
about the 18th of January, If not earlier
and increasing rapidly during the
spring months until the reserves in our
banks will probably exceed those Of any
preceding year since 1900-Ihat this very
$3.50 DOC. 900, if unfortunately the in
creased debt shall be converted into
bank notes, that these bank notes viii
not disappear and he automatically re-
tired; but that they will find place
in the reserves Of the state banks, in
the reserves of the trust companies and
to some extent-thOugh they have no
right therein the reserves of the ma
tional banks.
Will Drive Out Gold.
Now, mark this: That every bank
note held as a reserve viii displace just
that amount of gold and drive it out OF
The country. That is just what our
silver purchases did from 1879 to 1894
The poorer money always has and in
variably will drive out the better.
There will be upwards of one per cent
profit on the circulation taken out on
these bonds, and so the banks will force
them out persistently and the counter
part viii be that, noiselessly. imper-
ceptibly, but with absolute certainty
the gold will give place to the bond-se-
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