The evening star and Newark advertiser. [volume] (Newark, N.J.) 1907-1908, 1907-09-26
EMERGENCY
CURRENCY'S
NECESSITY
Former cOmptrolIs Hep.
burn Points 1t OPT at
Convention Of Banlers.

DAVIS meeting of the Americai Bank
ers' Association. the principal fddress
was made by A. Barton HepburnComp-
troller of the Currency under lPresi-
lent Cleveland and now at tht head
of one of the large New Yohk panKs'
Mr.. Hepburn's text was the pAnAQf
the currency commission of the Amer
lean Bankers Association, which was
made public some time ago, N Which
recommended hat national banks oe
permitted to issue emergency nptes
to the amount of 40 per cent. OF their
bond-secured circulation by paying Pa
per cent. per annum on the amount
I outstanding and to issue notes In an-
dition to his 40 per cent. to the Ell
tent of 121s per cent of the paid-in
capital, subject TO a,tax of 5 per cent.
He said:
1.-THE proposed plan is neither compre.
| hensive nor radical; it seeks TO engraft
| upon existing laws simple changes which
will admit of increased bank-note circu-
lation IN response TO the increased demands
of business which accompany periods OF
business activity-witness the c~rop-moving
season. 1t also c~ontemplaes the retirement
of such circulation with the abatement of
| such demands. 1t seeks to provide such
increase at the instance of the issuing
DAnK. III IGSDOnSt IL tIC OCllnI0 VI
| customers; 1t seeks also, by convenient
points of redemption, to secure the retire
| ment of such issue. whenever. the demand
which called the same into being has been
satisfied. Not being secured by high
priced bonds. yielding a low rate of inter-
est. there would be less feeling @of con-
much as possible. In fact, with convenient
points of redemption, the outstanding
period of such notes would be limited.
1T is the opinion of those most ex-
perienced, that the function of such cur
rency would be to serve the retail ana
small change purposes OF the immediate
constituency of the bank Issuing the same.
The farther the point of redemption from
the bank of issue, the more expensive II
would be. Banks In central reserve cities
could not issue and put into circulation such
a currency, unless for use in its imme-
date vicinity, except at a time when thefaf
is a demand for currency ipmen front
other localities. Then they might use sucf3
currency and serve the public, while All
the same time protecting their reservtS
money. Whenever the currency demanel
was satisfied, such far-away notes woulc
seek the nearest redemption agency OF thu
bank issuing the same and travel home IA
the expense of the bank of issue.
ut is assumed and asserted in some
quarters that such a currency would rel
dound greatly to the advantage OF the4
speculative market in the city of New
York-'Wall Street. This Is quite erron1
eous. The New York Stock Exchange hasf
a clearing house of its own, based upon tut
same principles as kthe clearing house foi
banks. ana DfOkerS, lnSledu VI pdyih6 AoV
all the stock they buy and receiving pa
for all the stock they sell, report to TIL
clearing house and settle for the balances
THE Stock Exchange, Produce Ex-s
change, Cotton Exchange, all the ex-
changes dealing in commodities, as Well
| as all the varied interests of any consider
able magnitude in the city of New xork;
check. Actual money, or currency In any
form. is practically unknown in the city
of New York in any transaction except OF
a retail character. The bank check per-
forms the function OF payment. and hthes
amount reaches into the thousands, the
check Is certified. 1t is a perfect currency.
it is elastic. responding in volume to any
demand: 1t is predicated upon the credit
OF the parties to the transaction. Its re-
demption is speedy and 1t is unvexed by
arbitrary laws 1t is not subject to gov
ernmental interference. 1t is absolutely re-
sponsive to the demands OF trade, and
without 1t the of tina. great city
would be impossible; and, except for sup
plying the retail demands incident to every
community. it answers every purpose.
THE proposed currency would not be
disable between banks In the city of New
York. Balances at the clearing house in
that city can be settled only in gold or
SILVER or their representative and legal
tender money. The present bank notes are
not available for such purpose. Whenever
the present bond-secured bank notes come
into the possession Of New York banks
they send them to the United States treas
urv for redemption and receive in ex-
change legal tender money. which counts
as part of their reserve. One hundred and
thirtv-six million. two hundred and fftv-
two thousand. three hundred and sixty
dollars national bank notes were so pre-
serted for reclamation ny the banks Of the
citv OF New York last vear.
Il call attention to these facts and cir
cumstances in order to show that New
York has less comparative interest In the
proposed note issue than almost any other
locality. When the interior demand for y
currency is strong. New York banks can
issue and ship such. notes to their interior
C0Tf0Gnnn6nnfC and hH q dining an tfCfV y
the commercial demands without jrpairine
their reserve money. Such notes, If issued
edly come into use for tine purpose OF the
retail trade. Unde tho proposed plan
banks would pay out their own notes ard
present the notes. of other banks for re-
demption, and the fact cannot he too
strongly emphasized that. with ample
facilities for redemption, imitation Is i'm
only to serve a business need, and SO long
as they served such need they would he
promoting the interests Of ALL and when
the. demand .~slackened thev should -and
will, logically and naturally, seek the
nearest point OF. redemption.
In all our discussion of the currency
question, the principles approved by ex-
p%erience have been clearly set forth and
fairly maintained; but In all our recon-
less degree. been subordinated to pFac-
ticability. We have recommended, not
what we believed. in the light of expert
enee and existing conditions. TO be best
for the interests subserved. hut what. In
the LIGHT of existing political conditions.
we believe TO be attainable-not what was
best; bmt what we might reasonably hope
to obtain.
Judged from a historical and scientific
standpoint, the currency system of a conn
try can best be administered through the
binstrumentnlity of n central bank Of issue.
England proved this and created n central
bank of issue and provided tbat the note
issuing privilege then possessed by existing
banks should revert TO this central bank
of issue whenever for any cause the
various banks should surrender or forfeit
the same. United Germany has taught us
the same lesson, closely following The
example of ENGLAND. but greatly improving
upon the English system in respect 70
elasticity and ability to serve commercial
interests.
why will not a governrnent-controlled
central bank of Issue. where the banks OF
the country in good credit ran, within
proper limitations; discount their receiv-
ables. receiving the proceeds thereof in
bank notes, afford the best solution Of the
currency question:"
Newark Butter. Cheese and egg Market
These. prices will remain in force an day:
Fancy exfra craa rnerv nrtnf 90 N