The Washington herald., 1907-09-27
new CURRENCY PLAN
Features Discussed at the
Bankers Convention.
URGED BYPRESIDENT HEPBURN
Head of Chase National OF New York
Declares Proposed Medium Would
Not Promote the Speculative In
terests of Wall Street as Has Been
Claimed Against IL.

Atlantic City Sept. 26-The plan Of
the currency commission of the Ameri-
can Bankers Association for the i'm
provemcnt of the currency system by
making IT more adaptable to national
needs. was discussed at to-day's session
of the association.
A b. Hepburn. president Of the Chase
National Bank, of New York. explained
the plan at length and there was then a
spirited general debate on the subject
I'm which Congressman Charles n. Fow-
Ter. Of New Jersey, was prominent. Mr..
Fowler is chairman of the House Com
mittee on Banking and Currency, and
has been fighting for a credit currency
system for years.
Mr. Hepburn. in his address. said IN
part;
The currency plan recommended by
the commission may be summarized as
follows;
- Any national bank having been
actively doing business for one year and
having a surplus fund equal TO 20 per
cent of its capital shall have authority
to issue credit notes as follows. subject 10
the rules and regulations 10 be determined
by the Comptroller Of the Currency
la An amount equal TO 80 per cent
OF its bond-secured circulation, subject TO
a tax at the rate Of ID per cent per
annum upon the average amount out
standing -
o." (b) A further amOunteeQual 10 Y II
per cent OF its capital. subject 10 a tax
al the rate OF 3 per cent per annum upon
the average amount outstanding in ex-
cess Of the amount first mentioned.
90 2. The same reserves shall be carried
against credit notes as are now required
by law 10 be carried against deposits
Provides Guarantee Fund.
1T provides a per cent guarantee
fund, from which TO redeem the notes Of
anyS Sdefaulting bank. it provides numer-
ous redemption cities, conveniently 10
Gated in various parts of the country A
study Of the statistical history Of the ma
tional banking system from its inception
viii leave no doubt IN the minds Of can
did men as 20 the goodness of the pro
posed note issued and its. certainty Of re-
demptOu.
"By basing the amount OF the proposed
issue OF credit currency upon the bond
secured currency Of each bank. the value
ef government bonds, now so largely
owned by the banks, is preserved and
protected. The proposed plan is neither
comprehensive nor radical; II seeks 20
inEraft upon existing laws simple changes
which Will admit Of increased bank-nOte
circulation IN response TO the increased
demands OF business.
1t also Contemplates the retirement Of
such circulation with the abatement Of
such demands II seeks 10 provide such
increase at the Instance Of the issuing
bank in repOnse 20 the demands OF its
customers. II seeks also. by convenient
points of redemption. to secure the retire
ment of such issue. whenever the de-
,mand which called the same into being
has beer satisfied. Not being secured
by high-priced bonds. yielding a low
rate Of interest. there would be less
feeling Of constrajnt 90 force such notes
into use as much as possible,
Not a Wall Street scheme.
1T IS asserted in some quarters that
such a currency would rebound greatly
TO the advantage Of the peculative mar
ket in the city Of New York-'Wau
Street This is quite erroneous
THE proposed currency would not be
usabIe 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.
Under the proposed plan banks would
pay out their own notes and present the
notes Of other banks for redemption. and
the fact cannot be too strongly empha-
sized that, with ample facilities for re-
demptiOn, initiation is impossible
4 believe such a currency would ma
terially serve the public interest, relieving
and preventing the periodic stringencies
.--LL -. 4 l.