The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1907-12-02
chairman FOWLER
ON MONEY ] { QUESTION U.E|'S
Says He Predicted a Yea,
Ago Present State
Of Affairs.
THE COU NTRY is
PROSPEROUS
Says Only Basis Must Be Gold III
Gold Standard Country-Adds
That Unlimited Number OF
Bank-Notes Based on
Bonds Would BE
Last Straw.

NEW YORK. December 1.--Chairnia,,
| Fowler. OF the House Committee on
ranking and Currency. made the fof-
lowing statement to-day respecting the
outlook for financial legislation in tho
present Congress-:
There certainly should be soma
lremcdal legislation. and j can assure
lyou that the members of the Committee
on Banking and Currency will bend
their energies to that end. What wa
can answer. But that there is urgent
need for help no man can deny.
AT the dinner of the American
Bankers Association. at st. Louis n
year ago. I predicted that the thing
which. has happened must happen ,ln-
less come immediate action was taken;
that there was not banker in the
ltMited states who would not regret 1t
tif something were not done.
AT the close OF the last session oe
Congress ! said that the condition OF
OIL. finances and currency was such
that 1t would of necessity lead to the
destruction Of our prosperity.
Again now declars that II this
government continues IT'S present pol
icy of injecting into the arteries of
trade and commerce fixed bond-se
cured currency-hy exchanging securi-
ties, by bond speculation. by Treasury
mapipulation, by executive order. or
By any other form Of tlimble-rigging
we shall continue to move. but with
greatly accelerated speed. toward p
commercial crisis compared with. which
the present panic Is only pleasant
sumner outing.
Ren! Prosperity.
Our condition this fall has been org !.
of real prosperity. Our crops are WORTH
about s1,00o,00o,00o: the products OF
oup mines about Si,a00.e0n. 900: our
manufactured products about stI.00o.-
06e.ooo; a total of $4,000 o0o,noo.
meanwhile VIC have had the advast-
tags of an aryconsumptior
Of frodstMffs and are enjoying eacep-
I istIoua1ly hig1, prices. II a -tnis werii
not true. but pn the othsr hand our
business conditions had heen bad. DUR
crcps poor. and foreign prMes low
Tina gine what would have transpired.
aNotwithstanding all this. and whol-
slS becausesof the nlaladmfnistration OF
our financial affairs, we are in a state
of panic.
We have to-day in the banks OF tliia
country about sla.o00.o00.0oj of de-
posits. and about the same amount Of
outstanding loans. Against this fabu-
lo,ls sum the banks hold as reserve
about 5000, 100000 or less than s PR
sSSiiN. dlIo keSEti VI llllS % eESI Celt.ail re-.
serve, nearly .quarter S200.O00.00n.
is in bank no tes-a :, mere credit,
mere promise to pay.
Stating it another way. the reservcs
held against two and one half Gilliong
of CUR bank deposits to- day are bank
notes and not gold. which is admittedly
the only proper reserve IN any country
With a gold standard.
What is the End.
Yet if we continue our present pol.
icy. where is 1t going to ends Not long
Will it be before all OF our bank ds-
posts Will rest upon credit reserves.
This Is obviously the worst and
widest form OF Initiation Yet it IL q
that sheer madness is to fol.
low. as a scheme is now{being wrought
out to add to this already oyerwheiip-
ing burden another load In the form,
OF State. municipal. .and railroad bonds
ms the basis OF our bank currency liza.
hilltS. No one who has studied tfis
question doubts that all OF our re-
serves. whether for deposit or for any
ctiier form OF bank liability. including #
bank-notes, should be gold. Yet LANAI
ii:s as 1t may seem. at the annual meet
ing of the American Bankers Associa-
tion a year ago q resolution WAS in aa
troduced declaring that national bank VI 5s
totes We're a tit reserve. The argu- *
mGtit- was that u national bank no teif
telIs secured by government bonds.
was just rs good a reserve as. u green
hack, and the greenback Is a Lawful n
reserve, But this is begging the ques-
lion, because the greenbaek Itself Is
only tolerated as reserve because tho
stands ready at all times
10 redeem 1t In gold The security for
tho national bank no to. on the other
liand. Is "A per y cent 'sspverniGent y
,iond, payable twentS -tlSet wears hence.
which. as an inNestr rient hased upon
its of Interest. would, sell fot
about I6ad cents on the dol lar Its pres;
eut price is due to snacial demands Tor
II as security for tho bank-not te issues
To suggest as "a remedy for olli, tlnatt -,!'8
piul trouble that we add 10 the already 4
cNisting burden or about 800 Hpo.uQil 8s
of hond- secured bank Issue an uit-
lsnl.tel amount Of hank notes basee,
ltpon State. municipal OF railroad bonds
viii proYa the last straw. 3.8
X Must ns Bnscd on Gold.
"Itwill still Lurther force gold out NJ
sf our reserve and out Of the conntrys
Tho New York City bonds are of tbs.
aigtcst chararter aud would neces-
inrtly he tncludeI. Vet OF those II 3s
should ba said that the ! per cents.
srili,. syeitrs-ago sold for between 4 VI ssssS
md III. while toSday they are selling
II 10. and New Y orkS City as stinalns
L d,iticult to float the new loan Al !; 5
ser cent, This sort OF infiatien isltst
- stopped, Bank liabilities, whether
q derositors or npte holders, must hs ss
,aseG upon gold ,ti,d not upon fluetuat-
ng credits. Expansion lis simply In
:rGasing this liabilities OF a bank nj M
nut q corresponding Increase $nf ITS res NJ
,erye, and this may take plaesA Al-
,bough the reserves be ina8goid coin.
II isS simply a question Of the rela rsS
ion OF the liability 10 the resecye and g1
rot the form or liability, ssss
"Inflatton on the other hand Ii has
Ing one credit upon another. n " IA
credit Is, whether Is soNernns MT bond. .sss
state hond, municipal ols a railroad Ss #
bon,l.a sE NIX