The Washington herald., 1907-12-18
Comptroller Rideelv.s Rennr,


Senator Tillman undoubtedly voices the
popular feeling regarding the existing
monetary and banking situation, which
is one Of complaint and dissatisfaction
coupled with uncertainty. II not total
ignorance of the true and effective rem
edy for our financial troubles. 1t cannot
be said that our leading statesmen. or
financiers, or government officials are
contributing much toward a solution of
the financial question that will be gen
orally acceptable. Bankers themselves
are pretty evenly divided between an
asset currency and a central bank OF
issue. with some Of them inclined toward
the bond-secured emergency currency
which was tentatively favored by Presi-
dent Roosevelt Secretary Cortelyou. as
is well known. has no developed plan of
currency reform. though he offered some
suggestions for the strengthening Of in
terror reserves. The Comptroller of the
Currency, however, has an elaborate
scheme for a central bank OF issue-an
institution which Chairman Fowler. OF
the House Banking and Currency Com
mittee, prOnounces politically impossible
But as there is strong propaganda in
favor Of such an undertaking, it may be
worth while to consider some of its feat
ures as outlined by Mr Ridgely in his
annual report.
The establishment of a central bank, in
Mr.. Ridgely's judgment, would solve two
pressing problems Of our national bank
ing system-how to issue an elastic cur
rency and how to provide a reliable and
efficient reserve system. Mr.. RidgeIy
diagnoses our recent furry as due to
lack Of confidence Of the banks I'm their
reserves, in consequence OF which the
reserve system broke down and reserves
were only partially available. In addi-
tion to this. there was a demand for more
currency than could be supplied. With the
resultant Of a currency famine. "The
remedy for this state Of affairs" saws
Mr.. Ridgely. is to improve the reserve
system so that the reserve deposits of
the banks can be kept in bank where
they are surely and certainly available.
We must impart 10 our currency system
some element Of elasticity. so that where
there comes a sudden demand tor cur
rency It can be supplied in bank notes.
without depicting the supply OF reserve
money" All this Mr. Ridgely is confident
can be accomplished by the establish
ment Of a central bank OF issue and re-
serve. According to Mr. Ridgely's plan.
the central bank would be under govern
ment control. and its business would b.,
confined 20 transacting the government
business. the issue OF credit notes. carry
Ing reserve deposits OF other banks. the
discount of their paper. or the rediscount
OF their customers paper. 1t should also
deal in government bonds and in foreign
exchange. It's stock could be owned by
the national banks proportionateIy to
their capital.
An Institution Of this character would
relieve the Treasury of several important
functions now performed by It. But the
tendency of most legislative proposals is
TO enlarge the functions OF the Treasury.
instead Of diminishing them. The maxim.
that the Treasury ought TO be divorced
from the banking business finds small
public acceptance nos adays. The secre-
tSry every year asks for more power, and