The Intermountain Catholic. (Salt Lake City [Utah] ;) 1899-1920, 1907-01-12
REMEDIES FOR FINANCIAL PANICS.

REMEDIES FOR FINANCIAL PANICS.
There is considerable discussion these days as
to currency reform. elastic currency, etc. but
the subject is abstruse one the average reader
has neither the time nor the inclination to go deep
ly into it. However, money supply is what causes
good or bad times, and people are affected by It's
influence in their daily struggle for this worlds
goods, becoming wealthy or penniless according as
the supply of money is adequate inadequate. and
whether it is sound money unsound.
The supply of gold and silver as money would
not be quarter enough to do the business of the
country. Paper money is therefore used. to the
extent of more than three times the amount of coin
in Some of this money is issued by the United
States government and some by various banks
throughout the country. In order that this paper
money may not depreciate, the government agrees
to pay gold for it at any time on presentation at
the treasury in Washington. People do not want
the gold and so long as they knefv they can get it
at any time they are perfectly antent to take the
paper money at its full face val'&. The money is
sued by the banks is guaranteed ~ the government
in the way, and in order to protect itself from
loss through the failure of he-banks the govern
ment requires the banks to deposit the full amount
with the treasurer at Washington receiving there
for a like amount of government bonds
This is the system, briefly, hich has been in
for many years The total am ount of money now
in circulation in this country sqpwards of two and
half billion dollars or little over thirty dollars
for each man. woman and child. On account of the
growing business of the country and the danger of
people getting panic-stricken and locking up sew
eral hundred millions of this money thereby MAX
ing it impossible for business to pay the banks.
and for the banks to pay their depositors, the bank
ers of the country have for years been trying
to devise currency which will expand in times of
emergency, or stretch like an elastic. and then,
when the emergency is over, will automatically 60
back to normal. If such thing existed in 1872,
the worst panic in history would have been averted
millions of people would have been saved from dis
tress and want. and there would have been contin-
uous prosperity and progress instead of several
years of stagnation.
The plan now agreed upon by the Bankers As
ISOLATION is briefly as follows:
Allow banks to print and issue money by depos-
ting only five per cent of the amount with the
treasurer at Washington The amount thus issued
must not exceed one-fourth of the capital of the
bank The government agrees to redeem these
notes in lawful money at any time In order that
the banks will not be too free in the issuing of this
money, they must pay the government tax equal
! ing about three per cent per annum on the amount
outstanding This is an inducement to the banks
to retire such money or notes soon money gets
| plentiful.
In addition TO the above. the banks may in an
emergency issue other notes or money. upon which
they must pay the government five per cent interest
per annurn. On account of the high rate, the banks
will naturally issue this kind only in extreme emer-
gency The government agrees to redeem this kind
also on presentation Such am agreement on the
part of the government is necessary to give such
money any value, as otherwise it would be simply
wildcat currency The banks issuing such money
agree with the government to redeem it on presen-
taton in lawful money.
Such plan. if enacted into law, would. in case
of necessity increase the volume of money over
three hundred millions of dollars about one
eighth the amount in circulation. The tax OF
interest charged the banks by the government
would be put into fund, with which to redeem the
notes of such banks as might fail. The statistics
for the past fifty years show that such percentage
would take care of such notes. and leave an enor-
mons sum besides which would be accommodating
at interest
If there is any objection to this plan, it is dit
fcult to see it. 1t would increase the supply OF
money at critical times, and as it would be expen
sive for banks to keep it up it is natural to expect
that it would be decreased when the critical time