New-York tribune., 1907-11-04
G. n. FOWLER URGES
CREDIT CURRENCY
Il PERMANENT REMEDY
FOR MONEY STRINGENCY.
More Elastic System W0uld PreUent
PanicS, He Believes General
Business Conditions Sound.

on Banking and Currency of the House. of Rep
resentatives, leading banker Of this city and
g recognized authority financial affairs, be-
leves that permanent relief from such condi-
tons as prevailed in the recent panic must come
through IAN issue Of credit currency adequate
10 meet the requirements OF trade and currently
redeemed in gold coin" Underlying business
conditions Mr.. Fowler believes to be essentially
sound Discussing the causes of the stringency
and temporary and permanent relief measures
yesterday, Mr.. Fowler said:
BUSINESS CONDITIONS.
The underlying business conditions are es-
sentiay sound evidenced by the increased
earnings of the railroads and the fact that the
value OF our agricultural products this year is
$500 100000 more than last year (Which was the
people about $1,000, 100000. But public con-
hdence has been greatly shaken and credit has
been seriously affected-therefore, all patriotic
citizens, from the President down, should do all
in their power to restore that confidence which
is essential to national prosperity.
CURRENCY sTRINGENcY-ITs CAUSE.
Is that there is scattered broadcast throughout
the country at the mines, in the wheat corn and
cotton heids, IN the pockets of the people, tiIIs
OF the stores or locked up, about $500 100000
o. Of tne reserve money of the United States, most
the BANKS serving as reserves.
TEMPORARY RELIEF.
credit IN the form of Clearing House certificates
cashiers checks and due bills of business houses
and manufacturers during the next ninety days.
PERMANENT CURE
Must come through a system of credit cur
dinary demands of the smaller trsge Et ,rneso ae
as checks and drafts do in the broader field of
commerce.
We have now proceeded far enough into the
present financial crisis to get pretty clear per-
spective of the real situation
First-The condition is now general reaching
every nook and corner OF the country
Second-f the gold certificates, the United
States notes and silver certificates or the re-
serve money which the banks of the country
have sent into the wheat fields Of the West and
Northwest, into the corn fields of the West and
Southwest, into the cotton fields of the South
and into the country districts of all sections
to settle up the years business-I say If these
reserves now scattered broadcast over the land
were in the banks, where they properly belong
there would have been no money panic this fall
The proof Of this assertion is conclusive. Dur
ing the last four months there has been sent
from the banks into the country districts ap-
prOximately S300.000000 OF currency. OF this
amount S250.000.000 approximately was reserve
money-that is, gold certificates, United States
notes and silver certificates II this S250,000,000
OF reserve money now In the banks IL
would serve as a basis Of more than $780,
100000 credits or loans and the present crisis
would have been aVerted. This result could
have been accomplished without increasing
bank reserves to the extent Of single doll
lar. without increasing the liabilities of the
banks Of the country to the extent of one single
cent
/ challenge any to controvert this state
ment, and submit the following as absolutely
conclusive proof of the assertion:
If the banks Of the country in which the
S2J0.000,C00 had been deposited had been au-
thorized, they should have been, to create
banknote credits as well handbook credits.
and they had proceeded to convert this $780,
100000 Of handbook credits into banknote
credits. the banks would not have been affected
In any degree or in any way whatever, and the
whole country would have been amply supplied
with currency with which to transact all the
fall business.
How could this have been done? Simply by
authorizing each bank TO issue cashiers checks
payable 10 bearer, which is a current credit;
that Is. a credit that passes by mere delivery
-eoririne no Endorsement Fv this process the
s25OOG0.OO0 Of handbook credits would have
been converted into banknote credits, and as
the reserves required for both forms of credits
should be the same there could have been no
change whatever in the situation The bank
debt is the same. the amount of the reserve is
the same 1t has been only matter Of book
keeping.
Let me illustrate il with particular instance
The First National Bank of Kansas City has
deposit subject to check or draft, with the First
National Rank of New York amounting TO
$1,000 The bank reserve against this deposit
IS $4,000. The Kansas City bank asks the New
York bank to send it $4,000 in currency, and
Il does so by sending its cashier cnecks 10 the
Kansas City bank. thereby paying off the book
credit Of $4,000 and creating bank note t credlt
of $4,000 against which IT holds the same $Z.5oV
Gs q reserve. The bookkeeper in the New YORK
bank has charged the Kansas City bank with
600 and credited the cashier with $4,000
That is all there Is TO the transaction except
this-that the bank credits have been adapted
10 the requirements Of the business OF the coun-
Try assert. therefore, that the present money
famine or currency stringency is due TO the
fact that we had way Of adapting our bank
credits to the requirements Of trade-and that
until adopt the principle Of converting our
handbook credits into banSnote credits. as the
demands Of business require we shall continue
10 suffer incaIculaby in our business and always
be subject to the misfortunes that now. .1fhlct us
IMMEDIATE RELIEF
The only relief we shall now get from the
most frightful confagration of credit that has
visited the commercial world IS coming
and must come, from enforced current credits,
just as IL did in 1893. Every banking centre IN
the United States has already adopted Clearing
House certificates way OF escape But
every Clearing House certificate is credit note
and based upon identically the same security
and principle as the credit currency have been
business houses and manufacturers Of undoubted
standing in the country should boldly and
bravely do now just what they did in 1893.
The following are some Of the various forTlS
Of enforced currency credits issued then, and
may be Of special interest and good purpose
now:
LOAN COMMITTEE OF THE NEW YORK CLEARING
HOUSE ASSOCIATIONS. 80
Eew York. 1893
This oer,i6es that the has deposited with
this accordance with the proceed
upon which issued This certificate VIII
received payment of balances at the Clearing House
fr the thousand dollars from any mem
bar II the Clearing House Association
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