The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-11-25
GOVERNMENT oURRENCY.

| GOVERNMENT CURRENCY.
The idea appears to be gaining
| ground recently that the government
itself might issue notes which would
take the place of currency, instead of
| leaving the task for national banks to
do-that is, If there is really a de-
mand for more currency in order to
carry on the business of the country
Along this line. the New York
Herald offers these remarks: ''It is
condition, not a theory. that confronts
the country. It is now universally
recognized that the cure for boarding
and contraction on the part of the
public in crisis is liberal and fmme-
date expansion. This is what the
Bank of England does when in emer-
gencfes the bank act is temporarily
suspended and credit notes are issued
to supply all demands. In the present
crisis here the exigencies of the situa-
ton could be met by an issue of gov
eminent legal tender. notes to the
amount of, say, $200,000,00O, to be re-
deemed in a year or two, or perhaps
convertible into government bonds
within stipulated period. The credit
OF the United States government is the
highest on earth. and the notes thus
issued to meet the emergency would
be accepted as being good as gold
Mere notice of such a measure might
restore confidence. and, causing re-
lease of boarded funds. render their
actual issue unnecessary"
It is somewhat debatable whether
the government ought to go into this
business, because it will be a radical
departure from established policies,
but any step that is taken for the
purpose of increasing the currency
supply will probably be a great de-
parture from past policies. In fact,
the government has already taken a
radical step away from its practices in
the past in the issuance of the $780,
100000 of government certificates
which are now being issued.
And this issue of government GER
tiflcates furnishes the key to a posi-
BILE government currency. These GER
tiflcates are issued in denominations
Of $50 each and run for one year.
bearing three per cent. interest. They
are practically the same as short-time,
three per cent. government bonds.
Because these certificates bear in
terest it is expected that investors will
buy them and lay them away. just as
conceded, however, that some of them
will circulate the same as currency. |
For instance, if a man runs out of
ordinary bills but has a $50 govern
ment certificate in his pocket, he will |
be able to use it as readily as though |
it were a $50 bank note. 1t will be |
worth more than a bank note, how
ever, for the man who happens to |
have 1t on November 20. 1908, will be |
able to turn it in to the government |
for $3.50.
Now, If the country really needs |
more currency, as the advocates of !
asset currency assert, why can not the !
government issue these certificates in !
smaller denominations than $50 and |
without interest? If they did not bear +
interest there would be no object in |
boarding them. and they would be
kept circulating. They would be just |
as good as bank notes, for bank notes
bear no interest and are secured only
by government bonds, while these GER
tifcates would virtually be non-inter-
est bearing government bonds in
They could be put into
by the government issuing
them to pay for its Panama canal sup
plies instead of issuing more bonds for /
that purpose and incidentally the gov
eminent would save a lot of interest
by SO doing.
The advocates of an asset currency
propose to let national banks do this
very thing in order to increase the
currency in times of stringency, but
such bank notes would not be as well |
secured as government certificates
Under Leslie M. Shaw's plan asset
bank notes would have behind them
only $685. cents of government bonds
for each dollar of bank notes, while
under Congressman Fowler's plan the |
bonds behind the asset currency
would be securities that ought to be
kept to protect depositors alone.
If the currency really ought to be
increased, there Is argument in favor
of having the government do it. al
though there is probably argument on
the other side also-but it isn't in
favor Of asset currency.