The evening star and Newark advertiser. [volume] (Newark, N.J.) 1907-1908, 1907-11-04
TIGHT MONEY CURE
CREDIT CURRENCY Is THAT
OF FOWLER.
Would Have Cashiers Checks Put in
Circulation in Case of Emergency
Such as New York Saw Recently.

ELIZABETH, Nov. 4.-Congressman
Charles N, Fowler, of New Jersey,
chairman of the banking and currency
committee of the House of Represents
tives, discussed. today, in an interview,
the present ~financial situation. Under
lying business conditions. he said, were
essentially sound. He added;
THE cause of the currency stringency
is that there is scattered broadcast
throughout the country, at the miness
in the wheat, corn and cotton fields, liz
the pockets of the people, tills of the
stores, or locked up, about 81 800, 900, 900
of the reserve money of the United
States, most of which. under a proper
condition, would be in the banks, serv-
Ing as reserves.
Temporary relief will be through the
forced use Of current 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
rency expanding and contracting with
LIN aAAAeAA tCAiltlAANl0 u iC y
trade, precisely as checks and drafts
do in the broader field of commerce. We
have now proceeded far enough into
the present financial crisis to get a
pretty clear perspective of the real stu
alton.
"First-The condition is now general,
reaching every nook and corner of the
country.
"Second-If the gold certificates, the
United States notes and silver certifi-
Gates, or the reserve 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 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 con-
elusive. During the past four months
there has been sent from the banks into
the country districts approximately
$500. 900. 900 of currency. OF this amount
s250, 900, 900 approximately was reserve
money; that is, gold certificates, United
States notes and silver certificates. If
this $3.50. 900, 900 of reserve money were
now in the banks it would serve as a
basis of more than 1850, 900 credits or
loans, and the present crisis would have
been averted. This result could have
been accomplished without increasing
our bank reserves to the extent of one
singla dollar, without increasing the
liabilities of the banks of the country
to the extent of one single cent" He
continued:
If the banks of the country in which the
$3.50. 600. 600 had been deposited had been
authorized, as they should have been, 10
create bank note credits as well as bank
book credits. and they had proceeded to
convert this $3.50, 1000 of handbook credits
into bank note 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 cur
rency with which to transact all the fall
business.
How should this have been done? Simply
by authorizing each bank to Issue cashiers
checks payable to bearer, which is a cur
rent credit; that Is, a credit that passes
by mere delivery. requiring no Endorsement.
BY this process the $3.50, 600, 900 Of bank book
credits would have been converted into
bank note credits. and as the reserves re-
quired for both forms of credit 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 a matter Ct
bookkeeping.
Can any one give a single reason why
We should use a check book for credits
to order and not use a current credit OF
the same bank upon which we draw our
checks? Is not the cashiers check Just
as good as our check upon the same bank
Indeed far better-when protected as II
should be by a guarantee fund deposited
with the United States government, many
times more than ample to insure its re-
demption in gold coin?
If the banking institutions Of the coun-
try could exchange 1000 00, 900 Of cashiers
checks for $1,000, 100000 of reserve money
now floating around in the mines, wheat,
corn and cotton fields, and this $1,000, 100000
added to the 81, 000.00G0m in the banks on
July l, 1907, our bank liabilities would be
increased only about 8 per cent? while our
reserves would be increased 100 per cent.
and instead Of our average reserve being
about 10 per cent. it would be 20 per cent,
and the end alone is sufficient to justify
the adoption Of the principle of current
credits in this country,