The semi-weekly messenger., 1907-12-06

six months The secretary OF the treas
| ury had to step in and by wise action
| put a stop to the most violent period
Of oscillation. Even worse than such
| f1uctuation is the advance in CONNER
cial rates and the uncertainty felt in
. the suficiency OF credit even at high
rates All commercial interests suffer
during each crop period. Excessive
rates for call money In New York
attract money at the interior banks
into the speculative field This de-
pletes the fund that would otherwise
be available for commercial uses. ana
commercial borrowers are forced to
pay abnormal rates. so tha, each fall
tax. In the shape OF increased inter
est charges, is placed on the whole
commerce Of the country.
The mere statement Of these facts
show that our present system Is Sc
riously defective. There is need OF a
change. Unfortunately. however. many
of the proposed changes must be ruled
from consideration because they are
complicated. are not easy OF Compre-
hension. and tend TO disturb existing
rights and interests. We must also
rule out any plan which would mater
tally impair the value of the United
States per cent bonds now pledged
to secure circulation the issue of which
was made under conditions peculiarly
creditable to the treasury. I do not
press any especial plan. Various
plans have recently been proposed by
expert committees of banksrs. Among
the plans which are possibly feasible
and which certainly should receive
your consideration is that repeatedly
brought to your attention by the pres
ent secretary of the treasury, the es-
sential features of which have been
approved by many prominent bankers
and business men. According TO this
N national banks should be per-
mitted to issue a specified proportion
of their capital in notes OF a given
kind. the issue to be taxed at so high
a rate as to drive the notes back when
not wanted in legitimate trade. This
plan would not permit the issue of cur
rency to give banks additional profits.
but to meet the emergency presented
by times of stringency
81 do not say that this is the right
sy stem | only advance it to empha-
size my belief that there is need Tor
the adoption of some system which
shall be automatic ana open TO all
sound banks, so as to avoid all pos
sibility of discrimination and favorit-
ism Such a plan would tend to l.
vent the spaSms of high money and
speculation which now obtain n New
York market; for q present t1ere :
too much currency at certain seasons
OF the year, and its accumulation AT
New York tempts bankers to lend l.
at low rates iOr speculative purposes;
whereas ar other times when the crops
are being moved there is urgent need
for a large but temporary increase IN
he currency supply. 1t must never be
forgotten that this question concerns
business men generally quite as much
rs bankers; especially is this true Of
stockmen, farmers and business men
in the west for at present a certain
seasons of the year the difference In
interest rates between the east and
the west is from 6 to 10 per cent where
as in Canada the corresponding diff
ference is but per cent. Any plan
must, of course, guard the interests OF
western and southern bankers, and
must be drawn from the standpoint Of
the farmer and the merchant no less
than from the standpoints OF the city
banker and country banker"
| again urge on the congress the
need of immediate attention to this
matter. We need a greater elasticity
in our currency; provided, of course,
that we recognize the even greater
need of a safe and secure currency.
There must always be the most rigid
examination by the national authori-
ties. Provision should be made for an
emergency currency. The emergency
issue should, of course, be made with
an effective guaranty, and upon con-
ditions carefully prescribed by the
government Such emergency issue
must be based on adequate securities
approved by the government and must
be issued under a neavy tax. This
would permit currency being issued
when the demand for it was urgent,
while securing its retirement as the de-
m&nd fell off. It is worth investigat-
ing to determine whether officers and
directors of national banks should be
allowed 10 loan to themselves. Trust
companies should be subjected TO the
same supervision as banks; legislation
to this effect should se enacted for the
District of Columbia and the terrific
rIes
ole i,e.r. h.,~ s.1--