The White Pine news. [volume] (Ely, Nev.) 1906-1910, 1907-12-27
THE CENTRAL BANK PREJUDICE

derlip of the National City bank, after
laying down and explaining the prin-
ciples that should govern in the es-
Establishment of an adequate bank cur
rency system in this country said
that there are many solutions that
would in his opinion measure true
and sound" by application to these
principles: and one ideal solution, he
suggested. would be combination of
the German system of a central bank
of issue with the Scotch system of
branch banks, says the Boston Com
mercial. He was careful to add, how
ever: II recognize that there is pro-
found political prejudice against both
of these ideals, but 'lieye it is a
prejudice absolutely lacking in sound
foundation.
Only a week ago, it will be recall
ed, Chairman Fowler of the house
committee on banking and currency
declared of any system embracing a
central bank of issue that it is 'po-
litical impossibility' in this country
at present and chiefly because, in his
opinion, it would require something
like IA quarter of a century to edu-
cate the public up to point that
would Justify congress in passing
such a law. This conviction recog-
nizes the same prejudice" that vice
President Vanderbilt refers to; but
one opinion regards the overcoming
of it as something almost hopeless,
while the other looks upon it appa-
rently as a prejudice that can be
overcome with comparative ease as
soon as its unsound foundation is ex-
posed We get this prejudice chief
ly through nheritance-from that
old time one of President Jack son S
day that moved him to oppose-and
successfully-the rechartering of the
United States bank. And it may as
we'll be understood at the outset that,
if we are ever to have currency
system embodying central bank of
issue, there must be some popular
education" on the subject as a pre-
requisite.
And in this connection it is not UNI
timely to call attention to some state
ments made by the managing director
of the Disconto- Gesellschaft of Ber-
| lin in letter to the special currency
committee of the chamber of com.
merce, of which Mr.. Vanderlip was
himself number. Chairman Claflir
had put three questions to Director
Salomonsohn-with reference, first
to the circulation of bank notes il
Germany varying from one season t,
another; second, to the effect tina
issues of uncovered notes have upon
interest rates and in the way of pre-
to the advantages possessed by thu
German system. The replies were t.
the effect, briefly, that the note cir
culation does vary with the seasons
in Germany, but the regulation of i
by the Reichsbank prevents any il
effects; that there are in reality NJ
uncovered note issues in German,
and that in the 81 years from 1877!
to 1906 the official bank discoun
rates ranged from 8 to Z per cent
never above the latter-the highes
average for any five years period il
that time being only 4.42 per cent
1S96-1900 inclusive; and finally
that the advantages that have ac
through the operation of the centra
bank of issue, the Reichsbank, ma,
thus be succinctly summarized
THE Reichsbank satisfies any in
crease in the demand for money on
of its own resources by enlarginy
its issues of notes even to the extern
/ of mourning the penalty prescribed
i by law in the event of an over-issue
while, on the other hand, by the con
troll of its rate of discount it prevent.
undue expansion of it's circulation
Through the regulation of it's dis
count rate it exerts controlling in.
| fiuence upon domestic business af.
fairs and upon the International
movements of gold. The Reichsbank
guards the German monetary system
against outside interference and en-
courages or binders by means of dis
count policy the inflow or outflow of