Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-12-11
Central Bank Impossible.

central BANK Impossible.
"A great central bank is, in my opinion,
political impossibility at present. lido
not regard great central bank as essen
tiai to scientific, sound and wise bank
ing and currency system for the United
states provided we can unity and co-ordl-
nate our banking interests, bring them
substantially into one system which Will
secure universal cooperation and the
strength OF a combination of our entire
banking capital. and even with central
6ank the same coordination must be eff
tected. 4
Our reserves must be all of the same
character-gold or its equivalent. because
sold is our standard of value
Our reserve In all of our financial in
stltutions must be adequate to prove our
credit and protect our depositors.
We must adopt the principle of FREE
interchange of banking credits and bank
note credits.
Our bank notes must spring into exc
istence precisely as checks and drafts do
through business transactions
our bank notes must be related to
ana based upon the consumable commo.
cities OF the country. going out with pro-
ton.
The practice-I will not say principle
or finance and currency now in opera
ton in this country is costing the Ameri-
can people at least $4,000 600 annually.
Vaiues incident to such currency panics
as the present, which are liable to oc-
cur at any time If some significant fall
ure should precipitate It,
The cost to the people of $4,000 900
arises from the fact that the use of
all the capital represented by the bonds
deposited to secure our present bank notes
Is lost because they are wholly unneces-
sary and in their present use and rela-
ton are an unmitigated curse
"a nj
the bonds deposited to secure govern
ment deposits Is also lost, as well as in
terest at the rate of per cent upon
government deposits. which since the es-
ADJUSTMENT of the national banking sys-
tenn up to the present time has amounted
to about SI5,O00.OO0 or nearly twice as
much as the loss to depostors resulting
from failures of national banks.
Exchange Reserves for Credits.
There Is in the pockets of the people
.25O.O00OO0 of reserve money. $1,OOO.-
OOO,OOo of which at least should be ex-
changed for current credit or credit cur
rency.
IF any other business in the world,
except our politically managed, were in
volyed.. this waste of s1JO.OOO,OOO annual
~ would be stopped at once.
WHO pays for this waste OF capital?
American labor. Upon labor rests the
entire cost of the banking business which
is necessary evil incident to the produce
ton, transportation and sale or DISPOSE
ton of s25,O0o.000,OOo worth of product
annually.
"A law should be passed giving the
national banks the right of exercising
In the respective states where located all
the powers of executors, administrators
guardians and trustees. Unless this step
is taken, the advantages now enjoyed
by the trust companies will gradually
but inevitably, compel the national banks
to surrender their charters for trust
company charters: for If a trust COM
pany Is required to carry only one-fifth
or one-half the reserve of national
bank. 1t can afford to pay a much higher
rate of interest upon deposits and even
tually undermine the national banks.
THE right should be given to national
banks to issue an amount of credit cur.
rency equal at least to their capital
These two powers would have the eff
feet of bringing into the national sys-
tenn practically all the trust companies
and state banks. IL our recent expert
ences have confirmed the public opin-
ion that the required reserves of the ma.
tional banks are none too high.
If our banks were authorized to con-
vert their bank book credits into note
credits upon the demand OF depositors
there would never be currency famine
such as we are suffering from now"