New-York tribune., 1907-12-29
ECONOMIC CONVENTION.
SESSION At M4DISON.
Sneakers on Banking and GoUern-
meut Regulation of Business.

ca1snes Incomes" The paper discussed by
u-in.bron N Daniels. Princeton University; Frank
Fetter Cornell University; Fred NJ. Taylor.
michigan University; Herbert j. Davenport Chi
caro University and Robert Diefmann, University
of Freburg.
no1-is r Dewey OF the Massachusetts Institute
of Technology delivered a speech late this after
-oon setting forth the asset currency plan of the
American Bankers Association He said:
The plan before US for consideration to-day IS
that proposed by the currency commission OF the
AMERICAN Bankers Association. Thls plan Is ire
onsntIx Enoken of as plan for asset currency. 1t
Mi be observed however. that it is simply prop
,Jnon bonds 100 per cent of which shall be. as at
present, TaTea M ,9Ted i per cent The ostensble
object of this plan is TO provide certain portion
of cnrrency which will adjust itself to the periodic
pnoTeInents Of the money market, and which will
presumably flow and ebb according TO the demands
for the movement of crops and for special emer-
gencies- Advocates Of this plan & SO SO far as am
addition 70 the total supply OF banknote money
They are, however. deSrous of introducing some
fore us is: win a currency issued in this way
which is based primarily upon the amount of bond
Of bonds available for notes. create this elasticity?
II Is estlilsteG Z l1aI 'S lt naossitIo in
crease of little over s2ooeeoooo Of credit notes
last ten years there has been an increase of bank
note circulation of s4oo.ocoeo- IF the bonded in
de5tedness Of this country shouo increase so as 10
make larger amount Of bonds available for bank.
note circulation. then there would be possibility
Of still further increase in the credit note crcuIa-
ton; the two. credit note and bank note clrcula-
ELASTICITY OF CIRCULATION.
Elasticity of circulation presupposes effective
agencies for retirement and redemption OF notes
Does the plan OF the American Bankers SQInillls so mus
will inevitably flow back? We have in this country
six thousand individual national banks each indie
pendent Of the others our banks lave not been
trained in redemption and there is not taat rE%tlfy ny
between few competing bank systems such as op-
tains in Canada which would lead banks 10 present
redemption be obtained except by the passage OF
law 1rhiddns any bank 70 pay out me Greolt ra 011
ton involve the machinery OF either central bank
1e o5 thai banknotes are REGARDED by
people large as absolutely sound, as good as
hey stay out in The hands OF the peo&Ple & I0T 6P
that the Treasury Department has, for govern
mental ends actively opposed the retirement, Of
ieges to banks Which would run counter
simple way as that implied in the bankers plan
why would it not be possible TO improve the Pres
lnt methods of redemption so that there would be
9 TIE plan Of the American Bankers Commission
Is confessediy conprornise, 1t IS beheaeq lev d, ny
many. however. to be step toward asset hanklhg; %
provides that the authorized issue of credit notes
shall be increased TO corTesp9ndlngly grSIeF r+ p
therefore face this contingency and pass 5udgnent
nl9n s5e nrincine rle into our moneary circulation.
Again, # may be asked whether II IS i rehranle @
forms in our banking system have been put into into
Spfna0F SpTatl09 TO fe Re ends 81 Wc % the baners com
sion desires that they fall within the scope ol
DEFECTS IN BANKING SYSTEM
Among these defects may be mentioned the
question Of:
/ insufficient reserve particularly Of country
banks. and the centraltzing OF such reserves III
The inadequacy of redemption f. facilities itss and
securities which cannot be rapidly liquldated anu
thus tying Up the funds Of the bank Tor TOO long
The bad banking methods Of trust companies; n pies
market in New York City ,, - .s.,,a
The abene @ Fl a so Ehs5eS o baf ioanabe
funds viii fiow the place where they are most
And 5oi 7naV- the rigidify Of bank reserves
Might it not be possible 10 permit our naloi@l af M
Schif to encroach upon their reserves-say. up 70
OF per Cent? This would let loose about S25,
eo 600 which might he as serviceabe tor emergency
circulation the credit notes OF the American
bankers plan
The subject Of transportation was discussed by
Harrison s. Smailey, of the University Of Michigan
Mr. Smalley, speaking on the theme The Basis OF
Reasonable Railway Rates" said in part:
I believe that we would take long step forward
If should abandon the idea OF Justlce IN % raISs
&c nri-p9Ia opne-s6n and operation rates must OF
necessity frequently work injustice, and that in all
Tafeis attained when the burden of Injustice has
been properly placed or distributed the ifnp9r, ~
Injustice which should rightfully be borne BY the
railroads the hand and by the public on
TWO widely differing conceptions Of rate Iegisla-
ton are possible. On the hand, IT may be
thought OF as purely remedial function. designed
tTafion. while on the other hand it may be re-
garded positive constructive agency or force
velopment. OF these two views doubtless the first
has up 10 date exercised the more important In
fuence upon public discussion and upon legislation
George B. Haynes read paper on the Massachu-
setts public opinion bill. J. Allen Smith, Of the
University Of Washington, discussed the recent
institutional legislation. and James W Garner, or
the University OF Illinois: Jesse Macy Of Iowa Col
1ege. Thomas F Moran, Of Pardue University, and
Charles E Merriam, Of the University Of Chicago,
discussed various phases Of primary election leg1s-
lation " s Wren, Of Oregon. also spoke On the
initiative and referendum Of that state.
Taking as the subject Of his address THE Princi-
pies Of Government Control Of Business" this even
Ing Jeremiah w jerks of Cornell University,
president OF the association said ii Is a mt time
now with 50 many different opinions prevalent
in the country regarding the relationship OF the
government to business enterprises of various
kinds to inquire whether any fundamental prlh-
ciple in connection with this question can be rec
ognized as having q permanent application.
In all civilized countries" said Mr. Jenks' the
fundamental condition Of stable government ana IN
consequence OF public prosperity, is that In con-
trolling the individual members Of society ana IN
directing their activities the government ihuSe at
il thinks best
NATURAL RIGHTS THEORY HARMFUL
As the principle of government. Mr. jerks said
the theory Of natural rights of individuals is
harmful All arguments for social reform should
be MADE on the basis that the welfare OF society
all be improved thereby. lie continued:
We have heard much talk within the last few
years Of the ownership OF our eobernlens bs ' me
.noneyed classes and the lmposspllliy OF IaHa,1e &
wealthy malefactors brought TO Justice; 10 ,o On
Corrupted but the remedy is ct hand in the selec-
ton Of upright officials Some instances Q! Gu; sdS
ties case the recent investigation OF the ilsu an
companies in New York, the exposure IRE Oh hinb il