Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1907-12-06
THE CURRENCY QUESTION.
Elasticity In Circulating Medium q
Present and Primo Necessity.

year ago I spoke as follows of the cur
rency:
II especially call your attention t
the condition of our currency laws
The national bank act has ably served
a great purpose in aiding the enor'
nous business development of thu
c.untry, and within ten years ther'
has been an increase in circulation PEI
capita from $21.41 TO $33.08. For sew
cral years evidence has been accumu
lating that additional legislation II
needed. The recurrence Of each crol
season emphasizes the defects Of th'
present laws. There must soon be 8
revision of them, because to leave then
as they are means to incur liability
Of business disaster. Since your body
adjourned there has been a fiuctuatior
in the interest on call money from
per cent to 80 per cent, and the fiuc.
tuation was even greater during the
preceding six months. The secretary
Of the treasury had to step in and by
wise action put a stop to the most vio.
lent period Of oscillation. Even worse
than such fluctuations are the advances
In commercial rates and the uncertain
ty felt in the sufficiency Of credit even
ut high rates. All commercial interests
suffer during each crop period. Elk
cesslve rates for call money in New
York attract money from the interior
banks into the speculative field. This
depletes the fund that would other
wise be available for commercial uses
and commercial borrowers are forced
to pay abnormal rates, so that each
fall tax in the shape Of increased in
terest charges Is placed on the whole
commerce of the country.
1.-The mere statement Of these facts
shows that our present system is seri-
ously 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
III
rule out any plan which would materi-
ally impair the value Of the United
States 2 per cent bonds now pledged
to secure circulation, the issue OF
which was made under conditions pc
culiarly creditable to the treasury.
do not press any especial plan. Vari-
Gus plans have recently been proposed
by expert committees Of bankers
Among the plans which are possibly
feasible and which certainly should re-
ceive your consideration Is that repeat
IDLY brought to your attention by the
present secretary Of the treasury, the
essential features Of which have been
approved by many prominent bankers
and business men. According to this
plan, national banks should be per-
mitted to issue specified proportion
Of their capital in notes Of given
kind, the issue to be taxed at 80 high
rate as to drive the notes back when
not wanted in legitimate trade. This
clan would not permit the issue OF
currency to give banks additional
Profits, but to meet the emergency pre-
sented by times Of stringency.
II do not say that this Is the right
system. I only advance It to empha-
size my belief that there is need for
the adoption of some system which
shall be automatic and open to all
sound banks, so as to avoid all possi-
hility of discrimination and favorit-
ism. Such a plan would tend to pre-
vent the spasms Of high money and
speculation which now obtain In the
New York market, for at present there
Is too much currency at certain sea-
sons Of the year, and its accumulation
at New York tempts bankers to lend
1t at low rates for speculative pur-
poses, whereas at other times when
the crops are being moved there Is
urgent need for large but temporary
increase in the currency supply. II
must never be forgotten that this ques-
ton concerns business men generally
quite as much as bankers. Especially
is this true Of stockmen. farmers and
business men in the west, for at pres
ent at certain seasons Of the year the
difference in interests rates between the
east and west Is from 6-to 10 per cen,
whereas in Canada the corresponding
difference Is but per cent. Any plan
must Of course guard the interests OF
western and southern bankers as care
fully as 1t guards the interests Of New
York or Chicago bankers and must be
drawn from the standpoints Of the
farmer and the merchant no less than
from the standpoints Of the city bank
er and the country banker"
I again urge on the congress the need
Of immediate attention to this matter
We need greater elasticity in our cur
rency, provided, of course, that we rec
ognize the even greater need Of a safe
and secure currency. There must al
ways be the most rigid examination
by the national authorities. Provision
should be made for an emergency cur
rency. The emergency issue should
of course, be made with an effective
guaranty and upon conditions care
fully prescribed by the government
Such emergency issue must be based
on adequate securities approved by the
government and must be issued under
heavy tax. This would permit cur
rency being issued when the demand
for 1t was urgent. while securing Its
retirement as the demand fell on. II
is worth investigating to determine
whether officers and directors Of ma
tional banks should ever be allowed to
loan to themselves. Trust companies
should be subject to the same supervi-
sion as banks. Legislation to this effect
should be enacted for the District OF
Columbia and the territories.
Yet we must also remember that
even the wisest legislation on the sub
ject can only accomplish a certain
amount. No legislation can by any