The Washington times., 1907-12-03

In my message to tho Congress year
ngo spoke as follows of the cur
roncy:
"T especially call your attention to
the condition of our currency laws. The
national bank act has ably served a
great purpose in aiding the enormous
business development of the country,
and within ten years there has been
an increase in circulation per capita
from $2I.4I to sss.Os. For several years
evidence mas been accumulating that
additional legislation is needed. The
recurrence of each crop season emPha-
sizes the defects of the present laws.
There must soon be a revision Of them,
because to leave them as they are means
to incur liability of business disaster.
Since your body adjourned there has
been a fluctuation in the interest on call
money from 4 per cent to 80 per cent,
and the Auctuation was even greater
during the preceding six months.
"The Secretary Of the Treasury had
TO step in and by wise action put stop
10 the most violent period of oscillation.
Even worse than such huctuatiOn Is the
advance in commercial rates ana the
uncertainty felt in the sunicienCy OF
credit even at high rates. All CONNER
cial interests suffer during each crop
period. Excessive rates for call money
in New York attract money from the
interior banks into the speculative field.
This depletes the fund that would 9th
erwise be available for commercial uses,
and commercial borrowers are forced
20 pay abnormal rates, so Inat eacn
fall a tax. in the shape OF Increased
interest charges. is placed on the whole
commerce OF the country.
The mere statement Of these facts
shows that our present system is seri-
ously defective. There is need Of
change. Unfortunately, however, many
Of the proposed changes must be ruled
from consideration because they are
complicated, are not easy Of cOmprehen-
sion, and tend to disturb existing rights
and interests. We must also rule out
any plan which would materially i'm
pair the value Of the United states Z
per cent bonds now pledged TO secure
circulation, the issue Of which was made
under conditions peculiarly creditable
10 the Treasury. ! DO not press any
especial plan. Various plans have re
Gently been proposed by expert COM
nittees of bankers. Among the plans
which are possibly feasible and which
certainly should receive your cOnsidera-
ton is that repeatedly brought to your
attention by the present Secretary Of the
Tre8 sury, the essential features of which
have been approved by many prominent
bankers and business men.
One Plan Suggested.
According to this plan national banks
should be permitted 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
currency to give banks additional profits,
but to meet the emergency presented
by times Of stringency.
"I do not say that this is the right
system. / only advance 1T 10 emphasize
my belief that there IS need for the
adoption Of some system which shall
be automatic and open % all sound
banks. so as TO avoid all possibility OF
discrimination and favoritism. Such a
plan would tend TO prevent the spasms
OF high money and speculation which
now obtain in the New York market;
for at present there IS too much cur
rency az certain seasons OF the year,
and It's accumulation at New York
tempts bankers 20 lend Il at low
rates for speculative purposes; whereas
at 6ther times when the crops are being
moved there IS urgent need for a large
but temporary increase In the currency
supply.
ct must never be forgotten that this
ally quite as much as bankers; especial
IL is this true Of stockmen, farmers.
and business men in the West, for at
present at certain seasons OF the year
the difference in interest rates between
5he East and the West is from to 10
per cent. whereas in Canada the cor
responding difference IS but 2 per cent.
Any plan must. OF course. guard the
interests Of western and Southern bank
ers as carefully as IL guards the inter
ests OF New York or Chicago bank
ers, and must be drawn from the stand
points OF the farmer and the merch ant
no less than from the standpoints OF
the city banker and country banker"
Need More Elastic Currency.
again urge on the Congress the need
of immediate attention to this matter.
We need a greater elasticity in our cur
Icncy; 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 authorities. Provision
should be made for an emergency cur
rency.
The emergency issue should. OF
course, be made with an effective guar
anty, and upon conditions carefully pre-
Ecrlbed by the Government Such emer-
Eency issue must be based on adequate
securities approved by the Government,
and must be issued under a heavy tax.
This would permit currency being IS
sued when the demand for it was ur-
gent, while securing It's retirement as
the demand fell of. 1t is worth in
veshgating 20 determine whether Of
ficerS and directors of national banks
should ever be allowed to loan TO them
selves Trust companies should be sub
ject TO the same supervision as banks;
legislation to this effect should be en-
acted for the District OF Columbia and
the Territories.
Yet we must also remember that even
the wisest legislation on the subject can
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