The Washington herald., 1907-11-20

Whlle the administration measures for
ihe relief Cf the monetary stringency
emphasize the desirability Of currency re-
form. they also bring into prominence
diverging lines Of opinion respecting the
agency through which our currency
should be isSued-whether through ma.
tional banks or State banks. or by the
Federal Treasury. The plan offered by the
American Bankers Association which is
quite likely to be the basis Of the Presi-
dents recommendations to Congress on the
subject OF financial legislation, contem-
plates an extension of the present bank
note circulation in times of need by is
sues based on assets other than govern
nent bOnds-in other words. a flexible
credit currency. There are two classes Of
objectors TO legislation Of this character
those who favor the control OF the entire
money supply by the government directly.
and those who would restore the old
State banking system. OF The two classes
the first is probably by far the more
numerous
That there is a considerable body Of
sentiment, particularly i'm the South. for
return to the State banking system is
well known. and the feeling in that sec
tlOn that it's interests have been neglected
in the existing stringency seems calcu-
lated TO force it TO the front William L.
Royal. Of Richmond. has lust published
a History of Virginia Ranks and Bank
ing Prior to the Civil War" in which
he seeks to show how well adapted the
system of that day. with it's well-secured
local issues Of bank notes was to the
prevailing conditions. He lays particular
stress on the value OF local banks of is
sue 10 agricultural communities. pointing
out that before the war the note circula-
tion in such communities was sometimes
five times as large in proportion to the
banks assets as in the cities. Mr. Royal
regards the successful operation of this
system as illustrating the superiority Of
free banking, Unhampered by legislative
restriction. The national banking system
he critcises as centralizing in its tend
encies while the great body OF the
people are, to "a large extent. denied
banking facilities He frankly places
more faith I'm the character Of the banker
than in the quality Of regulative lesisla-
ton. All THAI is needed TO make our
banking system responsive 10 every de-
mand. i'm Mr Royalrs judgment is TO
repeal the pernicious restrictive provi-
sions Of the national banking act. and
leave the banking business as free as the
hotel business is or as the dry goods
business is, and panics will be ended
and the country viii have all the money
81 can possibly use"
These will be recognized as the views
OF an old-fashioned Democrat who still
adheres 10 the theory that the less goy-
ernment the better But that theory IS
unacceptable % tAe popular sentiment Of
the day, which demands. I'm the case Of
the notc-issuing function. that it be
either exercised by the government or else
controlled and regulated by II. Instead
or less bank legislation. the cry is for
more. and II cannot be denied thar tbe
practices ot some bankers Justify the
cry. It may be set down as certain. there
fore, that prospective currency legislation
VIII not tend in the direction suggested
by Mr. Royal nor will IL surrender m
the banks the functions Of note issue nou
performed by the government. but NAV
permit the issue of a credit currency
under stringent government guarantees
But that end will not be attained with
out arousing the strenuous opposition Of
those opponents Of a credit currency who
would have the government issue a legal
tender paper currency We have no doubt
the next few months will develop a sur,
prising amount of greenback sentiment
IN the country