New-York tribune., 1908-01-02
MONEY DEPRECATED.
TOO MUCH GOLD MINED.
Yale Professor Says Initiation OF
Prices Caused Panic.

A gold
Of its purchasing power is described as the primary
c,use of the financial panic of 1907 by j. Pease
Norton assistant professor Of political economy
at Yale in an article in THE Review OF reviews
for January on The Gold Situation and the Cur
rency Outlook" with especial reference TO Congress
sionaI legislation and the danger to business from
Presidential campaign on currency issues FRO
fessor Norton thinks insufficient regulations con-
trolling capitalization OF corporations and the IN
vestments of trust institutions were contrbutory
To remedy these conditions he declares, the
country must choose of two courses oh
the hand. he says, the interests involved nnuS'
compromise by permitting the appointment OF
gold commission 10 investigate and reco'hlneHu
legislation to the Congress of 1909, thereby remoF
ing the whole subject from the realm of polltlcs-
On the other hand, he nothing but a stormy
Presidential campaign disturbing business ann
placing these important technical questions in the
hands of ''unprincpled political agitators.
In regard the depreciation in the value OF sold
Mr.. Norton maintains there are two causes Tor
high prices, which, he says, unquestionably exist
to-day. These are (a) imitation of prices due 70
deprecated money. and (b) famine prices due to
want. The high prices of to-day cannot be famine
prices. he asserts because during the past e1ShI
years crops have bountiful progress extremely
rapid and the standard of living throughout the
world upon the increase The causes. then, must
be sought in the depreciation of money If statls-
tics agree in showing the of production OF
gold ore diminished radically by new inventions
and the worlds stock of gold showing a marked
and sudden increase little doubt remains He
says:
The facts are plain. golden deuge is already
was 81 900 900; in 1900 $12 100000 in 1900, s262.-
in 1897 sa5 oS and the sa5e of that hat
the larger amount of each years Pr9ductioni iit Is
ali other commodities: that at the present rate of
acceleration the worlds stock can double IN less
the gold food are sporadic and exceptional but
lists and metaliIlrgists Who have succeeded in
ducing the profitable working cost ION OF ore
time this question of gold depreciation becomes
easily the financial problem Of the age
Continuing the writer takes up the su5tect OF
the 100000 bond issue of this city The price OF
this issue represents the havoc which gold deprecia-
ton has wrought up to this date he says How
great is the fall in New York City bonds few even
realize In 1904 the New York CITY 5t2 per
cent bonds were distributed to the public as high
as IO4. Since then decline has occurred OF a
points or 25 per cent in this gilt edged investment
security" If the purchasing value of the dollar
has declined 10 per cent in three years, according
to the index number issued by Dun last May, Mr.
Norton draws the conclusion that the holders of
the 1901 bonds have 81 per of their capital
and received an interest return of little more than
one-half the current time rates. Then taking up
the subject of immediate relief. he says:
Many special interests under the guise OF rene
financial system dangerous the interests Of our
people. The movement for d central bank Of the
United States cannot be seriously viewed, when
the conditions politically and otherwise are known.
The reference of such a remedy Senator Tillman
would be decisive. Leaving out of the question the
many impractcabe suggestions. the possible RENE
dies when financial political and commerclai con
ditions carefully weighed, are few; On the
whole il is probable that no direct legislation at
all would be most advantageous for the prosperity
of the country. Stripped of technicalities. the fol-
eraI bills to be introduced. would be Sautary,
vded currency campaign shall not result
EirSt-Iequlre state
etc. become national banks.
(a) By extending to the national banks complete
powers possessed by trust companies and requiring
adequate reserves against notes against deposits.
graduated scale. dependent upon the proportion OF
reserves &, similar in Il way TO the 10 per cent
the banknotes of state banks. These two
laws would. if carefully worked out. insure uni
administration of banking institutions and en-
force adequate reserves. Trust companies and
banks would be forced to become national
hanks
Second-Give 20 the national banks the right to
banknOteS unsecured by government bonds,
against which reserves should be required. pro-
yided the bank has already outstanding. say. 90
per cent of the present government bond secured
notes. In this the transition to the Canadian
system of asset currency can he gradually brought
about without injuring the prices of government
bonds held by the banks.
Third-HenCefOrth government bonds should not
he basis for circulation TO a total amount great
than the $500 000o GOO now outstanding although
thev may be given in exchange the privilege of be-
coming the sole security for government deposits
These remedies may be passed by the present
Congress to advantage. But the danger to business
is great since a prolonged currency discussion in
Congress is apt to throw the entire question into
the Presidential campaign. The remedy for the
problems may well be left a gold commission.