The Washington herald., 1908-02-29

Senator Smoot. OF Utah. yesterday ad-
dressed the Senate in favor Of the Aid
rich currency bill
He argued against some OF the claims
that have been made by Democratic sena-
tors who are opposed 70 the bill, and ne
decried the proposition that the govern
ment guarantee bank deposits. arguing
that II this were done It would be but a
step toward the guarantee OF other under
takings affecting the public
The coming week is expected by those
who are backing the Aldrich bill to wit
ness the final disposition OF the measure.
While no precise agreement has been
made TO this effect. Il is believed that
vote viii be had on Thursday next.
Before the vote comes. however what
will probably prove TO be the most inn
portant speech made on the bill is 10 be
made by Senator La Toilette. who will
advocate his amendment proposing &c
compel the valuation OF railroads whose
bonds are 70 be used as a basis for
emergency currency before the bonds can
be accepted by the Secretary Of the Treas
ury for this purpose
VIII Amend the Bill.
II has been practically decided 20 ac-
| lcept Mr. Ia Follette's amendment in
modified form. and the bill viii also be
amended TO provide for the retention Of
more adequate reserve funds by the banks
not located i'm central reserve or reserve
cities
/ Senator SmOOt said. in part:
The American people in the final
anal, sis are a conservative people. but at
/ times they losa their heads and plunge
| into speculation. live beyond a reason
able standard and expand even legiti-
mate business far beyond conservative
limits. Whenever this is done. trouble
! ensues just as IL has in our recent un-
/ fortunate money panic
NO one questions the fact that the
American people have been under a bust
ness tension too great for safety. Our
| railroads were OverWOrked. our manu-
| featuring institutions were unable 20 sup
I ply demands made upon them: the cost OF
production KEEP; mounting higher and
\ higher: the wages Of the laborer in
! creased. and the expenditures Of the peO-
! pie increased in a greater proportion than
! all else. Speculation was rife and men
/ wanted to make fortunes in day. These
| are some OF the causes that brought
/ about the present conditions.
VIII Give Elasticity.
"In my judgment the provisions Of the
Aldrich bill. IL enacted into law. viii not
only furnish an absolutely safe emer-
! gency currency. but will also provide for
/ its expansion when a necessity exists,
and the penalty rate Of interest will COM
/ pei its retirement as soon as the neces-
| sity is removed. believe IN an emer-
gency currency. but not in an inflated
| currency.
What we need is not a larger volume
/ OF currency. but a currency that VIII
| come az the call Of need and retire when
il has done its work To secure such a
| currency several plans have been pro-
posed OF these. I think the bill under
/ consideration goes most directly 10 the
point and gives better promise than any
other al present proposed OF accom-
plishing the desired end
| We need not consider the currency
question aI all. except as IL is affected
by an extraordinarily large demand for
money Provision must be made for put
ting out an extra supply when there is
an extra demand
Makcshift Currency Needed.
Many objections TO this plan are urged
objections which do not strike me with
much force. It is said the plan is a make
shift So be it. A makeshift currency IS
precisely what We want We wish it to
come. stay as long as it IS needed, and
then go away as quickly and as quietly
as possible. If that isn't a makeshlft,
what is?
H. 1T is said that the plan is devised in
the interest OF the Eastern bondholders.
Those who make this charge presume
that the bondholders are Eastern. What II
the bondholders would gain by #? Would
the people lose? Who would lose. and how
would anybody lose? Would no one but
! the bondholder gain? Would not any
State in the Union, any city. or any
/ county. whose bonds would come under
the provisions Of this BILL gain when II
| offered its bonds for sale? The State. city.
or municipality issuing the bonds would
be able 10 borrow at lower rate Of interest
! after the passage of this bill than before.
The benefit Is not offered 70 New York
alone, nor TO the East alone. Utah. or
any Western or Southern state, would
enjoy it to fully as great an extent.
Defect in Reserves Law.
Il think a great defect in our banking
laws now in force IS found in their re-
quirements as to the reserve to be held
by national banks outside of reserve cit
les. These banks are required to keep
a reserve equal to 15 per cent Of their
deposits. but are permitted to keep three
afths of this on deposit in banks Of re-
serve or central reserve cities. This
leaves only two-ffths ef the IS per cent
only per cent of the deposits-required
in the vaults OF the bank whose de-
posits the reserve is designed 10 protect.
The Aldrich bill. as il was originally
drawn, required these banks to hold in
their own vaults az least two-thirds OF
this, or 10 per cent Of their deposits in
stead Of per cent. This would have been
an Improvement in the law as it now
stands, but it was stricken out
Senator SmOOt referred 20 an amend
ment which he has introduced 10 remedy
this defect in the bill and said that he
considered il necessary in order that
| future panics may be Obviated. 10 amend
the reserve law so that banks shall keen
an adequate reserve in their vaults al
all times to meet possible need OF ready
cash.