New-York tribune., 1908-02-11
SENATOR ALDRICH on HIS BILL

II
Senator Aldrich's speech on his currency Dill
,,.iu bo road with great interest and attention
bocause If is the first comprehensive explanation
of the natives which led the Senate Finance
Committee 10 prefer bond secured currency 10
The asset currency so generally desired ps 'ho
banking and business community ana tne hls'
authoritative defence of the measure from the
criticism it has encountered. The country now
knows lust how much the committee soCsb1 10
accomplish and in what way it expects 'his
measure tn accomplish it. The bill. as the
Senator takes care to explain, is simply al
emergency measure. designed TO afford rehet
when panics recur There is 10 intention OF
furnishing such a currency system as Secretary
CorfelvolI declared was needed. one that would
be automatic in its operations, tending TO equal
iza interest rates in all sections and III all sea
sons of the year. Senator Aldrlch lhlhhS ihdI
the countrys money supply is rendered SUM
ciently elastic by the import and export OF sold,
and similarly, we suppose. is the Secllohai
money supply by the expressing of packages OF
money hither and thither as they are needed
These methods, in our opinion, serve lmperlectls,
and simply for want of better ones. Compared
with those of European nations they are crude
and primitive and costly TO business
We doubt whether the West, where the strong
est opposition 10 the Aldrich bill is expressed,
will be satisfied with measure aiming TO ac-
compsh anything less than Mr.. Cortelyou pro
nounced desirable The dissatisfaction with the
defects in our currency system which are eAhlp-
tied not oply in emergencies but in the busy
seasons of every year is extremely Widespread.
The resistance of bankers, too, which Is nearly
unanimous, is hardly likely TO be overcome py
the Senator'S exposition They object to the bill
because they say that they do not ordinarily IN
vest in the securities required by it. Senator
them
but if. in general and habtually, they have such
bonds among their assets In large quantities
why should they be unwilling to base their
notes upon that part of their assets ana prefer
To base them upon another part-namely, mer-
camille paper? Moreover, it seems to us that
the Senator cXaggerates the extent TO which the
banks low hoIu bonds Of the sort required by
his bill when he directs attention to the fact
that in December the national banks held $7O5,
100000 in bonds, "a large part being, he says,
OF the character required. When ii is recalled
that at that date the circulation of the banks
stood at S6l9eU.0lO. and that in order to secure
the government deposits of $1610oo0oo they
had to borrow Sl66 100000 in bonds, it is evident
that they could then have owned only COM
paratiyely small amount Of miscellaneous secur-
lies.
1t is objected 10 the AIdrich bill that like the
present law which makes United States bonds
for Daukn0fe issues, out OF course III
4 less degree. it would tend to give a fictitious
value to state. municipal and railroad bonds,
and it seems 10 us that Mr.. Aldrich practically
admits this when he says:
Nothing would bring the benefits of the
rional banking system more closely to the atten-
ton OF the great masses of the people than
would the willingness the part of the banks
give value and stability to local securities by
their purchase basis for security of note
circulation.
What is this giving value 10 local securities
and, ill the next paragraph, giving "a better
standing" to railroad bonds but providing a
market for them which does not now exist
atins an additional demand for them and, ac-
cording to an inevitable economic law. raising
their price:
Mr.. AIdrich's defence OF his bill is able and
shows his usual intellectual reSOurcefulneSS, but
it is hampered by i weak case. II does not
seem to us that it satisfactorily answers any of
the strong objections which bankers and bust
ness men have raised. New York banks, stu
ated in the centre of great bond market and
surrounded by large bond holding corporations,
could buy borrow the required bonds in an
find difficulty in availing themselves of the pro-
visions of the bill TO take out circulation.
And every bank which bought bonds would have
its capacity TO go to the relief of the business
community lessened instead OF increased by the
process.