The Washington herald., 1908-03-13
WHITE FAvORs FOWLER BILL.
Leading Political Economist Writes 20
Chairman % House Committee.

Jeudin. Political Economist Writes 20
Chairman % House Committee.
Mr.. Horace White. who is considered
the leading political economist in the
United States. sent the following letter
to Chairman Fowler. of the House Com
mittee on Banking and Currency:
New York. March TO- 1905
Ny Dear Mr. Fowler.
Yours of the 9th inst Is received. When this
session Of Congress began | considered Il unWise
70 attempt - amend our currency system BY a
single comprehensive measure did not then
think that the public mind was Tipc for Il. al
though the discussion has been going on in
limited circle. fer nearly fifteen years So for the
sake Of breVity, I preferred the bill proposed by
the American Bankers Association, except that
did not favor special tax on a particular part
Of tbe circulation.
If. however. the people are prepared. as they
now seem 20 BE- % take into consideration a root
/ snd-hraneh measure Of reform like that cf House
OH No 1857, shall contribute such aid 10 IT'S
passage as can
II is a great merit that the bin reafrrns the
principle that gold, rot government debt IS the
true basis Of proper currency. II proposes %
take away all soft money cushions and false props
of our monetary system which might fail US in a
time Of trouble
When the civil war camr on a large part Of
cur currency, based upon State bonds. fell TO a
discount ranging from 10 20 50 per cent. Before
the war ended, cur government bonds and green
backs fell 70 stiH lower price. and the green
backs remained below par for more than sixteen
years.
Why should we continue 10 expose ourselves
20 such chancrs. though the Tisk Of war or
I internal conYulsion now seems 10 be slight II Il
IS worth while 10 build A great navy IN SniicipR-
ton OF conflict with foreign powers. is it not the
part OF prudence 70 put orr government finances
and currency sure foundation, especially when
u can be done without expenscf
TIE plan groPosed In your bin is feasible and
VIII accomplish the end sought. without any dis
/ turbancc or contraction whatever Moreover, the
gold needed is within easy reach
The next most important feature q the bin IS
that which provides Tor central redemption agencies
and supervision Of the banks bs each other. Most
bank failures are caused hy speculation with the
funds Of the hank. By mprcyident ioans 20 the Oh
GERS ard their friends and faTorites n violation Of
law. Put stop 10 such leans and you practically
insure The deposi.ors ncehoders. and shareholders
against loss
/ hear that the banks o. Chicago. st. Louis. and
Kansas City are taking steps Voluntarily for such
mutual examination and supervision This is a
wise extension q the powers e the Clearing House
Associations Far better Is frequent examination
\ by ones ntighbos and rivals in business than a
diagnosis b. the Comptroller after disease has
set in.
With this practice established BY law the mutual
insurance Of both deposits and circulation by means
/ n common guaranty fund drposited in the
/ Treasury VIII be very simple matter such CO
Insurance cannot b. considered either paternaiism
/ or socialism The government does nothing but
hold the money Contributed by the banks them
selves, and pay il 70 those entitled 70 receiye IT,
/ The small banks arr not ont on an equality with
the large regards capitol OF earning capacity
but their liability 70 failure Is mninizcd aud this
IS an advantage 20 the whole banking fraternity
and 10 society IN general
To avoid ambiguity il would I've weil 70 add 20
the seTentecnth section Of the bu & proyiso that
the government shall rot incur auy liability in
respect q the guaranty fwd except for lis safe
keeping and disbursement accoriins to law.
IL Is the Il m banking science that Csrcula-
ton, notes, and deposits alike potential de-
mands on the hanks cash reserve and that the
3 banker cannot determine which of the two forms
his liabilities shall assume and that il IS a matter
q indifference 70 him which form they do assume
( Il IS most desirable. howeTcr 10 the community
which be serves that his customers shall have the
prTiCge Of exercising their right 20 draw upon
I the bank In the form which they prefer A
considerable argument might be written on this test
i but ] forbcar
/ ] concur IN general with the rep0rt of tie Mer-
chants Association. q New York In favor q your
I bil dated February Il. 1905 and I remain
Your sincere friend and well wisher.
HORACE WHITE