The White Pine news. [volume] (Ely, Nev.) 1906-1910, 1908-04-11
COMMERCIAL PAPER FOR
BANK-NOTE SECURITY?

ment point to the ultimate passegt
of the Aldrich currency bill by tht
: national house of representative
with possibly some amendments ma
terially changing 1t from the shape
in which it went over there from the
senate-and along with II another
measure providing for currency
commission to investigate and report
on a more deliberate plan for remod-
cling the general currency system
these bills will not get through the
lower chamber without a determined
fight for them by their sponsors II
will no doubt require the holding OF
a caucus by the Republican repre-
sentatives, with a resultant vote max
ing the Aldrich bill, at least, party
measure.
As enc indication of the thorny
path now before the Aldrich bill 1t
is noted that the house committee on
banking and currency has slated as
mart of its program this week the con-
sideration of a proposed amendment
! to this hill providing that commercial
paper as well as government, state,
county and municipal bonds shall be
| accepted by the secretary OF the treas
ury as a basis of emergency note CIR
culatioa. The western representa-
tiyes are said to favor 1t very gen
orally, their argument being that
MANY tanks throughout the country
rarely hold bonds of any kind; and
that If they are to share In the bene-
fits of he currency legislation adopt
ed at this time, commercial paper as
we'll as the bonds of the federal, state,
county and municipal governments
must be made acceptable as security
for circulation. II was the influence
of the west chiefly, let II be noted,
that brought about the elimination
of railroad bonds from the securi-
ties originally named in the Aldrich
bill as acceptable for the protection
of note issues to national banks; and
il is the west again that now sug-
gests the ordinary notes OF mana,
drawn by individuals or firms or
companies and Endorsed by names
in sufficient number and good for
warranting account, as basis Tor
note issues to the banks. In other
words. the proposition Is about this;
If a provincial or country national
bank needs more currency and hash |
on hand or cannot secure easily any
of the approved bonds, IL may bunch
up a lot of the already discounted
paper of Brown, White and Com
pany. of Tar. Pitch and Turpentine
(Limited). of the Cow Greek Cream
cry corporation and of all the cross
roads storekeepers thereabout send
them To the nearest snb-treasnry and
get government Endorsed bank notes
of its own for them-proYided, OF
course. the comptroller of the cur
rency approves of the security But
how ara the treasury officials 10 know
whether such paper is good or
not? 1t has no established value, no
generally quoted market value at all,
nothing about it. indeed on which
to determine its real value, such as
the approved bonds of states, coun-
ties and municipalities possess. 1t
may be said in reply to this objection,
of course, that all this commercial
paper would have to be Endorsed by
the bank offering it-but wouldn't
note issues on that security be prac-
ticaIly-almost purely and simply
national bank credit notes, or some
thing closely approximating the
.'credit currency" of Representative
Fowler. the house committee chair
man? Furthermore. such CONNER
cial paper" commonly natures In
four, three or two months from the
discount, while bonds have life
ranging from ten, twenty and thirty
years up to as long as fifty years;
and would it not be putting the gov
eminent into the banking business
with vengeance to authorize. II TO
collect such commercial paper at
maturity and often perhaps before
the retirement of the emergency
bank notes secured by it?
It may be noted in this connection
that the Reichsbank of Berlin, 1.-The
imperial bank of Germany" is oblig-
ed to hold in it's vaults, as security
for the amount of its bank notes In
actual circulation at any time, one
third in current German gold, gov
eminent certificates or in bullion or
foreign coin and the balance in dis
counted notes that bear maturity OF
three months at the longest and on
which the names of three or at least
two persons known to be responsible
stand as indorsers. This bank is one
of the foreign institutions commend
ed by Chairman Fowler as present.
ing an example of true credit cur
rency" system. But it holds the dis
counted notes or commercial paper
in its own vaults-doesn't turn 1t
over to the national treasury in re-
turn for government secured bank
bills"
1t is not wholly ineonceivable that,
unless the house sponsors for the
Aldrich bill watch out sharp, they
may wake up some morning and find
it metamorphosed into a true credit
currency" measure. New York Com
merciai.