Los Angeles herald., 1908-01-24
AND CURRENCY

Hl HE address Of the chairman of the
congressional committee on bank
- ing and currency on "The Finan-
cal Situation is probably the frankest
utterance, and in its printed reproduc-
tion the most outspoken document ever
made or given to the people by man
of such official standing and authority
as Hon. Charles N. Fowler.
1t is not rapting demagogue, but
conservative and responsible student
and statesman and practical business
man, who says:
"The practice, will not say princi-
pie, of finance and currency now in OPP
Grafton In this country is costing the
American people at least $15O,000,OO0 an
nually. in addition to the frightful de-
vastation of values incident to currency
panics. which are liable to occur at
any time if some significant failure
should precipitate them. The cost to
The people of $150,OOO.0OO arises from
the fact tnat the use of all the capital,
represented by the bonds deposited to
secure our present bank notes, is lost
because the bonds are wholly unneces-
sary, and in their present use and re-
lation an unmitigated curse.
"The use of the capital represented
by the bonds deposited to secure gov
ernment deposits is also lost, as we'll as
interest at the rate of 2 per cent upon
government deposits, which, since the
establishment of the national banking
system up to the present time would
have amounted to about $75,OOO,OOO or
nearly twice as much as the loss to
depositors resulting from failures of
national banks.
There is in the pockets of the people
1880, ,O0e 900 of reserve money, $1,OO0,-
C00,O0O of which at least should be ex-
changed for current credit or credit
currency. If the banks could exchange
their credit notes, amounting to S1,000,-
noe, 900, for 81, ,OO0, ,000, 900 of these reserves
low in the pockets of the people, they
would increase their liabilities only
per cent of tie $4,000, 100000 deposits,
while they would increase their re-
serves 145 per cent. If any other busi-
ness in the world, except one politically
managed, were involved this waste of
$150,0OO,OOO annually would be stopped
at once. Who pays for this waste of
capital? American labor. Upon labor
rests the entire cost of the banking
business, which is a necessary evil in
cident to the production, transportation
and sale or disposition of $4,000, 100000
worth of products annually"
"Unmitigated curse. Necessary evil.
Vigorous language, surely.
Logically, if an evil is necessary
an attendant curse cannot be ''unmiti-
gated" But we must not quarrel with
Mr.. Fowler's phraseology. Instead, let
us recognize the impelling necessity
which causes public servant, a repre-
sentative member of the highly re-
sponsible" class in American society,
to say:
Il nov declare that if this govern !
ment continues it's present policy of in
jecting into the arteries of trade and
commerce a fixed, bond-secured cur
rency, by swapping securities, by bond
speculations, by treasury manipula-
tions and by executive orders, we shall
continue to move only with an accel-
Grated speed and with the direetness
of a musket groove, and the absolute
certainty of passing time, toward a
commercial breakdown commercial
crisis-a commercial ragedy-compared
with which the present currency panic
is only a pleasant summer outing.
"Are We such business fools, such
economic idiots, such political towards, |
that we will not move even though the |
heavens fall? And if perchance we do
move, shall we jump into the fathom-
less abyss of basing credit upon credit
instead of basing all bank credits,
whether deposits or note issues, upon
gold com? 1 submit that beyond all
possible doubt there is a complete want
of coordination between our business
and our present currency"