The Washington herald., 1908-02-11

AtAAtA VI tA+H NbAalAt VIII nave a. HAAbitH
tendency 10 prevent financial crises ana
TO preserve public and private credit at
home and abroad
THE emergency issue we propose should
enable the solvent banks of the country
to meet at all times their demand obli-
cations and 10 respond to all unusual
bat legitimate business demands II viii
save bankers and the public alike from
further humliating confessions OF gem
eral insolvency. it viii be used in time
OF trouble to take the place heretofore
filed by clearing house certificates, and II
will render the use of Illegal or question
able substitutes for money unnecessary.
The obligation of the government To
redeem the notes of national banks is
strengthened and more clearly defined. A
definite pledge of cOnvertibiljty by the
government is required by this act to be
printed upon the face of every note. The
value of the national bank notes has
always been fixed IN the minds Of our
people by the certainty of government
redemption. No one stops 20 inquire
whether national bank is located in
Maine or Texas, whether its capital is
great or small or whether its financial
condition is such a. to give credit TO its
notes
a new form of notes, if issued purely
for emergencies and less carefully Sc
cured than existing notes. would be dis
credited at once, and their appearance
would invite distrust.
Controlling Purpose of BIiI.
There should be no misunderstanding
as to the sole controlling purpose Of this
bill 1t proposes by its provisions to
prevent panlcs and furnish the means Of
relieving panic conditions. We do not
claim that Il is "a universal panacea for
all financial ills. II is 20 give the ma
tonal banks the means Of accomplishing
by legal methods that which I'm this
crisis, they felt compelled 10 accomplish
by illegal and destructive methods. 10 the
great loss of the country. Il makes no
preteuse of providing "A new monetary
system aud tries no new experiment with
our currency. IL surrounds notes 90 be
issued by safeguards for ultimate pay
meut similar 10 those now IN use.
Public discussion of the bill has turned
largely upon the question whether the
measure proposed was satisfactory 10
bank managers. ignoring The fact that
the question of the sOundncss. character.
and volume OF currency is one IN which
the public is vitality interested. / must
confess that iu considering relief meas
ures it did not occur % the committee
that their first duty was 20 provide adj
diti0nal profits to the banks The banks
are not applicants for charitable relief
The report OF the Comptroller Of tho
Currency shows that the dividends paid
by the national banks for the sixteen
months prior 20 June 80. 1907. We're at
the rate of l3 per cent anuum Of the CAPT
tai and surplus of the national banks
In the ten years prior % 1901 the aver
age annual rate of dividend was but lit
Tie over 3 per cent.
Had t0 Restrict Banks.
The committee were We'll aware that
If the issue of the additional notes pro-
yided for should be made a constant
source Of profit 10 the banks. the notes
would be issued Immediately and would
become a permanent addition 10 our cur
rency. and would leave 10 margin for an
increased circulation when the usual flow
of currency was interrupted and a new
supply demanded. To make proper pro-
visions in emergencies for this supply.
and to answer the reasonable cNpeCta-
tons of the people Of the country when
their interests are imperlled. should not
involve the necessity of increasing the
profits Of the national banks
In the recent panic there was q gen
eTal suspension of cash payments by the
national banks. The failure Of a bank 20
meet its demand obligations is a viola
ton of every law governing its conduct
/ and existence. The extraordinary for
beaTaHce Of the people Of the country and
! Of the officers of the government IN the
face of this violation was perhaps JUS
titled from the condition in which the
banks found themselves. Bank mana gers
should realize that repetition of these
violations will not be permitted Il
would be difficult to eXaggerate the injury
which would come 10 the credit of the
country and the prestige Of our great
financial Centers, and the losses which
would be- eHtailpd upon people and in
dustries alike, if the banks OF the country
should again suspend payments in a
period Of financial disturbance.
Gives Warming 10 Bankers.
There certainly could be no possible
/ justification of a suspension brought
about through a refusal on the part OF the
/ banks 10 accept a method Of relief
/ adopted by Congress, on the ground that
an acceptance would involve a Joss of
profits TO the banks. Our recollecuons
/ Of the happenings Of the past three
months are too definite TO lead us 10
1 listen with patience 10 a discussion by
! officers Of banks in the large elites OF
/ the question whether the use OF the
| remedies proposed by Congress would re-
/ suit in large additions 10 their dividends
+ We do not intend 10 place a premium
upon that kind Of bank management
| which proposes 20 make financial dis
/ turbance and disaster a source of profit
/ THE second objection urged is that
/ banks generally do not have, and would
| not purchase and hold. securities of the
/ class which the Secretary of the Treasury
! is authorized 20 accept under the pro-
| visions of the bill. The committee were
/ OF the opinion that they would deserve
! general condemnation If they did not re-
/ quire. as a basis of the note issue con-
| templated the very best available securi-
! ties.
/ 1.-THE plan OF the bill restricts the
| securities to be accepted under its pro-
! visions 20 government issues and tho
bonds OF railroads that are, by recent
/ legislation, under government regulation
I think 7 am justified IN designating the
! bonds of States and communities as gov
/ eTnment securities. To sustain the credit
/ and facilitate the borrowing power under
| proper condition Of the various political
divisions throughout the country is quite
as important 10 the general welfare a,
it is 10 take steps to maintain the credit
Of the national government
Securities Beyond Question.
ssVI,o en,,r-ftfaa ,o,,,.s 81 ....s---.--v
! Ceptance in settlement Of obligations n,
securities except United States bond.
have a better credit and standing in al
financial circles. They have a definit.
value, readily ascertained, on all tn,
great exchanges Of the country, and they
are nIWavs salahle under nnrrnal cnn