Evening star. [volume] (Washington, D.C.) 1854-1972, 1908-02-18
TOO MUCH POWER TO BANKS
Can Contract and Expend Currency
at Their Pleasure.
URGES EMERGENCY CURRENCY
But Thinks the Government Should
Itself Issue It-Praises His
Party's Financial Policies.

Party's Financial Policies.
Senate this afternoon against the Aldrich
currency bill. He said by way of intro
duction that he was opposed to the policy
of delegating to national banks the
sovereign function of issuing money. but
said he was not opposed to an emergency
currency.
Il favor the emergency Treasury note, "
said he, instead Of the emergency bank
note"
I'VE have practically turned over to the
5000 national banks in this country the
high prerogative of supplying the people
with money wherewith to transact their
business Under the law they have the
right now to take out additional circula-
ton In the form of bank notes to the
amount of hundreds of millions above and
beyond the circulation it has pleased
them to furnish the people, and under the
law they have the right now to retire
millions of their outstanding circulation
from year to year.
Would Augment Banks Power.
I'm other words. they have the high pre-
rogs tive Of supplying a large proportion
of our currency, and the power to expand
and contract 1t within certain limitations
as it may please them to do. To pass
this bill in it's present form would aug
ment that power. 1t would afford a new
opportunity to expand and contract the
currency on a larger scale and with great
err rapidity than under the present law.
Five hundred millions of emergency cur
reney could be taken out. and it could be
returned to the Treasury whenever and
as rapidly as the banks might wish to
return it. Counting the present sum of
cash money available for ordinary bust
ness at two billions. if we should add
$500, 100000 to that sum under the author
ity of this bill. it would increase the total
Of available cash to $3.50. 0000O0. OF
this sum, One-tifth. being emergency cur
rency. could be taken out and returned in
such a way and with such manipulation
as to materially affect property values
through a process of rapid expansion and
contraction. l fear we may open Pan
dora's box if we pass this bill in it's pres
ent form.
Would Have Government Issue Cor
rency.
4 would have the government itself is
sue the currency, full legal tender cur
rency. instead of delegating the power Of
issuing it to corporations 1t had created.
ana the return of the money to the Treas
ury should be SO regulated and made as
to prevent a destructive depreciation of
value by a too rapid contraction.
He advocated a governmental guaranty
fund for the payment of depositors in in
solvent banks, approving of either the
plan of Senator CulbersOn to form an as
ISOLATION of national banks and provide
for the payment of the depositors in in
solvent institutions by a pro rata assess
ment upon members Of the association or
the plan of Senator Ne son for d reserve
fund In the Treasury. derived from taxes
upon the banks circulation. adding that
he favored a small special tax to create
and maintain such q fund.
He said that the discretionary powers
of the Treasury officials were too great
Strange things have happened about the
Treasury" he continued 1T has come
to pass in recent years that men holding
even subordinate yet responsible positions
In the Treasury-men without special
training in the science of banking and
who had not previously demonstrated any
special abilities as financiers-have gradu-
ated from the Treasury into responsible
positions such as president and vice pres
Cent of great financial institutions at
opulent salaries.
IF some great bank or combination of
banks should desire some millions of
dollars for some special uses of their
own, and could persuade some subordi-
nate official of the Treasury. holding a
place of authority and influence, to have
the sum desired taken from the Treasury
vaults and deposited with the banks, that
official would render the banks a signal
service-a service for which some signal
reward might be expected. Such a thing
might be done in conformity with law
and done even without the special knowl-
edge or direction of the Secretary 1t
Is practically impossible for the Secre-
tary of the Treasury. however great his
abilities or his high purpose. to keep the
enormous transactions of the Treasury
Department under his own eyes. Abuses
are possible. and where they are DOS
sible they should be guarded against"
Financial Policies of His Party.
Senator Stone concluded with the fol-
lowing words of praise for the financial
policies of his party:
Il look around me and hear SO rnuc,.
to encourage that 1 am inspired with
a feeling of profound confidence that
the day is at hand when the destinies
of this country will he again committed
to the party of jefferson and Jackson
W he'll that suspicious day shall come AS
comt 1t will, We will go forward saneIy
along mounting way. developing great
enterprises and fostering our splendid in
dustries. and though we shall strive to
lit the country to a higher enninence
than ever before. we will not forget TO
reverence the Constitution and guard orr
institutions against all who would under
mine them.