Deseret evening news. [volume] (Great Salt Lake City [Utah]) 1867-1920, 1908-03-21

! rs NOT ln-thc vaults uf me bank Us ant
] to DE unavailable AT IT. very bnle ie Ks
! needed III proved unnNeiluN,c 90 'lt
| recent pault. The country uGnN tnHt
! had thrcC-nlthg OF It's icsorvc ~ New
/ York could not get IL Wheu u injected a.
| For all practical purposes u h0G a rt-
| serve OF only q pcr cent ui rs deposits
! and with that small awoau had 20 race
! a panic But for THIS fact J doubl
/ whether the panic would have boen $50
| Widespread, aud whole sections On lne
country would not have been compelled
/ to resort TO clearing housc certificates.
HAD TO PROTECT DEfosiroRs,
have no sympathy With the ptter
| attacks that have bcen directed against
the bankers of New York CITY DteRusc
| OF their failure to pay back tnuir re-
! serves whom they were demanded;
have no sympathy With an attack ON
any man for failing Co do what ne can
| no do providing his actions 10 PLACING
himself in that position were within the
limits of the law and morally l'Eht lne
New York banks found IL iniposslple
TO pay back this money on TENANT, u
they had paid. all their depusitprs W1lic
u dollar TASTED, the majority OF the de-
| positors would have called after tne last
| dollar was gone \ financial cyclone
| would have swept the country compUr-
ed to which that which did stllNg Il
would have been only a breeze The
banks had To protect their GepositorS
against each other. In order to pay
all, they had to delay payment to those
who were clamorous
The country bankers had no more
claims than any other dcpositors, Cen
orally they received interest on money
| they kept on deposit in New York Ihey
sent IT there to get interest ON u. They
knew that New York banks were not
paying them interest on money TO LOOK
at 10 in their vaults. rnoY knew tncSc
! banks would be compelled TO use the
money in order - pay Interest on d9lly
balances. OF course ordinarily me
country banks could get It back on de-
| msnd and borrow additional amounts
IN case OF need Bur Il is unjust TO
blame men FOR falling TO do the nnpo9-
| sible I'm time OF panic because IT would
be possible in ordinary times.
PROPOSED AMENDMENT.
The Amendment 1 propose would
strengthen The reserves of vuan'ry
banKs by adding onc-thlrd TO the legal
requirements and nearly doubling the
amount required by law to be kepI IA
their vaults At the same time, 1t
would not add TO their idle capital, Tor
they could keep this added third or
the reserve invested in interest paying
bonds
The bill before the senate proposes
amendment. IL does not propose reNolu-
ti0n In my opinion IL is amendment
and not revolution that our banking
laws need. Men who, generally speak
ing, entertain didmetrically opposite
7 views on finance are often FOUND S;and-
ing ON the common ground of opposi-
ton to our national banking system
To those who insist that the severn
ment should abandon the banking held
say that the government Is not IN
the banking field: but as the prosper
ity of the nation Is SO NitallN aIiecteu
by our banking methods the govern
nlcnl should regulate them and II does
we'll. since 1t can do SO without loss or
risk OF loss. IN throwing its strength
behind our national bank circulation.
If am told that national bank note
is nothing but promise to pay, / say
IN reply that the government by M
iorsing this promise mas given II, IN
the public mind. the force of a pay
ment
MATTER OF HISTORY.
1t has been urged that the govern
ment, instead OF issuing bonds on
which the banks buying them could
issue notes, should itself have issued
the notes thereby saving the interest
for which the bonds called. To dis
cuss this properly, we must remember
the circumstances under which the
| bonded Indebtedness nI lnlS AbuilNi y
was originally incurred. The nation
was engaged in war, the most des-
tTuctiVe of values of any the world has
ever known. This war. with It's neces-
sary issues OF paper money, had driven
coin almost out of circulation. With
! the issue of greeubacks nine-renths OF
the coin went out of circulation Ieav-
ing only S25. 100000 in circulation IN
1869. At the same time $3l2,iS1,AlS
i'm greenbacks and S2679l262c IN mis-
! cellanepus currency, consisting of notes
of the bank Of the United States, state
bank notes, demand notes, and f'flc-
tional currency were all the circulation.
The total circulation was $685. 1874, 03S.
! OF which only $4,000 900 was corn, and
even in this small amount the coin
was not circulating with the paper. il
was the money of the Pacific coast,
then less accessible To the Atlantic
coast, where paper money was circu-
lating. than China is now. The public
debt Was increased between 1862 and
| 1868 to the extent of more than $500,
600, 600: from 1863 TO 1864 nearly $500,
100000 more, and I'm another year,
nearly a billion. During these three
years the public debt Increased between
twenty-one and twenty-five hundred
million. What would the money OF the
United states have been worth then. II
the suggestion of printing money, in
stead of borrowing It,. had been fol-
lowed? Even IN the amount 1t was is
sued il was greatly deprecated If It
had been quadrupled, it would have
been worthless.
CURRENCY vs. BONDS.
IL currency instead OF bonds had been
issued then. the government could not
have bought half as much with dol
lar ms II received for the bonds even
Ii the money it received had been pre-
ciscy like that it would have issued :;
for by selling bonds it kept the total
down to fourth OF what II would
have been II IL had issued The money
instead Of borrowing IL.
Under The circumstances the govern
ment permitted the banks taking the
bonds To- issue circulation ON depositng
the bonds with the treasurer equal to
three-fourths OF The face value Of the
bonds so issued. The banks at that
time did furnish part Of the credit
nat was behind this form of currency,
and the government secured better IN
terost rates on account OF the privilege
II gave OF issuing notes and ON account
of rs promise to pay in coin
But why not issue money Instead of
bonds now IN time of peace bonds
are not apt TO be issued except to pro-
vide money for the payment of other
bonds that mature. For this purpose
money could not be issued because
the bonds call for payment IN coin, ana
Il. 4