New-York tribune., 1908-04-24
THINKS 1T DANGEROUS.
4 Reader Fears Result of Basing
Banhnotes on Commercial Paper.
o The Editor OF The Tribune

To the Editor of The Tribune
Sir have been constant reader of The Tr1n-
for over fifty years and n rule have re-
Earded it able exponent of principles that
make for that righteousness which exalteth nation;
hence my surprise to find what have generally es-
teemed safe counsellor and guide in ali matters
of general public concern advocating the
adoption OF what seems to me-and am sure must
seem to thousands of other readers of The Trtb-
Ine-a dangerous experiment in our national BANK
ing system. I refer to It's recommendation that
provision be made for the of commercial paper
a basis of security for the notes of our ia
tionaI banks This is q step backward-a move
toward a return to a system of banking and bank
note security that was long since tried IN the
balance and found wanting
one Of the greatest blessings resulting from the
for the preservation of the Union was the
enforced substitution of our system OF nafionai
banks the state banks that existed before the
war ANY one whose recollection goes back TO
the tine when banks provided the people with
paper money-thc so-called circulating medium
must agree with me in this opinion There were
of course, some safe banks IN those days whose
promises to pay never deceived the people: but
there many others of different sort-mahy
''wildcats'-whose circulation was based upon bank
assets Of very unsubstantial character and sub
jeCI to heavy discount in the money centres OF
the East. It was d time when exchange brokers
fourshed in ali important cities whose business II
was deal in so-called 'uncurrent money'-paper
money that had been received by stCrekeepers and
wage earners at par, but which could not be used
TO pay for goods purchased in New York, Phila-
delphia o. Boston except at A heavy discount
whatever the exchange brokers would pay for Il in
good money. In the early SOS happened to De
employed for a time in the city of New York, and
at the END of each week was forced 10 receive my
paw in Jersey money'-money obtained by my en-
ployer ct about 81 a. cents on the dollar, WIeh
! raid for money current in New York BANKS
With exceptions, the bills of country banks
outside OF New England-especially Western banks
were at heavy discount in New YORK. me re-
suit was the cost of making remittances from
Western points New York-then, as nov" 1he
money as as the business centre of the country
in funds that would be accepted at par ny 'ne
banks merchants OF that city, was heaVy ciie
al due TO the lack of confidence in banks whose
circulation nothing better behind 1t than palH
assets-the promissory notes OF Tom DICK anu
Harry Consider the situation now as compared
with the time referred to, Now 1t costs nleEcHaIA'7
and others living in any part Of the country ho
matter how 11r from New York. who nave occ@s'o
10 purchase drafts New York, Phlladeiphla VI
Boston little nothing for such eXchanges- NO"
Maine Texas New Jersey. California or oregon
pass current everywhere. Why? Because they are
all secured in the same vay-by the ponos 81 the
United States 1t is evident. from past experience
that il would be q great mlsfortune-a great HldI
ca loss 10 the peopIe-to change the present oasls
Of security for our paper money TO anything less
secure.
Granted that the commercial paper. in other
words the promtssory notes of individuals. hr1fis
and corporations discounted and held by our ma
tonal banks can, rule be depehdeo oA a7
ooad security for the money loaned, can such
security. take the place of United States bonds or
for that matter state county municipal bonos
wouId the notes Of our national banks thus Sc
cured be accepted everywhere, the same aS oohI
secured notes? Would they not be Disseminated
against especiaIlv when issued by small country
hanks located a long distance from New YORK
Surely the people cannot want any change IN our
banking system that will result in making our
circulating medium or any part OF H. olHerehI
from what It now is. All national bank notes
should as now be equally good in al parts OF the
country because equally Well seCured-secured py
bonds IF some kind that can be sold any day 1or
,ar value AT least on any Of stock exchanges
t,ro,,ercaI naDer of first class quality Is always
short time naper payabe sixty or ninety Gays
,b,cb 1vouId make it's use security for eIners-
o,o,, currency OF any othe- kind of currency very
inconvenfent II not impracticable
end as ! began. our rational banking system
80 ono Of the greatest blessings resulting from
+be var for the preservation of the Union Let
elT enourh alone; hold fast to that which Is eoou'
rrbarA * no immediate danger OF an tnsufnclencS
4 T-yite5 States bonds meet all the necessitltS
- o,r national banks in the matter OF setuII'S
for their paper money. The present lnolcaI4oiI7
ora that there will he scarcity Of such securl-
+iee for the next fifty years at least AT the same
+,,,o tbere is no reason why first class STATE
county, and municipal bonds should not oe useu
-. sac,,rf+y for our circulating medtun-such Donus'
Gov Instance as the savings banks or Ne" 10TH
ara narr1itted to invest in But why nave an
emergency currency" al all, or any KIND OF cur
repc,- different from what We are now accus'oheu
- di4erent in quality otherwise!
Erie Penn. April 90 1905 j F DO" "NlNtT-