The evening world., 1908-01-15
French Authority on Finance
Holds 1t Will Tend to Con-
found Confusion.
CENTRAL BANK E D
While Proposed Measure Might
Stop Panics, European Sys-
tenn Prevents Them.
Written for The Erenin1 World
By Alexandra UIar,
Editor La Vie Findncidle, Leading
Financial ~ Er1nc.

Financial Authority Of France.
There has not been a greater sssue at
hand IN the Unitei States since the
adoption Of protectionist tariffs than
tho currency reform which is 70 be dis
cussed this winter by Congress. This
reform IS evidently intended to prevent
tire rturn OF financial flurr,e,, to guar
antee the American financial market
and above all the Industrial prosperity
of the country from such rough Shocks
as have recently occurred. I think 1t Is
puhlr opinion much more than polit-
Clans or capitalists that insists upon a re-
form OF this kind. But II my inquiry Of
a month in New York concerning this
vital question has not introduced me
into error I am obliged 10 state that
public opinion Is still more incompetent
in these matters here than II Is in Eu-
rope. II asks for financial relief. but as
Tar as l can see IL has been unable to
make any valuable suggestions as TO
the way and means to bring It about.
The nation caves the question with It's
financial leaders and IL Is likely to in
N' N'FS '4'AAAA NIihL may
seem sufficient in the eyes of those who
want above all to maintain their per
sonal control OF the country's prosper
ity.
From the European standpoint-1 am
not entitled to take up another-.t may
seem evident. however. that the interest
Of the nation Is not always identical
with that Of Wall street. And 1t Is
rather astonishing for a Frenchman to
see that the only currency bill that has
a chance TO be adopted by Congress is
Just Via l venture TO call a Wall street
bill and not a United States bill.
Why Was Central Bank Idea Apan-
doned2
The Aldr1ch Currency bill. II am well
Informed. has come into existence under
rather curious circumstances. About a
fortnight ago. waen Mr.. Aldrich came 70
New York FOR discussing the question
with prominent ank and economists
1 Understood that there could not be
am more the question of maintaining
this amazing currency system that has
ruled the United states economical he
Tor half a century. Mr.. Frank Wander
~. Who IS considered In Europe one
OF the most clear-siGhted economists OF
this country, told me then. just after a
conversation with Mr.. Aldrich, that he
was sure the would-be reform was to be
a first step toward the establishment OF
a central bank. which. ! dare say. every
competent man beyond the ocean CON
sIders the sole available solution of
the problem. Mr.. Hepburn, NIr. Selig-
and Mr.. Snhtff seened to be eY-
actly OF the same opinion. The schecne
which then appeared 10 have a great
to be carried through provided
n kind OF national clearinghouse. n GEN.
tral agency the stock OF which $50. CO.,
wa TO he held by tho national
hanks in proportion to their capital.
The head of this central institution was
to be appointed by the President Of the
United States. whereas. just as in the
was to be elected BY the shareholders
Uhe national banks): The latter were TO
act as branches OF the entral agency
as 70 what concerns currency matters:
to be forbidden to make loans on
bonds or stocks; its role was to be re-
stricted to r~ediscount with banks, to re-
cetve and to disburse Government mon
eys and to Issue currency.
AIdrich Bill Will Confound confu.
sion.
This scheme was really excellent and
Its adoption would have aroused univer
applause all over the world. Blu
within a fortnight it disappeared and in
its place the Al3rich bill as 1t Is pro-
posed TO Congress gives 1t what we call
in France n tirst-Class funeral. l do not
know the req ons which nave brought
about this sudden change and l abstain
from NenturinS any suggestion with re-
spect to this point. But as a matter OF
fact It Is rather hard TO state that II the
new bill should be put INTO practice not
only the great lesson OF the crisis will be
lost. but the currency system OF the
country. although remaining unchanged
in It's principles. will be worse than ever
"A: least from tho European standpoint.
Now what does the Atdrich bill pro-
vide for? In n word It caves THE pres
ent system unchanged. but authorizes
notes up TO $3.50, o0O, 600 on bonds ap-
proved by n Treasury board. The Ques-
ton whether "A national bank Is to be
allowed to issue such currency Ia to be
deciiesl by a special board in Washing
ton IN representation OF the banks
needs TO n sub-treasury.
First OF all, the b~ond-secur9d currency
Is maintained. Americans do not realize,
to be definitely established; It
u a mere emergency system tina ought
have been suppressed when the emer-
gency had disappeared. In fact. 1t has
for United States bonds when political
conditions civil war; had closed this
1t was to force the banks to
buy United States bonds which they
for the currency they issued. In other
words II was n means to a X up loans.
In the world outside this coun-
has ever been able to solve the req
son why the United states has con-
tinued TO stick TO such a system, which,
from a merely economical standpoint,
Is really monstrols. Only one country.
under the same necessity to enforce
Government bonds on the people. ven
tured an imitation OF this method. 1t
Japan. But as soon az conditions
improved she got rid of this awful
to monetary s~oundness, al
the system was far less unpleas-
ant than in this country. where ii hero
are not less than $500 issuing
banks.
Central Banks In Europe.
Every other civilized country has
practically only one great central note
bank. In France this bank has
the absolute monopoly OF issuing notes,
England and in Germany the monop-
ply IL becoming complete. us no rSw
banks can get tho right OF issuing
and the older ones are so much