The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1909-06-15
CURRENCY REFORM.

L
After the revision of the tariff, which
viii be revised. but not reformed. win
be an effort to change the currency
laws. Senator Aldrioh will have
charge of this latter work, as we'll as
the former. and the change made in
either case viii be pretty much accord
ing to the desires of the Rhode Island
man At the present time the trend
seems 10 be in the direction of a cen
trail bank. but just how such an insti-
tuition could be organized and put in
working condition is impossible 10
state Ever since the days Of Andrew
Jackson there has been an almost uni
versaI distrust of q central bank, but
perhaps a majority of the people of the
country would be willing, if assured
that panics would be a thing of the
past. Regarding the central bank
project the Wall Street Journel calls
attention to a few facts:
In this country it has to be recog-
nized, however, that the trainers of a
new project of banking circulation dc
not begin with a clean slate. They
have to deal with nearly 1000 national
banks already lowered with the power
Of note issue and with some $4,000 state
banks and trust companies with large
resources. These institutions cannot
be suppressed. and their suppression
would not be urged by any sane advo-
cate Of a central bank. II might be
necessary. however, to bring them into
some correlation with a new system
which would make them responsive e
the policy adopted at the center of af-
fairs. This problem was faced in Ger
many and Sweden by comforting spe-
cial privileges on those banks which
complied with certain conditions. with
out taking away the rights vested in
them by existing law. In Sweden on5
of the inducements to the local banks
to surrender circulation was the bene-
fit of a discount rate at the centra
bank . per cent below the market rate
In Germany it was only necessary t.
limit the banking operations of those
banks which failed to comply with thC
new requirements to the states where
they existed and in which they had al
ways done business. BY devices Xix,
these the problem OF bringing about uni
formity within a reasonable time was
easily solved.
How to deal with the nearly $780,,
100000 in United States bonds held by
the existing national banks to secur'
circulation is another difficult prob
lem. A step will be taken towards it
solution if future issues of bonds ar
made at a higher rate than . per cent
The banks are likely to be driven b,
the instinct of representation to re
sist the grant of the privilege of not
issue upon these new bonds. Otherwise
the issue Of a 8 per cent bond at pa
would tend TO send the . per cents be
low 90 and seriously to impair the sur
plus of every national bank in tn
country. If the banks under these con
ditions become champions of stoppinl
the present imitation in bond-securet
notes, they will be ready to listen TO
comprehensive project of banking re
form. The suspension of the existin:
! circulation where il is. Just as was don
1 in England by the act Of 1874, and il
/ Germany in 1873. would clear tn
ground for "a more flexible and scientih
/ system Of issue in the future and be
/ long. firm step towards a sane banking
/ system"