Manchester Democrat. [volume] (Manchester, Iowa) 1875-1930, 1909-10-27
drawn from the experience of Can
ada and foreign countries.
Will Make Haste Slnwlx

ada ana foreign countries.
Will Make Haste Slowly.
The Boston financial element is
disposed to nike haste slowly. They
are willing to wait patiently for the
report of this commissionS even III
that means year or so of delay. In
the meantime there is manifest di.
vergence of opinion, and experts DIFF
fer as to the plan which ought to he
adopted Independent of the report of
the commission. 80
In the first place it is evident that
every scheme of currency reform
which has been suggested has one
thing in common. They all propose
that the government shall retire alb
solutely from the business OF issuing
currency, and that this currency shall
he, 2ut cut by the banks. and either
secured only by their general assets
or by ordinary commercial paper, in
stead of government bonds.
4 This principal of, what is called
asset banking or 'asset currency,
is by no means new one. It dates
back to 1894 when the American
Banking association held meeting
In Baltimore, at which al plan was
formulated for permitting the banks
to issue currency of theiir0wh up to
q certain proportion of their capi-
tai, the same to be secured by the
deposit OF special fund which
would protect noteholders in addition
to the ordinary liability of the bank.
Proposals Hold "Baltimore Plan"
This original scheme. or Baltimore
plan," as it was called, is found in
one form or another in all the sug-
sessions now being put forward. In
1906 the New York chamber of com.
merce recommended the creation oi
a central bank whose stock would be
owned jointly by the national banks
ard the government, but whose con
troll would rest absolutely in the
treasury department at Washington
1t was realized that the country
was not radey for such radical legis
lation, and the chamber of commerce
therefore recommended that any ma
tional bank with bond circulation
equal to one-half of its capital should
be given the right to issue notes fol
| y ,e a.. m o15
These notes were to be taxed or
a graduated scale from to per Ger
according to the amount Issued. Tht
proceeds of this tax We're to form {
guarantee fund for the redemption o
the notes at their banks. Future is
sues of United States bonds were
not to be available for circulation
and the restriction on the retire
mant of national bank currency wa.
to be removed
!, Retires When Not Needed.
4 The theory of this was that th'
graduated tax on this unsecured cir
! culation would cause 1t to be retire'
) when there was any redundancy, bu
: would furnish the banks with
, means of providing money for meet
] ing the unusual demans at crop NOV
ing times and other emergencies.
This simple form of uncovere
: notes has some strong champion
a here, because they say that it ful
nishes the necessary elasticity wit
$ the least possible amount of new ms
J. chinery, while it paves the way fc
the retirement of the bond secure
circulation, but in the most gradus
! sort of fashion so as to produce tn
least possible disturbance to bus
ness conditions.
In January 1908, special commi
:. sion appointed by the America
: Bankers ssociation, at meetin
held in Chicago formulated bill f
a new currency. This provided thu
any national bank might issue note
equal to 40 per cent. of the amour
of its outstanding bond secured ci
culation, but not to exceed % pt
- cent. of its capital. On this class
circulation it would pay a tax of l
q per cent. per annum.
NIL Besides that the same banks wou
rt be authorised to take cut addition
,e credit circulation to the amount
.e II 1-2 per cent. of the capital. {
m which the tax would be per cen
n. per annum. 1t was provided that tt
is total amount of national bank al
,e credit notes should not exceed thu
k pid up capital in any case.
oy There was provision regard
ts the relation Of national bank moi