New-York tribune., 1909-09-23
FAVORS CENTRAL BANK.
H. Barton Hepburn Writes on Cur
renCu Problem.

In tho Century Magazine" for October, a Bar
ton Hepburn ex-Controller of the Currency. author
of "A History OF Coinage and Currency and
president of the Chase National Bank, writes on
rs a Central Bank Desirable?" and contrasts the
rigidity of the United States currency with the
hexibility OF the monetary systems OF other ma
tions. Answering mis- own question Mr.. Hepburn,
a recognized authority on finance. takes strong
ground in favor Of the central bank plan. recently
discussed by President Taft in a speech al Bos-
ton. After sketching the present currency sys-
tens I'm America and foreigl countries, Mr. Hep
bum passes to q discussion of asset currency.
which he holds is Dsdly needed. tie continues:
Over 90 per cent of all business transactions
! accomplished through hanks is consummated hy
means of checks and drafts which are in q sense
auxiliary currency and possess perfect elasticity.
l. ess than 10 per cent is done by means of money.
very slight degree Of distrgst which lessons the
Of checks and increases the demand for money,
can easily produce money stringenGy. t-ntil
well managed banks. WITH ample capital and pos
sessng abundant good LIQUID assets. to obtain cur
tenn Uili he defective and all classes must suffer
financial loss with every recurring money strin-
! think there Is no disposition to interfere with
the iaw auJrori7ns ne al natons banks to issns cir
have purchased these bonds at price far in
circulation privilege and have rights which should
be acknowledged and fairly dealt with, but it is
evident l think. that our commercial interests
cannon he properly safeguarded until tho power
exists somewhere 10 issue notes against natural
and normal banking assets-credit or asset cur
reney n you % Las@ pea1r conceded ,b,, snoh function
can b. exercised To hettcr advantage by central
hank than by several thousand individual banks
The primary purpose in allowing banks to issue
notes is not to enable them To make money, but to
serve the public. Congress recognized the bank
ing principle i'm the Aldrich- -Vreeland law. provid-
ing for currency associations composed OF
tisuously located banks, with power, in co-opera
tiOn with the Secretary uf the Treasury to issue
banknotes secured by their assets This law
seeks 10 provide in crude and impTaCtiCable
the advantages which a central bank would
possess. do not sympathize with the assump-
tion that the people will not approve central
bank and that therefore some other eXpedient
must be devised. We already possess great
central bank-the Treasury Department. 1t is the
held SS04 6O9 2S9 in gold belonging To the public
for which It issued certificates of deposit to cir
culate as money; it held S476 5SI797 in silver for
which II issued certificates Of deposit To circulate
money. On the date there were still in
circulation as money $l.265. 1SS treasury notes is
sued III payment tor silver bullion purchased: :
there was also in circulation ,S07 in fiat
notes, commonly called 'greenbacks'; there
also i'm circulation S6S7 40S 227 national bank notes
issued by the Treasury Department through the
Controller OF the Currency Gnd the United States
posit with the Treasurer of government bonds
security therefor.
From the above facts it is apparent that we now
have FAR and away the greatest central bank of
deposit and issue In the world. On the same date
June I. this central hank Of ours was IoanInE
$I2046,01a 63 to national banks In the form de-
II has loaned TO banks high as $249 2S3s4S tDe-
cember -. 1900 at one time.
our central hank located at Washington also
engages IN branch banking. by means OF sub
York Phuadephis BOSTON, Baltimore Chicago
Cincinnati 81 Louis, New Orleans, San Fran
cisco Denver and seattle II buys and sells sx-
change hank, wishing 10 ship money 10 any
point where the Trea asury has branches applies
10 the Subj Treasury for a teleerRphic trsnsfer
paying therefor the sovernment contract express