The sun. [volume] (New York [N.Y.]) 1833-1916, 1910-09-22
BRIEF OPINIONS OF rHE GEN.
TRIAL BANK SCHEME.


Frosl hooeVs hasasiaS.
LEsLiE NJ. SHAW: Before We attempt 10
revolutioniHe our financial system let one
good faithful attempt BE- made to impart
the element OF elasticity to the currency We
have. When this has been tried and found
impossible Il will perhaps do To put the ship
of state In dry dock and install new and
experimental machinery.
| W. ~ ALLEN: n IL constantly assumed
that France owes her financial prominence
to her central bank system. and therefore
u follows that all We have to do To attain
The same proud position L. 10 establish a
similar institution. What nonsense France
owes her preeminence entirely TO the fact
that In her dealings with the world out side
abe is some t7O0 OoO 600 to the good Her
yearly income from interes, dues and tour.
ists exceeds her outRo for mercha ndi-e
imports by that amount. But with IA II is
Just the reverse. Last year our foreign
debts exceeded our merchandise exports
by S1Oo. 600
when senator Aldrich holds up the French
bank rs a model he leads us 20 infer that this
L. the kind OF an institution We are to have
But in his address TO the Economic Club.
November. 1909. he makes IL quite plain
| that our bank IL to he very different In its
| most important function. That il, In pro-
tecting the gold reserve For this purpose
the French bank can raise the rate Of dis
count suspend gold payments or pay out
silver as an alternative. HUT the Senator
seems to think that our bank will he able
to protect its gold reserves by n moderate
rise in the rate OF discount. Now then. II
France with her income OF 800. 0Oo. OOO finds
IL thus necessary TO protect her reserve. n
is ridiculous to suppose that we can protect
our gold supply by any less drastic met hods.
Again. unless our cent ral bank II 10 corner
the gold supply and keep II cornerSf there
IL absolutely nothing to hinder these aliens
and the foreign hanks In New York and other
cities from gobblinR IL up a. fast as IL comes
from the mint In settlement Of these various
debts.
Hero 10 the great defect Of the central
hank scheme u In not permanent remedy.
IL can only AFFORD temporary relief. II h
makeshift. IL will not prevent future
panics or severe strinRency. for the very
plain reason that 10 will not cut down any
ons Of these foreign debts which are the
sole cause Of our financial ills.
Furthermore. Ne never will &c, q proper
remedy for financial Ills until our Legislators
open their eyes TO the full extent Of this
burden and SEQ the emba rrassing post ION
in which II has already placed tho country.
For the two fiscal years ended July 1. 1910.
our trade balances were under $3.50. O0O M.
so that wit these foreig On debts OF sam OOo OoO
year Ne ran behind o. .2SO. OOo .OOO. That
IL more than all tho gold ws have in our
Treasury and national banks. We averted
the export Of that amount in gold. less what
aliens carried Oh. by borrowing from foreign
bankers. In other words. foreigners have
in this short time acquired lien on almost
every dollar % gold We have in sight Prar-
tically speaking We are as q nation doing
business on borrowed money.
DO the advocates Of a cent raj bank com
prehend the Significance Of those momen'ous
factsP DO they imagine for a moment
that such an institution will save us from
the consequences Of this continually running
into debt' Il there no other way OF relief
for the prodigal merchant than to keep on
mortgaginE his property;
HENRT CLEws: 4 central national hank
might run for years with great success to
those in control. as a huge. ovsrshadoWinR
political and speculative machine but a. a
hank serving the interests Of the people or
the real needs OF the nation II would he found
wanting. There would h endless popular
and political clamor 20 curb the monster
w. had created ar to annul It's charter
The ultimate result would more than proha-
bly, he ths annulment Of the charter, and
history would repeat itself. hut with more
political and financial commotion more
business disturbance and disaster than at /
tended the liquidation Of iis forsrunncrs.
Whatever tho advantages Of a central |
bank. the facilities which IL would offer and |
the power Of protection which u might pos |
sess In times OF panic are objects that can |
be more easily obtained by other and moro
practical means. Let Va have large hanks |
by all means, " they are needed. hut most Of
the ills which advocates OF the central hank |
seek TO eliminate are hest provided against
by intelligent. concerted action. such as the |
New York Clearing House has repeatedly
shown itself capable OF rendering in times
Of panic.