The Cairo bulletin., 1912-09-11
Member Of National Monetary Com
mission Addresses American
Bankers Association
CURRENCY SYSTEM UNs0UND
Former Colorado Congressman AL
50 Assails Present Re-
serve System
Associated Press Dispatch.

SA0SoNta iCDo bfSpdLSA,
Detroit, Sept. 10.--Now is the
time for critics of the proposed
National Reserve association. recon-
mended by the National Monetary
commission, to come forward and
come forward and point out what
they believe to be defects in the plan,
In the opinion of Robert w. Bonynge,
a member of the commission, who ad-
dressed the American Bankers AS
sociation in convention here today.
Mr.. Bonynge's address was on
Banking and Currency Reform
He spoke, in part, as follows:
"Our banking and currency sys-
tenn is universally recognized as
thoroughly unsound. All the politi-
cal parties have declared in their
platforms of this year in favor of
its reformation, but NO specific rem
edial legislation has been proposed
by any. 1t is perhaps better that
they should not have done SO. The
problem is essentially an economic
and business question.
"The defects in the existing sys-
tenn that must be remedied no matter
which party is charged with the re-
sponsibility Of framing the legisla-
tion are unscientific treatment OF
bank reserves, the rigidity of our
entire credit system and the lack Of
cooperation between our indepen-
dent banks.
'Our present reserve system re-
stricts the loaning power of banks at
times when reserves should be freely
used and credit literally extended to
solvent business men and thereby in
tensities, if it does not actually pro-
duce panics. Our scattered reserves
are wholly ineffective for use in
emergencies. Our bank notes do not
fuctuate in response to business
needs Even the commercial paper
held by the banks is not a truly
bank in times of stress is concerned
only in strengthening it's reserves
The sole method available for that
purpose is the calling of loans. The
portion of the reserves held in the
vaults of our thousands of indepen-
dent banks is for all practical pur-
poses dead asset Indeed, rigidity
stamps itself upon our entire credit
organization.
1--WE have only local banks. They
furnish banking facilities to their
own communities. They are indis-
pensibe. But it must be obvious
that these strictly local institutions
can not look after or provide for the
general credit conditions of the
country at large.
GAS it was found necessary to
organize the federal government to
guard our national interests and to
legislate on those subjects affecting
us as nation, so we must have some
national federation of the banks for
national financial purposes. The in
dependence of the units must be alb
solutely preserved. The powers
given to the federation Of the banks
must be strictly limited to those that
are national in character. The
form of organization must be such
as to insure its operation in the in
terests of and as support to all
legitimate business and must be
wholly free from sectional, political
or selfish financial control.
EINtau fh,,c ornap;yoJ Il YY,,,cf he
empowered to act as custodian for
the reserves of the banks, to redis-
count their short time commercial
paper, to provide a safe and sound
bank note currency that will auto
matically adjust itself to the con-
stant changes in business require
ments, to act as the government g
fiscal agent, and to represent us in
all national and all international
financial affairs.
The experience of the world
proves that a currency issued by o
government or by government
owned institution always lacks the
essential element of elasticity. Its
amount Is determined by the govern
ments needs and fixed by statutory
provisions which cannot be speedily
altered to meet changing conditions
The government issues money, and
may and should in the Interests OF
the public regulate, the agency OF
agencies which may. in accordance
\ with certain general principles that
< it establishes, issue credit redeemable