Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-12-22

risks of such occurrences as our disgrace
full panic Of 1907. with its suspensions OF
payment, shortages OF accommodation
and general financial disturbance. Again.
because We have no uniform system or
standard for financial transactions, such
as exists abroad. American securities are
naturally looked upon with doubt by for
e1gn investors and are listed only with
hesitation by foi>.gn exchanges.
Our national monetary commission re-
ccently presented a plan of reform. The
object is not only to preserve the indepen-
dence and usefulness of our excellent
banks. but also to give them a system
based upon economic laws and the needs
of the nation. The plan proposes the forma-
ton of reserve agency. not In any WAY
European central bank. but co-ope,a-
tive association of all our banks. The
banks individually shall be permitted 10
commercial and industrial purposes--ir
other words prime, day-to-day business
bills-just as is now done in Europe. The
reserve agency Will hold the bank re-
the rediscount for the individual banks
Of this commercial paper. This instead
of holding this reserve money idle or
sending il to New York for speculative
loans. as at present.
Here, then We have what we now lack
namely "a perfect elasticity % credit
q standard banking instruments which
will pass current throughout the world,
and CD a great united banking resource
held ready and sufficient to control and
regulate any threatened financial crisis.
Benefits of Suggested Reform.
The benefits Of this reform to the
American shipper must be apparent. In
the first place he would be spared the
losses of our recurrent money-panics.
do not know what percentage of the hun
Of Loot l.x,A
ness houses in the panic Of 1907 fell upon
the export and import trade, but in the
aggregate they must have been very
great Every shipper will recall clearly
enough his individual losses, and he is
cogniZant, too, of the dull market that
followed for several years this financial
upheaval.
Secondly, a standardized business paper
would give to the American merchant tho
very same banking accommoda. lions he
now seeks abroad. In selling goods, for
instance. to buyer in Buenos Aires he
would draw at "A specified number OF days
upon his correspondent in that city He
could have this draft discounted at his
home bank, assuming obligation for tho
amount of the loan only In case OF de-
fault by the buyer In Bnenos Aires.
This loan being necessarily OF longer Pc
riod than ordinary commercial loans, tho
bank need not bear the bur-
den of protracted credit. but can have
the paper rediscounted at the reserve as
ISOLATION of which II is a member Thus
the bank may keep its credi: resources
open to other merchants at all times.
New Glass Of Banks.
In addition the plan permits a new class
Of banks. which will in effect be highly
specialized institutions to finance foreign
trade. Their functions will be similar to
those Of the chartered banks OF Great
Britain which are intended to carry on
banking operations in the orient and gen.
orally in the British foreign possessions.
They facilitate transactions between Eng.
lish exporters and importers and the
merchants and producers In the countries
with which trade is carried on. These
banks accomplish a distinct service I'm adj
iusting credit Instruments to the pecu-
iarities OF trade and lending obtaining in
the far east.
In all its many broad aspects this mat.
ter of monetary reform is a great and VI
.al issue. In its immediate relation 10 the
ii transcends In Importance any
ssue now before the people OF the United
States 1t is above craftsmanship. 1t
should not be delayed by anything save a
thorough and earnest debate in Congress.
With the enactment OF suitable legisla-
ion a new and great era OF solid prog
'ess will be inaugurated In this country.