New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1912-12-07
Tells Congress in General Message 1t Is
Needless to Occupy Its Time with
Recommendations
OBSERVATION-DISCLOSURES
Takes Strong Ground Against Present independence
for FiEpinos-Sees No Ground for Asking Rad
ical Changes in the Sherman Antitrust
aw Provisions.

NnanCldl system 10 NllUSNdlu ~ oNSt -.
The most crying need this country mas
is a proper banking and currency system
The existing one is inadequate, ana ever
one who has studied the question adinlts
II.
II is the business Of the national gov
eminent 10 provide a medium, automau-
cally contracting ana expanding IN Soi-
ume, to meet the needs Of trade. our
present system lacks the indlspensaple
quality Of elasticity. -,
that has elasticity is the banknote cur
renCy The peculiar provisions OF the IaH
requiring national banks TO maintain re-
serves 10 meet the call OF the deposltols
operates TO increase the money strlngehSy
when IL arises rather than TO expand tne
supply of currency and relieve II IL
operates upon each bank ana furnishes a
motive for the withdrawal OF curTehVS
from the channels OF trade oy escn uarH
TO save itself, and offers no lnducemenl
whatever for the use OF the reserve "
expand the supply Of currency 10 meet
the exceptional demand. ,,.
After the panic of 1907 Congress rediIheu
that the present system was not adapted
TO the country's needs and that under IL
panics were possible that might properly
be avoided by legislative provision. AZ
cordingly monetary commission Wds az
pointed which made report IN feu D,o uui "a
1912 The system which they recommended
involved a National Reserve ASSOCIATION;
which was, in certain of It's faculues anu
functions a bank, and when was sl.Sn
through its governing authorltles tnc
power, by issuing circulating noIes LOT AZ A.
proved commercial paper, by nXlnG us
counts and by other methods OF transtea
OF currency, to expand the supply OF the
monetary medium where II was nlost
needed to prevent the export or Ioai u, ,
of gold and generally TO exercise such su-
pervision over the supply or money III
every part Of the country as TO preVent a
stringency and panic. The stock IN thIs
association was 10 be distributed 10 tIle
banks OF the whole Cmteo states ,,o 80 to
bank units and to capital stock pald IN
The control OF the association was Vesteu
i'm a board of directors 10 be elected Dy
representatives Of the banks, eAce - 49,
officers, and the Controller or the Cur-
rency. The President was 10 appoint tnc
governor OF the association from thIeo
persons to be selected by the directors
while the two deputy governors were 10
be elected by the board or directors
The details OF the plan were worked out
with great care and ability. and the plan
in general seems TO me 10 furnish the
basis for proper solution OF our pIe .,
difficulties. / feel that the government
might very properly be given a greater
voice In the executive committee or the
board Of directors without danger or IN
jecting politics into It's management; but
/ think the federation system OF banks IS
a good one, provided proper precautions
are taken 10 prevent banks OF large capt.
tai from absorbing power through owner
ship of stock In other banks. The oDJec-
tions to a central bank, II seems 10 me,
are obviated IL the ownership OF the re-
serve association is distributed among all
the banks OF a country in which banking
is free. The earnings OF the reserve asso-
citation are limited In percentage to rea-
sonable and fixed amount. and the profits
over and above this are 10 be turned into
the government Treasury. 1t is quite
probable that still greater security against
control by money centres may be worked
into the plan.
Certain II is, however. that the objec-
tons which were made In the past history
of this country to central bank as fur
nishing monopoly of financial power 10
private individuals, would not apply to an
association whose ownership and control
Is 80 widely distributed and is divided be-
tween all the banks Of the country, state
and NATIONAL, on the one hand. and the
chief Executive, through three depart
ment heads and his Controller OF the
Currency, on the other. The ancient hos
tiHty to national bank. with its
branches, In which Is concentrated the
privilege OF doing banking business and
carrying on the financial transactions OF
the government, has prevented the estab-
lishment OF such q bank since II was
abolished In the Jackson administration.
Our present national banking law has
obViated objections growing out Of the
same cause by providing a free banking
system in which any set OF stockhold
ers can establish national bank II they
comply with the conditions OF law II
seems to me that the National Reserve
Association meets the same objection In
q similar way; that is, by giving to each
bank, state and national. In accordance
with Its size, certain share In the stock
OF the reserve association, nontransfer-
able and only to be held by the bank
while II performs its functions as
partner in the reserve association.
The report OF the commission recon-
mends provisions for the imposition OF
graduated tax on the expanded currency
of such a character as TO furnish n motive
for reducing the issue Of notes whenever
their presence in the money market is not
other words. the whole system has been
Theoretically il presents a plan that ought
to command support. Practically II NAV
require modification in various provisions
in order to make the security against
abuses by combinations among the banks
impossible. But in the face of the crying
necessity that there is for Improvement
In our present system, / urgently invite
the attention of Congress 10 the pro-
posed plan and the report Of the commits
sion with the hope that an earnest con
sideration may suggest amendments and
changes within the general plan which
will lead 10 its adoption for the benefit
Of the country.
A banking and currency system seems
far away from the wage Garner and the
farmer but the fact Is that they are
vitality interested In safe system OF cur
rency which shall graduate its volume 10
the amount needed and which shall pre-