The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1912-11-29

ter actively into the money market
as paternal overseer of the ma
chinery of credit.
| 1t not infrequently happens that
surplus revenues accumulate in the
| treasury just at time when the
banks are straining their resources
to grant all the credits needed to
! finance a business boom. The treas.
ury then takes money out of the
| banks and boards it just at the time
when the country most needs it. II
the business boom goes so far as
Ito strain credit to the breaking
point, then the treasury must come
Ito the relief of the situation" by
depositing some of it's boarded cash
in the banks. In recent years the
treasury has been carrying a large
surplus, and it has been in a po-
sition to relieve financial tension by
| 'depositing funds in the banks. In
December, 1907, following the money
panic, the special deposits in the
banks by the treasury had reached
1886 100000. Three years later they
were reduced to $4.OOO,OOO. In the
fiscal year 190S-1909 the treasury
withdrew $1OO,OCC,cOO from the
banks.
This state of affairs places in the
hands of the secretary of the treas
ury a power greater than any Amer
lean should have The power of
the secretary to influence the money
market by deposits or Withdrawals
of public funds is always danger
Gus. No government officer should
have this power. 1t has been a
great burden, l believe, on the
shoulders Of every recent secretary
of the treasury department. '..#,
If the people realized how dan
gerous is the power in the hands
of the secretary of the treasury,
they would insist that the treasury
be at once taken out of the bank
ing business Accustomed as we are
to government interference with
the money market, few of us real
ize how the treasury in the past
few years has exercised the CEN
trail bank function of regulating the
discount rate The treasury, by al
ternate deposits and Withdrawals of
the public money in the banks, as
we'll as by other devices, has at
tempted to regulate the discount
rate.
The treasury department should
be divorced from the money mar
ket and from the banking business,
and the way to effect the reform is
plain. We should have in this coun-
try a quasi-public institution not
only to hold the ultimate cash re-
serves of the banks and to regulate
the rate Of discount, but to act as
the fiscal agent of the government.
Such an institution would hold the
government balances as deposits,
and the government could check
against them just as any large bus,
mess concern checks against it's
balances in the bank With the gov
eminent balances deposited in such
an institution, the business of the
country would never be disturbed
by the treasury boarding up cash,
and the secretary of the treasury
would no longer be forced to med
die in the money market.
New Banking System Urged.
Taking the government out Of
the banking business is only one
phase of the reform of our bank
ing and currency system in which
all Americans should be deeply in
tereSted. The principal require
ments of a new banking and eur.
rency measure are that it shall pro-
vide a practical immunity from Sc
rious panics-such an immunity as
is enjoyed by the other leading
financial nations: that it shall abol-
ic1, no ho1 rN,.1s
nary stringencies in the money
market, which keep relations be-
tween the bankers and the business
men of the country almost continu-
ously at skies and sevens; that it
shall remove the defects of our do
nestle exchanges; that it shall en-.
large and develop the facilities of
our foreign exchange system; THAT
it shall properly develop the dis
count market; that it shall whole
somely assist in regulating the in.
terest rates and making them uni.
form throughout the country; that
it shall put an end to the tend
ency which forces our bank bal
ances into speculative channels, and
save them for regular trade and
commerce. To meet the case it is
necessary to have an elastic cur
rency, available reserves and every
necessary provision and power both
to permit and to check the expan-
sion of loans a.aF o..
The new banking system will also
have to provide with distinctness
and completeness ample banking ia.
cilities for our foreign commerce
a commerce that with the proper
governmental encouragement will be
worldwide and world-varied It is
idle to expect that we shall ever
have a developed foreign commerce
without developed foreign bank
ing system.
AS long as VIE have the present
banking and currency system, we
shall have panics- and no longer,
Does not this alone create state
of emergency? What doubt should
there be Of the urgency of this leg,
islation? Why should it take an
other wasteful and degrading panic
to impress congress? Why cannot
1907 suffice? There are many other
things of prime Importance to be
secured through momentary reform,
but if nothing were to be secured
but emancipation from panics, there
would be abundant imperative rea-
sons for immediate action by con,