Brownsville herald. [volume] (Brownsville, Tex.) 1910-current, 1912-09-11
BANKERS DISCUSS
CURRENCY REFORM
NATI0NNAL RESERVE ASS0CIA-
TION FAVORED BY BONYGNE
Speaker Held that Loaning Power o.
Banks ic Unduly Restricted at
Tmise When Credit to Solvent Men
Should be extended
"A esOciated Press.

| Associated Press.
Detroit, Mich, Sep 1O.-Now i
the time for critics of the proposed
national reserve as 7ociationfi recon-
mended by the national monetary
commission. to come forward and
point out wha. they believe 10 br
defects in the plan. in the opinion
Robert W. Bonynge. member Of tho
commission, who addressed =
American Bankers As ociation ir
convention here today. Mr.
Bonynge's address was on "Bankinr
and Currency Reform" He spoke
in part, as follows:
Our banking and currency sys
TEN i universally recognized ae
thoroughly unsound. All he politi
cal parties have declared in thci-
platforms Of this year in favor Of III
reformation. but no specific remedin
legislation has been proposed by
any. 1t is perhaps better that he
should not have done So The prob
lem is essentially an economic and
business question.
"The defects in the existing sys-
tenn that must be remedied no mat
ter which party is charged with tn h'
responsibilities of legislation are
our unscientifc treatment Of ban'
reserves, the rigidi y of our entirc
credit system and the lack of co
operation between our independen
banks.
"Our present system restricts tn
loaning power of banks at tim"
when reserves should be freely used
and credit literally extended to sol
vent business men and thereby inten
SITES, if it does not actually produce
ranics. Our scattered reserves arc
wholly ineffective for use in emer-
gencies. Our bank notes do not
fluctuate in respon~e to business
needs Even the commercial pape-
held by the bank is not truly liquif
asset with us. Each separate ban
in times of stress i concerned ONLY
in strengthening its reserve. Thr
sole method available for that pur-
pose is The calling Of loans. TIL
portion of reserves held in the vault
of our thousands of Independent
banks IS for all practical purpose
a dead asset. Indeed. rigidity stamps
itself upon our entire credit organ
ization.
! eve have only local banks. The
furnish banking facilities o thei'
own communities They are indi7.
pensible. But it must be obvious
that these strictly local institutions
can not look after or provide for thc
general credit conditions of tn
country at large.
"As it was found necessary tc
organize the federal government f
guard our national interests and e
legislate on those subjects affectin0
us as a nation, so we must have som
national federation of the banks fo'
national financial purposes. Thf
independence Of the uni : must hr
absolutely preserved. The power
given to the federation of the bank
must be strictly limited to those tha'
are ma ional in character The form
Of organization must be such as n
insure its operation in the interest
of and as a support to all Legitimate
business and must be wholly fire.
from sectional. poll ical or selfish
financial control.
"When thus organized it must he
empowered to act as custodian for
the reserves of the banks, to redis-
count their short time commercial
paper. to provide 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 4
fiscal agent, and to represent us in
All national and all international
financial affairs.
'sThe experience Of the world
proves thai currency issued py
government or by government
owned institution always lacks the
essential element of elasticity Us
amount i determined by The gov
ernments needs and fixed by statu-
tory provisions which can not DC
speedily altered to meet changlne
conditions. The government issue
money, and may and should in th'
Interest of the public regulate tn
agency or agencies which may, II
accordance with certain genera
principles that it establishes, issu
credit redeemable in lawful money
1t il for these reasons that the l.
suance Of bank note currency shoul'
be in.rusted to the federation 0
banks, under regulations TO be pre-
scribed by the statute and strict gov
ernment supervision through II
own officers.
with a cooperative federation O
our banks es' ablished. having IN
necessary powers to protect our gen
eral credit conditions, bankin
- 90 ., fnr xx-o1a1