Daily capital journal. (Salem, Oregon) 1903-1919, 1912-12-02

banking system Is deficient, and dan
/, gerously so, because reserves are not
available for each bank when needed,
because the currency does not expand
and contract with the actual needs Of
Legitimate business, and because there
Is no market for commercial paper ac-
cessible to all banks On account OF
these defects, when strngency riDens
into panlcky conditions, there Is no
way in which the banks all over the
country the small as well as the great,
can use the resources that they ac-
tually possess to meet urgent require
ments and to allay unreasonable ap-
prehenslon, He shows how in the
panics Of 1898 and 1907 this disability
worked incalculabe harm and loss,
and how the situation was dealt
with by the principal Clearing Houses
OF the country and by some Of the
smaller ones. He shows particularly
how in the city Of Columbia, S. c., the
Clearing House Issued, not merely
certificates that were to be used be-
tween banks alone, as Is the case in
New York, but certificates in small
denominations that were used as ac-
tual currency 1t was Illegal, In this
case, but 1t was never challenged, and
1t proved effective.
He proposes that practically the
principle Of the temporary device Of
Columbia shall be applied to the Ma
tlonal system There Is no doubt that
1t possesses great value. 1t would
be entirely safe, It would utilize actual
assets, II would give real aid when
and where II was needed, and II would
N no wise prevent or delay the return
,f normal conditions, It would greatly
'dyance IT, Supplemented by the pro-
lisbon for market generally avail
lble for commercial paper, It would
AVE the supreme merit that nothing
emotely resembling a money trust
ould exist, or could reasonably be
to exist. When every busI-
ess man In the furtherest corner Of
he land could be assured Of receiving
rom his local bank the credit to /,
'hlch he was legltlmately entitled on q
ne assets he possessed, with no mark ,
~ down OF securities and no extreme ~
se Of Interest, the boyle Of a money .,
'ust would find no odgment in his
ind, And the removal Of this source
mental disturbance would 90 far -.
ward maintaining the fairly even i,
nor of business throughout the land. -,
There Is little reason to expect from r.
'ngress at present any practical ac- -,
m in this direction. There is not an -
'ective public sentiment that de- ,o
lnds 1t, That sentiment must be -
'ated by intelligent discussion, and
this discussion such a paper as II
Vt Of Mr., Hepburn is an important
] valuable contribution. The pre- n
session that It will be necessary to
'rcome Is not unnatural. 1t is
ical consequence of the past ex-
'ience Of the country, which, as to
nmcrce and finance, despite its
'rmous progress is relatively
ing. The very plentltude of the re-
rces which in an imperfect and
iteful manner we have exploited,
prevented our people from reallz- 4
the underlying principle of ex- cor
nge which other countries have Is
WY worked out. But we have tho
ched n point In our evolution where SUI
30 must be taken into account. We twG
Q had stern and costly warnings ero
this effect which, II they are not but
ded, will unQuestlonably be re- Tn,
ted. tin,