Daily Kennebec journal., 1913-12-16
CURRENCY BILL
SEVERELY SCOR-
Ed BY Sen. ROOT.
Initiation of Credit
Will Be Caused--
Result Will Be a
Catastrophe.

a severe arraignment in the Senate,
Saturday, by Senator Elihu Root of
New York.
out statutory limitation on the issuance
of the proposed new currency. would
bring about an imitation of credit that
would result in dreadful catas-
trophe."
The note-issue section of the bill, he
said in dramatic peroration, "ex-
hibits the opinions of very great
leader of the Democratic party, whose
financial heresies have twice been re-
pudiated by the American people"
The only check to an inflated cur
rency, Senator Root commended was in
the hands of Federal Reserve Board,
appointed under the same influence
that put into this bill these false
theories, and bound to proceed in ae-
ccordance with them"
The bill was defended by Senator
Pomerene of Ohio, who opposed vigor-
ously the proposals for public owner
ship and government control of the
proposed regional banks, and declared
that the bill would relieve any finan-
cial depression now existing.
sharp differences of opinion, appear
ing in the debate on the floor, and
marked disinclination to compromise,
which was evident in corridor confer
ences between Democratic and Repub-
lican leaders, dissipated the hopes for
an early vote on the bill which nave
prevailed for several days.
Republican senators who are willing
to end debate summarily If they could
secure the elimination of certain fea-
lures of the bill. including the proposal
to guarantee bank deposits and the re-
demption of the proposed new notes
in gold or lawful money" met little
announcement and the leaders almost
gave up hope for an early vote.
Senator Root, in opening his attack
on the bill, presented an amendment
calculated to place a restriction on the
issue of the proposed government
notes, by taxing the reserves held
against the notes when they fall below
so per cent and by imposing graou
ated tax on issues above SS0O.O00,O ,O0t
and $1,000, ,000, 600. Some restrictive
amendment, he declared, was absolute,
ly necessary.
He asserted that the bill, as present
cd by Senator Owen, provided fol
"easy money for everybody" and that
anyone who could draw and sign. q
bill'' could secure currency. An infla
| tion of credit. he said could be pre-
vented only by the action of the fed
eral Reserve oBara.
European interests are watching us
closely" Senator Root said. Francs
will never forget her attempts to is
sue government money. Great Britain
still remembers her imitation troubles
Long before the crash comes the peo-
pie OF commerce and finance in Eu-
rope will have seen its approach.
But very little loss OF confidence
will not merely stop foreign investors
from buying American securities, hut
will bring tumbling back to this eoun-
try thousands of millions of our secur-
tiles. They will have to be bought, OF
the industries they represent or the
banks holding similar securities and
the American investor carrying his
business on similar securities, will &c
down to ruin.
Europe sent back 5000, 900, 900 Amer
lean securities in 1907, and that was
one of the causes of the. trouble. Last
September s200, 900, eco were sent back.
1t will take but little loss of con
fidence to bring this whole structure
tumbling down upon us. The securitie:
would have to be bought and the golt
supply of this country would go to pa,
for them.
If we enter on this career of infla-
ton we do it in the face of clearly
discernible danger, which, If realized,
Will result in a dreadful catastrophe.
Heretofore, when financial stress
came there has always been the Unit
ed States government. strong in credit,
to lend its aid. But this bill proposes
to put in pawn the credit of the Unit
ed States. and when need comes it is
the government of the United States
that is to be dscredited by the infia-
tion of its demand obligations which
it cannot pay"
Concerning the proposal that the
government should allow a body of
appointiye officers the power to bring
about this imitation, Senator Root said.
This provision exhibits the opinion
of very great leader Of the Demo-
cratic party, for whom I have a strong
regard, respect and admiration, and in
whose sincerity of purpose and good
faith I believe. Yet I am convinced
that he proposes an economic principle
which is false, which has twice been
repudiated by the American people and
the effect of which would be Injurious.
'iAnd as a matter Of course, we
ought to assume that the board which
will carry out the terms of this bill
would be appointed through the same
irresistible influence that inserted this
provision. A board appointed under
the power that wrote this section into
this bill will be bound to proceed in
accordance with the theories and
financial heresies which the country
rejected in 1896.
This bill presents the theories then
rejected. The Federal Reserve Board
so appointed would have to stand for
the same financial heresy."