The diamond drill. (Crystal Falls, Iron County, Mich.) 1887-1996, 1913-02-22
Principle
Continued From Last Week J

Continued From Last Week.
time that expanding business in mann
featuring and mercantile industries
demands larger volume of bank cred
il. The harvesting Of bumper CROPS
therefore puts burden ON all other
business
Our present bond secured bank cur
rency, q relic of the Civil War, is alb
solutely unresponsive to the needs OF
business. Its volume is fixed by the
amount OF and market for United
States bonds, by which i is secured
The deposit currency lchecks drawn
against bank deposits) is highly elias
tic. 1t expands and contracts to meet
the demand OF business. If the deposit
currency were universally used in the
agricultural regions our currency pro
blenI would be simple. But so long as
large amount of currency to pass
from hand to hand IS needed at every
harvest season, 1t Is our duty 10 pro-
vide this currency on scientific basis.
We can solve the problem by giving
ID the country banks means OF obtain
ing currency from a quasi-pubiic IN
stitution through the discount with 1t
OF the paper, based on agriculture that
they carry in their portfolios Cur
rency so issued will contract in.volume
ms easily as IL expands. because the
copsumption of the goods on which the
paper IL based will readily liquidate
the paper.
The United States is not the only
country in which the power to issue
circulating notes is given to many in
dividual banks issuing notes. In other
countries the note-issuine function has
been turned over 70 single institutions
under government supervision. we
ought TO give to such an institution
the sole power TO issue notes, and pro.
vide that these notes be largely based
on gold. II we provide such a national
currency. based on gold and high
grade. short.time commercial paper.
our currency will not only expand and
contrat 10 meet the demands of bust
ness but IL will be- as sound as any
currency in the world.
No more circulating notes should be
issued by individual banks. and the
present issue Of some $700. 600. 600 ma
tional bank notes should be- replaced
ultimately by the notes Of the national
institution. Means must be provided
Of refunding the United States bonds
now owned by the banks and deposited
with the Treasury as security for these
notes. II the government takes the
note circulating privilege away from
these bonds, thereby reducing theii
market value, then. as "a matter ol
honest business. IL must exchange
them for bonds that will command al
high a price. This conversion could ,
made by giving 3 per cent bonds foI
the present per cents. The bonds o.
our govern ment Ought TO sell in the
world markets on an investment basi
and not ut fictitious prices In a marke
made solely by the national banks.
In our international relations. on
unscientifio and defective banking
Systcp places us at a great disadvan
tags,
j Re-, foraign trade now reaches a..
coo. 600. 600 a year, exceeding that Q
avery other country but England. |
il not only carried in foreign bottoms
but u is financed by foreign bankers
: We canuot build at ONE merchants
marine to carry our trade, but we ca
an amend our banking laws that "
will be in position TO finance IT,
England is now largely engaged
financing the trade OF the world. DC
cause she has adapted her bankin
system TO world requirements. We al
the richest country In the world an
we have.the largest stock Of gold IN th
. world vet we must pay tribute to fo'
elgn bankers for financing our owe
seas trade. LikewIse, In spite Oh OF
great resources. we must periodical
ask foreign banks TO save us from u
crises brought ON hy our unsound ~
tenn OF credit.
We can take our place ~ an ln1e
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