Imperial Valley press., 1913-10-16
Bv Hon. Luigi LuzZatti
Former Prime Minister Of Italy and
ex-Minister of Finance.


Written for the United Press.)
There has already been noted the
clamor with which the Americans of
/ the United States decided upon some
time AGO and completed their investi-
cation Of the question of banks of is
/ ste for the purpose Of reforming their
PRESENT inadequate currency system.
At that time all Europe was levied
upon for information and Italy's con-
tribution was competently made by
S!gnor Canovai. l did not at shat time
make any comment, not because of
lacl; of courtesy or lack Of interest,
bUt merely because / was then at the
head of the government. Now, must
admit, am not sorry kept silent. IN
fact, the proposed laws for the re-
form of the currency in the United
States, which have followed the in
vestigation into the question of banks
of issue, appear to me most strange.
Il is not, indeed, to be wondered al
that no one, not even President Will
son, is satisfied with them.
In the first place, l believe, former
Senator Aldrich, who was the moving
genius of the currency investigation,
wished to create a single central bank
administered by bankers. His plan
was open to many criticisms, both in
substance and in form, but the idea,
however, of a single central bank is
unquestionably the right one. Now,
l believe, the latest proposed law
would furnish bank note currency,
created by the national government,
to twelve different authorized banks
of issue or emission which in turn
would secure the bank notes to the
national government by commercial
paper and which would maintain
guarantee reserve fund of 80 1-3 per
cent of gold or other legal money
This certainly is a more exact con-
ception of good banking rules, the is
suing of bank currency on commercial
paper and the guaranteeing in part Of
the currency thus issued by a reserve
fund of gold or other legal money. In
this way is ended the persistence in
the old times Of error of covering the
bank currency with government bonds.
1t is in fact merely the adoption of
the new system which has already
been generally in vogue in Europe for
some time past, and which the United
States alone has been slow to adopt.
However, leaving to one side the
considerations aroused by the twelve
banks of emission, which is opposed TO
the present day tendency of unity
the only tendency, as is to be seen
in Switzerland, that is capable of reg
ulating opportunely the currency, the
sight exchange, the inward and out
ward flow of gold-who is going 20
decide upon the severity of the dis
counting of the commercial paper?
Either, in one way or another the state
will take hand and politics will thus
enter in, discrediting the responsible
ity of the bank, or each individual ad-
ministration of the twleve banks will
act independently and there will be
twelve different standards of dis
counting, either severe or lax (ac-
cording to the competition of other
banks, a spirit of absolute rigidity,
ETC., etc, which will determine the
soundness of the bank currency IN
circulation, in which case the doubts
thus created will react in moments of
financial crisis on the banks of ennis.
sion themselves, thus aggravating the
condition Of the industrial markets.
In fact, the grand studies which
have been made by the United States
upon the currency question have up
to the present moment resulted only
in grand confusion and the United
States has failed to have the courage
shown by another sister republic
that of Switzerland, which also had
several banks Of emission, in the dif-
ferent cantons as we'll as at Geneva
and elsewhere, and which, after many
quiet Investigations, with the usual
Swiss way Of doing things, finished
with instituting a single central bank
Of state. This approaches to the
highest type Of The German empire.
which holding onto the vital forces Of
the old institutions, enjoys a happy
autonomy, succeeds in guaranteeing
perfectly It's bank notes, and above al
serves the national circulation in
stead Of making the national circd-
l@tion serve it, thus improving the ev-
change with foreign countries and di.
minishing the outflow Of the metal
currency.
However, one cannot lose hope that
President Wilson, who succeeded in
obtaining his tariff reform, will also
succeed in securing sound and healthy
principles in the control and issuance
Of the national currency.