The Washington herald., 1913-09-10
CURRENCY BILL.
BEFORE House
CONTINUED FROM PAGE ONE.

| unity the national banks have failed 10
| furnish 10 the nation as a whole a single
\ and powerful system of credit" says
Mr.. Glass, in explaining the defects Of
! the present system. The strength Of
! the credit situation in each country has
| descended upon the strength of the
hanks there situated, and except in
times of distress has even these COM
r1mities been measured by the strength
not of the strongest. but of the weakest
| institutions there located"
The champion of the administration
bill further points out that the country
has lacked the capacity either to pre-
vent credit disorders from breaking out
locally and spreading to the centers' or
L. defend its own resources against the
monetary demands of foreign nations or
against the infection due to bad financial
conditions in countries with which this
country maintains close relations.
Emphasizing the fact that the House
Committee has had q mass of informa-
ton and testimony obtained at various
hearings and provided 10y the National
Monetary Commission, on which TO base
its deliberations, MIR. Glass claims that
the House bill incorporates the best fea-
lures of all plans that have been sug-
gested. He sets forth the constituent ele-
ments on which the pending bill is based
as follows:
Establishment of a more nearly uniform
rate of discount throughout the United
States, and thereby the furnishing OF
certain kind of preventative against over
expansion Of credit which should be
similar in all parts of the country.
General economy OF reserves in order
that such reserves might be held ready
f. use in protecting the banks OF any
section of the country and to enable them
to go on meeting their obligations in
stead of suspending payments as SO often
in the past.
Furnishing a. an elastic currency by
the abolition Of the existing bond-secured
note issue in whole part, and the sub
stitItion OF a freely issued and ade-
quately protected system Of bank notes
which should be available TO all insti- |
tutions which had the proper class OF
paper for pres sentatiOn.
Management and commercial use of the |
funds of the government which are now !
isolated in the Treasury and subtreasur- |
les in large amounts. General supervision |
Of the banking business and furnishing |
Of stringent and careful oversight
Creation of market for commercial pa |
per.
Taking up the demand of the banking |
fraternity for a central bank, Mr.. Glass ;
states that il is not necessary to have |
1ut one single central bank in order to
obtain the combined use of the banking /
'esOurCes. which he says is the basic idea
II Capitalization. but that equally good
'esults can he obtained by federating eX
sting hanks in groups which will be suf
iCiently large to afford the cooperating
,ower which is the chief asset OF the
plan.
The suggestion OF permitting national
,anks 10 establish branch banks was dis
missed by the committee as not being
ca asibIe. and because it would necessitate
he abandonment of the free banking sys
en-.
General Points Given.
Mr Glass sums up the proposed issue
( Federal reserve Treasury notes" as
aving the following chief points: Ulti-
cate withdrawal of the circulation privi-
ege from the government bonds of all
Iasses: issue of notes by the government
through Federal reserve banks upon busi- /
ess paper held by such banks and re-
emDtion of such notes and regulation Of
heir amount outstanding at any moment
trough Federal reserve banks. So that :
he banks will facilitate the process of
ouvertng the old national bank notes !
ito the proposed new issue of Federal :
sservc Treasury notes, is the reason .
iven by Mr.. Glass for the provision OF
lc bill which gives the banks the privi- .
,ge OF exchanging the outstanding ? per /
ant circulating bonds for 3 per cent non I
rculating bonds: d
The cost to the government for con- 4
erting the bonds is estimated at nearly II
$4,000, but Mr.. Glass draws attention g
the provision which gives the Fed I
al Reserve Board the right to tax the b
ew currency, and that the government S
i'll receive a substantial share of the Il
Lrnings of the regional reserve banks. s.
e says that the bill! as II now reads Ii
i'll prove profitable to the government,
it becomes a law. Ii
What appears to be a partial approval a
the Democratic banking bill is a state Il
ent contained in the report of the Re- Il
IbIican members of the House Com n
rity members of the committee were Il
bound by their caucus action that pl
ey could not consider the amendments Of
opposed by minority members. "
Such changes, while comparatively pl
W in number" is the apparent admis- al
IN of satisfaction with much of the bi
bill, in our opinion are
ndamental and vital. The majority it
embers of the committee refuse to ct
vorably consider them on the ground fr
at they involve matters of Democratic 10
- POANg SS11SO ny Inc SGuCus II
The changes proposed I'm the minority bi
bort are in line with the suggestion with m
: Chicago conferences of bankers. The 81
publicans would not compel the banks W
come into the new system until such IN
ne as the success of the system has bI
IN demonstrated. They are opposed to in
: government assuming the obligations WI
the emergency currency note Issue tn
e other fundamental feature Of the fu
bill objected to is the power
en- the Federal Reserve Board and the ,
thod of selecting that board. The
nority takes the position that it will