The Salt Lake tribune. [volume] (Salt Lake City, Utah) 1890-current, 1913-04-17
PRoUTY CURRENCY BILL,

We see that representative S. T.
Prouty of the Des Moines district, Iowa,
has introduced an emergency currency
measure which provides for the coutin-
gent issue Of notes by national banks
under direction of the Comptroller of
the Currency whenever there is a money
panic. His purpose is to provide cur
rency scheme that will do away with
the Clearinghouse certificates and that
will afford actual currency in place of
mere cashiers checks or clearing house
paper when the currency is locked up
as il was in 1907.
Representative Prouty s idea is that
by the operation of this bill which he
proposes, the currency will not be
locked up and cannot be locked up, be,
cause enough Of it will be provided for
all possible needs. The bill authorizes
tho issue Of this currency under limita-
tions stated, and makes it crime to
put it in circulation without proper au-
thority. The emergency currency is to
bo printed exactly as other bank cur
rency, and its payment guaranteed, as
in other cases, by the United States.
Possibly the $500,0O0,0oo of emergency
currency that has already been prepared
by tho Secretary Of the Treasury could
be used under the Prouty bill.
Among the provisions Of this bill is
one that the bank issuing it is required
to pay interest to the Government on
the currency it puts forth in a grad.
ually rising scale. If these notes re-
main outstanding for ninety days the
tax will be five per cent; if double that
time, the tax will be six per cent, and
if for longer time, ten per cent a
year. The theory is that this tax would
force the banks to recall those notes
as soon as they were not needed for
the emergency that called them out.
This currency is to be delivered only
to thoroughly solvent banks that have
twenty per cent or moro surplus and
are found by the Comptroller to be in
good financial condition: The money
SO turned over to the banks is to be
placed in the vaults OF those banks, but
not to be issued until permission is se-
cured from the Comptroller Of the Cur
rency to do so. When bank desires
to redeem any of this money it must
deposit with the Treasurer of the United
States in lawful money the amount that
it desires to redeem, and interest will
be stopped on that amount, and the
Treasurer will withhold from circula-
tion the money thus deposited, except
gold, until like amount of emergency
notes Of the bank has been Cancelled.
The redemption is not left altogether
to the option of the bank, for if any
bank allows its emergency notes to re-
main out moro than six months the
Comptroller Of the Currency may order
a deposit by the bank for redemption,
and if this order is not obeyed in the
time and manner provided in the order,
the Comptroller may take charge of the
bank under the law for winding up in
solvent national banks. In such event.
the emergency notes thus issued would
be a first lien upon the assets of the
bank
There does not seem TO be any pro.
vision in this bill requiring the banks
TO make special deposits for the secur.
lty of this emergency currency, and iu
that respect the measure is inferior
TO the Vreeland law. II confidence
were to be fully held in the banks and
their issues, the Prouty measure would
be one that would provide simple and
effective substitutes for the clearing
house paper OF the cashiers checks.
But that is just the trouble, 1t is when
confidence is broken down that emer-
gency currency is required, and TO add
another doubtful element TO the cur.
roncy situation would be not a help
but a calamity,
Back Of all such propositions, how
ever, is the general proposition that
the currency system should be thor
oughly revised and made sufficient in
and Of itself to prevent or take care
Of any money shortage or panic that
might begin or be precipitated by ir
responsible and designing men upon the
country. Panaceas, such as special
measures TO cover particular cases, are
exactly what ought not to be considered
at this time, Tho Vreelaud law could
be continued until Congress is ready to
make this thorough revision and over.
hauling of Our currency system, and the
Vreeland law is certainly better
proposition than this Prouty measure,
as 1t requires security, and provides
for the release Of the emergency cur
rency direct by the Secretary Of the
Treasury, thus avoiding all possible
cause for lack of confidence,
1t is said that there is not much
likelihood of currency legislation at the
present extra session of Congress; and
if this Prouty bill is sample of what
we might expect IN such legislation, it
is just as well 10 let the subject drop.