New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-12-15
Senator Root on the Danger of Cur
renew Initiation.

Djsnatches describe the Senate as being I'M
nressed nv Senator Roots speech upon the dangers
of imitation that exist in the administration cur
rency bin. 1t could hardly have failed to be I'M
pressed Mr.. Root lsid his hand in sure way upon
the weaknesses of the bill and of the party respon-
sibe for it.
An enormous increase in the nations currency
will be possible if the bill becomes law And CON
ditons in this country justify Mr. Roots belief that
sooner or later the currency supply VIII DE over
expanded The pressure to increase note issues
will be irresistible in a period OF optimism anu
rapid business expansion. And, moreover, the
party now in power is full ef infationst ideas AS
Mr. Root well said, the man who shaped the cur
rency bill so that no limit was placed upon currency
expansion was the man who led the Democratic
party in its free silver campaign, and his influence
would be powerful in the Federal Reserve Board
which would alone stand in the way of imitation II
the currency bill should be adopted unamended.
All schools of thought have influenced the forma-
ton of the currency bill And the result is that II
is inconsistent with itself. There are those VINO
hold that practically no limit except that imposed
by the necessity of maintaining reserves is neces-
sary upon the issue of banknotes. But the notes
which they have in mind the paper OF the banks
alone and spring directly from the business transac
tons Of the community, bearing about the same re-
lation to those business transactions as the volume
of checks does and requiring limitation hardy
more than the issuance of checks does Ihere Is
much to be said for this view. Much experience
bears it out, though the plan has never been tried
on such a scale as prevails in this country, nor
under the conditions existing here. Such cur
rency is truly elastic, with proper retirement ma
chinery rising and falling automatically.
The trainers of the administration bill have
chosen to adopt just this much of that theory.
They have fixed no limit their proposed note
issues except the discretion Of the Federal Board
and they have done little to make sure that the Fed
eral Board will have the necessary discretion They
have provided for notes which would be issued by
banks but made obligations of the government.
They have made the volume of the notes dependent
upon the will of a government board. They have
given the notes something of the character Of
money. They have thus mixed other principles with
tat which underes the theory Of asset currency,
and this makes dubious the plan Of fixing no limit
upon the notes to be issued and providing no means
to impel their prompt retirement when they may be
Overssued.
A much safe" system would be provided if the bill
We're amended as Mr.. Root proposes and gradu-
ated tax furnished check TO the issue Of notes
above certain limit and motive for the retire
ment of notes issued in excess Of that limit soon
as they had served their purpose. If experience
showed that the limit upon untaxed notes might
safely be enlarged future Congresses could readily
amend the law, and thus allow for greater cur
rency expansion. 1t will be well for Congress to
heed Mr.. Roots warning Of the dangers of expan-
sion and throw greater safeguards about the opera
ton Of the new system than will be afforded by the
discretion of the Federal Board