Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-09-06
FEARS INITIATION
OF j. S. CURRENCY
Banker Reynolds Points Out
What He Terms Peril in
Pending Bill.
THINKS SHAFROTH PLAN
WOULD MEAN GOLD RAID
Not Banks But People Would De-
mand Coin, Chicago Financier
Tells Senators.

George NJ Reynolds Of Chicago, testi-
Tying today at the hearings Of the Sem
ate committee on banking and currency.
said he did not believe the proposed
Treasury notes. that would be issued
under the administrator plan of cur
rency revision should be made legal
tender"
I believe there would be a violent in
were made legal tender so they could be
held as part Of national banks reserve
fund.-" he said.
The notes would be taken In as reserve,
he said. and the banks would have an
added limit for the extension of loans and
credits.
Good Points Of Bill.
Mr.. Reynolds. questioned by Chairman
Owen as to the good points of the ad-
ministration plan of currency reform,
said he believed the strongest feature
in its favor was that it would provide
for proper elasticity in credits and cur
rency. He said he believed the bill would
do great good to the extent that 1t
helps in the mobilization Of reserves"
but he did not think that the bill went
far enough.
Mr.. Reynolds was asked as to the sound
ness of several plans that have been
proposed for the issuance of general
Treasury notes backed by a 80 per cent
gold reserve in place of all present paper
money. He said he believed many hold.
ers Of thee present gold certificates which
are secured by 100 per cent of gold re-
serve would demand the gold out of the
federal Treasury instead of accepting the
new notes.
do you mean the banks would organ
ize a raid on the federal Treasury - he
was asked
"Oh, no, the plan probably could be
worked out in time; but many holders
Of the present notes would undoubtedly
feel more secure with actual gold in
their hands," he said.
Division Among Financiers.
Senator Reed said that from the ex-
pressions Of the high financiers" who
have discussed the currency bill he be-
Heyed there was no settled opinion as
to currency reform.
II have not made up my mind about
a single line or word or syllable of any
bill" said Senator Reed. Il am after
general information"
The committee spent much time today
discussing a bill by Senator Shafroth to
retire all present circulating notes except
treasury notes and to issue new treasury
notes secured by a 80 per cent gold re-
serve.
Prof Sprague of Harvard University
said there could be no question about the
safety of such an issue to the limit Of the
usual volume Of circulating money. Above
the circulating volume he believed the ma
tional banks were In a better position to
control the issuance of notes than the
federal treasury, as they would exercise
a better brake on the imitation Of
credits.
During the hearings yesterday after
noon the committee was given assurance
by bankers, including James b. Forgan
and Mr.. Reynolds, that any problems of
credit contraction resulting from the en-
actment Of the pending administration
currency bill could be worked out SO
that there would be no serious effect
upon the business of the country.
Explains Credit Ratio.
Mr. Forgan gave figures to demonstrate
that under present banking conditions s.
of credit is given throughout the country
on each 81 Of actual money reserve. He
estimated that if one-third of the present
reserves were transferred to the regional
reserve banks, notwithstanding the dis
counts, banks might then receive from
the regional banks loans, and credits
would have to be reduced by 81, 500, coo, 600
to maintain the existing credit ratio OF
IS to ST. He said he thought this could
be worked out
Former Representative e. ]. Hill OF Con-
necticut said no other nation had at
tempted to make itself liable for the pay
ment of notes issued by the banks, and
insisted the government would find 1t inn
possible to secure an adequate reserve
for the purpose while, in it's attempt to
supervise the issuance of all notes. 1t in
effect would become the final judge as to
the individual credit Of every bank bor-
rover in the country.