New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-04-23
CANNON SUBMITS PLAN
0F FLEXIBLE CURRENCY
Would Make Clearing Houses
CuarantorS OF Good Com
merCial Paper.
WITH NOTE ISSUE POWERS
And Organization Into lncorpo-
rated Associations in
Sub Treasury
Cities.
WITH NOTE ISSUE POWERS
rBy Telegraph to The Tribune !

INV feieEi dnn 10 me INlDuuc
pbradelphis. April 22.-Financial panics
nav bo eliminated by utilizing clearing
souses as guarantors of good CONNER
.sl paper according 10 James G. Can
non president Of the Fourth National
Rank OF New York who spoke tonight
=, the annual dinner of the Philadelphia
l'rsdit Mems Association.
IT IS impossible" said Nj Cannon.
far national bank advantageously to
assist in providing currency in times Of
nsnic under our present laws. IT, how
sver the power TO issue notes against
GOOD commercial paper either at face
,alue or at a percentage of face value.
vas lodged with one central association.
,r since that seems improbable of &C
,omplishment, then with several asso-
iations. or through the sub-treasulfes.
ynder federal supervision. the situation
rould he entirely different
II believe that the clearing houses
ould he utilized as guarantors OF such
commercial paper. thus providing an alb
soute assurance that no loss would ever
occur 10 holders OF currency 50 issued.
This would entirely eliminate the fear of
recurring money stringencies and enable
rs 10 enjoy the comfortable feeling that
our currency was on basis of elasticity
whereby il would respond TO such de
mands as might be placed upon it by
the expansion and contraction Of our
trade and commerce.
4 have believed for considerable
tine. and so expressed myself as far
hack as 1907. that clearing houses should
be Incorporated, and I reiterated that be
lief before the Pujo committee in June
n last year. II has become the order Of
the day that when any body OF men eX-
srcises power which affects the country
at large, or any great portion of the
public, that power or authority. although
ostensiby private. is. nevertheless, i'm
PRESSED with a public character There
fore. i should he subject 10 govern
mental regulation. irrespective Of the
manner in which it may have been ad-
ninistered in the past.
Incorporation Essential.
And so IL has seemed 10 me that If
me clearing house is 10 form the nucleus
o. q comprehensive currency system In
TINS country, as some of us believe 10 he
possible. one OF the first requisites is
adequate provision for Incorporation. Ny
own preference would be for a federal
corporation law, something after the
gder Of the national bank act"
Granting. as We already have the
hsnker went on. expatiating on his pro-
Nsal that public prejudice is suffi-
GENTLY strong al the present time, TO dis
,ourage the hope that the creation Of
.sntral association. even though IL be not
& bank j. possible OF accomplishment,
ny idea is 10 provide by federal law for
corporation Of all clearing houses, and
'rther for the incorpora ton Of district
association in each OF the Sub-Treasury
cites. 10 comprise as members the regu-
arly incorporated clearing houses nat
urslly contiguous TO such Sub-Treasury
cities respectively. these bodies 10 have
powers and functions a. hen einafter set
iorth
Among the functions TO be lodged with
these district associations ] would name
iso the importance of which We nave
slready discussed First: These associa-
ions should be empowered TO hold part
the reserves Of the clearing house
ranks In their respective districts. when
districts should be clearly defined BY
statute Second: They should be empoN-
red and required 10 rediscount SUCH mer-
sntile paper as might be submitted 10
hem BY the individual clearing houses
NTH their guarantee, which would mean
ne Joint guarantee OF all the .nstitu-
ions comprising their membership. Such
PAPER should be limited as 10 maturity
and be the outerowth Of bona fde com
msrciai transactions, as distinguished
ron accommodation or collateral loan
PAPER.
TO take care of the third function, that
note issue ] would be IN favor OF the
government providing notes. to he held
IN The b-Treasuri under proper safe
guards. The district associations should
% empowered 10 deposit with the sub
Treasures 50 much Of the commercial pa
per rediscOunted bV them for the ipdl-
aoual clearing house associations, or,
10 other words. for their members as
might be necessary 20 meet the demands
f such members for currency and re-
ave therefor notes to certain per
'enlsge OF the face value OF the mercan-
me paper thus offered
Government Supervision.
Ia addition TO this. l would Suggest
soVernment board. 40 e composed OF the
secretary Of the Treasury. the Treasurer
% the United States and the Controller
VI the Currency. TO meet weekly ana
'ased upon reports received from the man
ayers Of the district associations a. 10
onditions in their respective districts
and upon such other information AS they
night be able 10 gather. to name the rae
I discount which would apply on al
cans made by the district ASSOCIATIONS
% the interim. The ability Of this ooaru
" raise or lower the rate or discount
1pon paper offered TO the district associa-
uots for discount, OF for the purpose OF
ssclrlng currency, would be an important
neck upon excessive note issues ana
.hfoueh the associations. gold coulo DC
aUTscted or repealed by the acton VI
ms board with respect TO the rates u