Ashland tidings. [volume] (Ashland, Or.) 1876-1919, 1913-08-28

government in signing promissory notes. What
is government bond but promissory note?
Nine hundred and SO million of them have
already been issued by the government, $50 mil
lion of which is deposited as security for
national bank note. Our friend Mr. Lynch, seems
to have acquesced in that for under its capitaza-
tion the First National Bank of San Francisco no
doubt, has some $50 thousand of its national bank
notes in circulation all of which are based on the
governments promissory note, and Mr. Lynch as
well as MI Irish and every other person informed
on the subject, will admit that national bank
notes are sound and acceptable currency MY
point is this: Instead of the government signing
interest-bearing promises to pay and allowing the
national banks of the country to make the profit
by issuing national bank notes against them. I
propose for the government to issue the notes
which are to be employed in this gigantic national
roads enterprise and loan them to the states with
out interest, the states paying only 2 per cent
year retirement fund and the government retir-
ing the notes at that rate"
Mr.. Irish: "One billion dollars in good roads
notes would increase the per capita circulation
about 33 1-3 per cent Do you not think that
would be dangerous experiment and result in a
deprecated currency"
Mr.. Greer: 1T would not depreciate the dol
lar. I contend that the government can safely
issue 2 " billions of them without danger AS
the legal tender currency increases the bank credit
currency will decrease. While the form of ~
billions OF our currency would change from bank
currency to legal tender the total amount in cir
culation would remain stationary, because that is
controlled by demand l might say here how
ever, that our present credit bank money affords
a useful currency because of its elasticity The
total sum of bank currency in circulation at any
given time is governed by the demands of com
merce at the time, and it is based on interest
bearing obligations it affords fairly flexible and
sate money medium because the interest charge
always retires it when not needed and demand
expands it when needed long as it's operation
is not hindered by artificial means But the dan
ger in it lies in the with which it can be
manipulated by designing interests, for it is only
necessary to arficialy obstruct credit to greatly
contract bank currency circulation, making liqui-
dation difficult and raising interest rates propor-
tionately. Keep in mind. it is always the business
of the money loaner to get the best rate he can"
Mr.. Irish: Then you would create vacuum
in credit and fill it with fiat money"
Mr.. Greer: mot at all. In the first place, the
currency propose is not fiat in the that the
present treasury notes fiat-<they are issued
by the government, based government credit,
while the notes l propose are of the same charac-
ter as our present national bank notes. the only
difference being that they based on- state in
stead of government bonds and the issue is made
directly by the government to the states instead
of to the banks to be loaned to those desiring to
employ the funds"
Mr.. Irish: "You have not yet replied to my
query as to the danger of such large legal tender
issue you propose"
Mr.. Greer: when we remember that during
the period that the per capita circulation of the
country was increasing from "a dollars to SO dol
lars, amounting to about one-third the CONNER
cia transactions of the United States increased
doll apito
not dangerous then, why should the proposed issue
be dangerous now? For, after increase our cir
culating medium 1 billion, or even Y billion,
more, the per capita circulation will not then be
as great in it's relation to the business of the
country as was the "a dollars per capita. And
further, statistics show that bank credits increased
during that period in about the same proportion
as commercial transactions, which, according to
my habits of thought, proves conclusivey that in
lieu of adequate legal tender issue to meet increas-
ing need for a circulating medium bank credits
have been expanded to meet it until now the bank
ing SYSTEMS promises to pay in legal tender are
laid on small foundation of legal tender with
which to liquidate to amount to menace not
only to the commerce of the country but to the
banking system as well, for the inverted pyramid
of bank credits has become so top heavy that it
trembles under the slightest touch of varying po-
litca breezes and bends to its foundation under
the Influence of designing hand, so pow
erfully illustrated in the panic of 1907, when to
save the system from utter ruin it was compelled
to resort to the unheard of expedient of concur
rent action in refusing to liqudate in legal tender
and issuing clearing house certificates in lieu of
cash."