The sun., 1913-12-22

IT'S GOOD AND BAD POINTS

tionizing the financial system to which the
country has adapted itself in the course OF
half century Is no small political tri-
umph. Everybody will hope that the party
in power will be sobered by the astonish-
| ing rapidly OF It's success with large
! mea sures and will be ready to make haste
slowly with other monentous political in
novations while business and industry and
finance are digestlng tariff revision and
the big change in the fiscal system which
! impends. Nevertheless the mere achieve
ment OF currency legislation accomplishes
nothing for the general welfare unless the
| law enacted conduces TO a sounder pros
perity and more widespread diffusion
Of II. II is one thing to pass law Of
| far reaching consequence. 1t is another
thins to insure that its consequences shall
I've desirable and promote popular inter-
! csts. For GOOD or ILL., however, new fnnn-
| cial facilities are about to hc provided in
the United States by the establishment uf
! new banking and currency system. and
| II is OF most Importance at this time to
recognize In this a factor OF more tre-
mendous potency than all the other favor
able and unfavorable influences with which
! the banking and business community has
had to reckon with in the past year.
Nobody knows how the new financial
system is going TO work. but Il can he
predicted that on all sides disposition
will be shown to make the best of II. As
the prospect has been regarded for several
months II appeared To discerning observers
that there was In the outlook for new
currency legislation a promise OF a far
earlier restoration Of prosperous activity
In general business and in the financial
markets than has been commonly sup
poSpl II would no only tn-JuN ~
too great expectations were prcmaturely
held of the beneficial operations OF the
new banking and currency system. The
contracting volumes OF trade and the
shrinkage OF values In most directions
even though they denote wholesome proc
esses OF liquidation correctly" of no It'll"
unsoundness In the economic situation.
are distinctly unpleasant. They pr.dis-
pose men to view hopefully legislative
provision which seems likely 10 facilitate
expansion Of credit and stimulate buying
power. At the same time the worst fears
which have been felt abou, the workings
OF the new currency law. once II went into
effect. may not he any more fully realized
than the earliest optimistic antic!pations.
Congress some time ago made II clear
that 1t would pass n law full Of much dis
appointment for sincere and intelligent
campaigners in behalf Of barking and
currency reform. II gave evidence that
II intended to enact legislation which
would express some vicious political
theories OF finance and would e,ubodv
some pernicious doctrines relative to Tin,
nature OF credit and money. There
should be no illusion as TO the kind of
financial system which is to be set up.
1t is the product Of infationist ideas
which are translated into both the bank
ing and the currency features of the
legislation that has been under cons idera-
tion for n bare half YEAR II will lend
itself to abuse of power. to political
oppression and peryersions and X falls far
short Of anything like such "A measure of
real reform as has been demanded by
every thoughtful critic of our banking
and currency system AS il has been bu.
is shortly no longer to he. Yet making
all allowances for its defects and maiu-
tanning patriotic hope that the Govern
ment regulators of the new financial ma
chine will be competent for their heavy
task. so that mischievous contingencies
may be mnimized "A fair argument can
be made that Congress has seen and done
large part OF its duty.
Whatever disadvantages are developed
in the workings of the new system may
after all lie subordinate to the advantages
which accrue from the legislative per
ception of some essential prnciples which
had to govern financial reorganization.
This perception il denoted in various
ways among others in the provision for
greater economy in the use of the reserve
basis Of credits through a banking mobil-
ization of reserves in the leGalization of
acceptances and the provision of a dis
count market and in the device OF a note
issue which bears a relation To- business
activities and requirements. Irrcspective
of it's aspects as an organization better
fitted than the one which is being aban-
doned to deal with the stresses and strains
of acute emergency, the new system may.
IL wisely managed. enable American enter
prise more assuredly and confidently to
pursue the progressive exploitation of the
vast wealth creating resources which
nature has bestowed on the I'nited
States.
Undoubtedly another prob,em ia nre-
sented I'm the establishment of tho new
system and in making the transition from
the old IN the new. hut so far as immediate
conditions 90 the bip new factor of currency
legislation should have some heInfu, an
niication The ending of tbe Ieris,,,iv.
movement Itself eliminates one nrohlem
from the business and financial rer;onjnr
hut n much more inspirinp considerstinn
than that is furnished by tho snancial
novelty with which tho countr,. ia eu,,in
ming itself II may he that many ,nonth.
must c,apse before any actual benen, can
he derived from IT, and n may very VOL
ne that initial cxpectations will no con-
founded nv tho continuing ;nnuoncs 90
such dif,,cnlties az have had tn no con.
tended apainst in recent months sin n
,vouId hc surnri.,ny ~ tba s,,hioot no tha
neu hanlin1 svstem shou,d nat rand 10