Daily capital journal. (Salem, Oregon) 1903-1919, 1913-10-16
BANK OF
CONTROL NECESSARY
Permanent and Successful Currency
Reform Possible Only Through
This Means, Says italian.
SWITZERLAND OFFERS AN
EXAMPLE OF ITS SUCCESS
Tried Having Banks Throughout Lit
tie Republic, But Found Single
Central Bank Best.
UNITED PRESS LEASED wIRE.1

lbNiAbD A-A4AoAD
Rome, Oct. 16.-That a permanent
and successful currency reform in the
United States can only be effected by
the establishment of central bank Of
control-not, however, under the direc-
tion of bankers as advocated by Form
er Senator Aldrich--is the belief of
Luigi Luzzatti, former minister of
Italian finances, former prime minister |
of Italy, and who recently refused the
post of financial adviser to the new
Chinese republic. In an article pre-
pared by him for the United Press he
today gives his views on the proposed
currency legislation in the United
States, as follows:
F'There has already been noted the
clamor with which the Americans of
the United States decided upon some
time ago and completed their investi-
cation Of the question of banks of
issue for the purpose of reforming their
present inadequate currency system.
"At that time all Europe was levied
upon for information and Italy's con-
tribution was competently made by Sig
nor Canovai. | did not at that time
make any comment, not because of lack
of courtesy or lack of interest, but
merely because | was then at the head
of the government. Now, l must admit,
/ am not sorry 1 kept silent In fact
the proposed laws for the reform of
the currency in the United States, which
have followed the investigation into
the question Of banks of issue, appear
to me most strange. 1t is not, indeed,
to be wondered at that no one, not even
President Wilson, is satisfied with them.
"In the first place, believe, Former
Senator Aldrich, who was the moving
genius of the currency investigation,
wished to create a single central bank
administered by bankers. His plan was
open to many criticisms, both in sub
stance and in form, but the idea, how
ever, Of single central bank is un-
questionably the right one. Now, /
believe, the latest proposed law, would
furnish bank note currency, created
by the national government, to twelve
different authorized banks Of issue or
omission which in turn would secure the
bank notes to the national government
by commercial paper and which would
maintain a guarantee reserve fund of
33 1.3 per cent of gold or other legal
money. This certainly is a more exact
conception of good banking rules, the
issuing of bank currency on commercial
; paper and the guaranteeing in part of
the currency thus issued by reserve
fund of gold or other legal money. In
this way is ended the persistence in the
, old times Of error of covering the bank
currency with government bonds. 1t
is in fact merely the adoption Of the
; new system which has already been
generally in vogue in Europe for some
time past, and which the United States
alone has been slow to adopt.
, Discounting Problem.
"However leaving to one side the
considerations aroused by the twelve
banks Of emission, which is opposed tC
the present day tendency of unity-thC
only tendency, as is to be seen il
Switzerland, that is capable of regulat
ing opportunely the currency, the sigh
exchange, the inward and outward flow
Of gold-who is going TO decide upor
the severity of the discountng of the
commercial paperl Either, in one way
or another the state will take a hant
and politics will thus enter in, discred
iting the responsibility Of the bank, o
each individual administration Of th,
twelve banks will act independent,
aud there will be twelve differen
standards Of discounting, either sever
or lax (accordng to the competition o