The Mitchell capital. (Mitchell, Dakota [S.D.]) 1879-1918, 1914-01-08
A SAFE CURRENCY.
R-AstH

A SAFE CURRENCY.
That the charge of Ex-senator
Aldrich and President Vanderlip of
the Standard Oil bank in New York
City, of a purpose by congress to es-
tablish a fiat currency" of the sort
advocated by William Jennings Bry-
an in 1896, was wholly unwarranted
and unture, is best evidenced by the
bin itself. An interesting statement
has just been made sby Festus j..
Wade, president of the Mercantile
Trust Company of st. Louis, CON
tanning a comparison between the
bank note currency created by the
new law, and the bank notes of the
three greatest European banks.
namely, those of London, Paris and
Berlin.
Following is his statement:
Bank of England Notes: Secured
by gold, but may be paid IS per cent
! gold and % per cent tn silver, at
the option of the governing board.
More than 20 per cent of the pre-
sent outstanding Bank of England
notes are now secured not by gold.
but by the debt of the British gov
eminent.
Bank of France Notes: Are pay
able in gold, but the governors of the
bank may, at any time, elect to pay
all OF such notes in silver.
Bank of Germany Notes Reich-
bank): Are payable in gold, but may
be paid In silver at the option of the
bank governors.
All of the three banks above nam
ed are private institutions. There Is
no government obligation behind
them, nor are there pledges by any
act Of English parliament, or the ma
tional assembly OF France, or of the
Reichstag of Germany, which binds
these governments to protect their
notes by payment in gold.
1.-THE references tt the currency
system OF England, France and Ger
many nre made simply to show COM
paratively, and thus better point out
the soundness of our basis for reserve
bank notes. 1t is not to be under
stood that comparison indicates any
m1sglvings on u part that the notes
or these great countries will not be
paid In gold or that there is not abso-
lutte confidence in the security of the
pound sterling, the franc of the
mark.
Reserve bank notes of the United
St9tes of America are secured as fol-
lows:
'(a.) BY the pledge of the govern
ment to pay such notes presented to
the treasury at Washington in gold,
on demand.
OBJ BY the obligation of any fed
erai reserve bank to pay said notes in
gold or lawful money on demand.
"(c.) BY the obligation .of each
federal reserve bank never to issue
Tin fact it would not be possible to
secure them) federal reserve notes
unless 1t satisfies the federal reserve
board at Washington, that it has:
CD At least 40 per cent of gold in
Its vaults to redeem all notes it
issues. CD In addition to this 40
per cent gold reserve, it must have at
least 100 per cent of notes so issued.
secured by prime commercial paper
worth at least 100 per cent for every
note issued; and this is coupled WIN
the obligation of each member-bank
taking out such notes. that the COM
mercial paper SO offered will be paid
at maturity. CD Such notes are Sc
cured by the entire capital stock of
each federal reserve bank, which
capital cannot be less than $4,000
900 for any n bank. In addition
there is the security of the double
liability of every share of stock own
ed by each member-bank."
1t will appear from the above COM
p~arison that the currency to be issued
under the new system will be the best
secured of any authorized by any of
the great nations. 1t is the first cur
.rency in the world to be based direct
ly on assets owned by private individ-
iuals and pledged as security for
loans. 1t is fixed. more rigidly upon
the gold standard than that of any
other country. 1T is somewhat iron
ical that the gold standard should
be adopted uncompromisingly by an
administration numbering among its
important officials the one who led
the attack upon the gold standard
as productive Of the %country's finan-
cial and industrial embarrassments.
The political phases, however, are
of comparatively little interest to the
public. 1t is of supreme Importance