Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1914-09-19

to the passage of the federal reserve
bank law. He showed that in 1868
there were about 10000 kinds OF bank
notes in existence and a banker in
those days had 10 have what was
called a "detector" in which was listed
tie various notes in use. The civil
war pointed out that a uniform cur
rency was needed, as we'll as 4 plan to
finance the government during the car
rying on of the struggle. Therefore.
under the national banking act of 1868.
notes based on the bonds of the United
States were issued. This measure,
however, was a fair weather law. and
at four different times It failed; in
1854. 1880, 1898 and 1907. Whenever
unusual strain was placed upon it,
panic resulted.
I'm the first three instances ther1
were political conditions involved. but
in 1907 there was no commercial up
heaval," said Mr. Dawson. 1t was
purely a financial panic. brought on
BY solely by local conditions in New
York City. 4 run was started on n
bank there, and New York banks
called in their funds from Chicago, and
Chicago from the country banks, and
as . result specie payments had to
cease and clearing house certificates
be issued. That panic brought about
the passage of the Aldrich bill in 1908
and a national monetary commission
was appointed under its provisions to
study financial systems OF the old !
world
The four kinds of paper money now /
in use were explained. The speaker |,
showed that over three billions and |
half Of money in circulation at the
present time, of which a billion and a
half are gold certificates; S75O,OOO.-
BOO silver certificates; $4,000. 900
greenbacks; and $3.50, 1000 goo national
bank notes, based on bonds OF United
States.
Elasticity Needed.
THE chief difficulty with the pres
snt financial system is a lack of elias
ticity," declared Mr.. Dawson. No
provision IS made for the extension
md expansion of currency and credit
It the times our big crops are har-
'ested. An expansion of several NIL
ions of dollars is needed to tide the
country over these periods. Another
iefect is the lack of cooperation
.mong banks.
Under the old reserve laws 10 per
.ent of the capital stock of national
ranks must be held against the de-
4 I
lily in the vaults. In times Of stress
his forced banks TO attempt to call
n as much money as possible, and the
esult was a frenzied contest among I
he banks, which made times hard and :
ash scarce"
Features of Plan.
The chief features of the new rel
erve plan include the establishment :
f u regional banks. each to be man
ged by nine men, six chosen by the l
oard Of directors and three by the I
ederaI commission" explained the a
peaker. Every national bank in each {
egion will be required to buy stock
o the value OF per cent of it's CAPT q
al and surplus, from which per cent
cumulative dividends will be paid. !
his will be a permanent investment. {
tate banks will haTB tho privilege of !
Oining the movement II they so de- /
ire" :
The federal reserve board will fix
he rate Of discount, which will he pub |
shed daily. A local bank would take d
ne notes of merchants here, endorse d
hem and send them to the regional q
ank at Chicago for re-discount, where t
ctUaI currency or credit would be
fven in return. The federal banks /
i'll have but two customers, the gov s
rnment and the member banks. They t
i'll be bankers banks and will fur 7
ish a means of replenishing the re- 5
,rves Of the individual institutions" ]
Lower Interest Rates.
1T will be seen that through the q
of the rate at which notes
i'll be re-discOunted, there will be-
Established a tendency TO lower inter
Il rates, for, If the Chicago rate OF I
scount is 3Iz per cent, it will DO a
cry difficult for Texas TO charge 10 S
I'd y per cent. The new plan Will
ZIP the bankers, even If it lowers in
rest rates. II will produce a stable 7
arket, a standard for commercial J
lper. II will tend to keep money in i
= own community instead of central T.
ing fl at New York City, as has been +
le custom in the past" :
Phil Mitchell was called on, but re- /
aimed from discussing the financial
iestion- He did take occasion 10 re- Y
r 70 his favorite theme Of good roads, a
Id declared that he depIored the ac- O
on OF The board OF supervisors in re- /,
lsing 10 place the 100000 bond d
sue on the ballot. \
1T was not so much what they Gid, II
u how they did 81, that concerns +
O." he declared They went into A
.cret session and killed the plan
OweVeF we are not discouraged, and
" keep I'd the light" a