The sun., 1916-02-14
Further Currency Reform Needed.

Flush times such ms the European
war has made for mis- country tend
TO obscure the intensely practical vi
sion which our law makers should
have. There Is much TO be done in
the way OF legislation 10 safeguard
the American financial aud industrial
future, and very little IL being done
about il. Congress IS wasting time
in talk about an infinite variety of
matters With every prospect that ac-
tion along constructive lines Will be
postponed until after the Presidential
election next fall.
There are many subjects to choose
from. some In respect 70 which II
might he difficult 10 obtain early
agreement without the expression Of
public opinion in the vote next No
vcmbcr. There Is danger in delaying
action in regard 10 most Of them. and
postponement increases the risk that
the business and banking organization
may eventually have 10 adjust itself
10 emergency measures.
An illustration is afforded by the
imperfections of the Federal Reserve
act. These are numerous and certain
Of them are positive menace, but
the comfortable circumstances OF n
redundant money market which
hardly permits the Federal Reserve
system 10 function at all as vet pre-
vents an adequate political apprecia-
tion of amendatory necessities.
As an accomplishment Of currency
reform the Federal Reserve act falls
far short of what Is practically at
tainable. II holds ont assurance
against the worst ravnges of financial
panic in the sense that, to speak fig
uratively. II provides plenty of water
to put out the fire of panic and keep
It from becoming n connagration.
Otherwise It Is III adapted to our
present and future needs. because It
provides for an excess OF water in
our currency at all times.
The American Bankers Association.
through Its official publication. urges
legislation 70 retire the grccnbacks
which the Federal Reserve net pre-
serves In the process OF putting more
new patches on our currency. The
bankers are quite right in arguing for
the retirement OF this relic of the
civil war, for the greenbacks offer
nothing but potentiality of trouble
as long as they nre included In our
forms OF money. Simply because they
were battle born an unwise sentiment
has been an obstacle 10 their elimina-
tion, aided by the soft money dclu.
sion which n good deal of our politics
continues 10 represent.
retention Of the greenbacks is that
they foster the unsoundncss Of legal
tender ideas which have persistent
popularity in many American conS,if-
uencies. There is always n hazard that
in some crisis the greeuhacks will of.
fer encouragement for the enactment
of crazy currency statutes. The fun
damcntal objection 10 them Is that
they now constitute an element Of ad-
imitation in n currency sys-
TEN which still contains too many
elements Of Imitation. The Federal
Reserve act does not, for instance,
the absolute extinction of
bond secured note circulation, but
makes provision for the emission of
such circulation hy the Federal Re
serve banks, although the national
banks may give it up
In ia" times 10 come "" are going
to have use for all the financial
strength and stability which We are
able Ia establish during line mri,ni Of
the European war, An integral pnrt
Of tho foundation which must SUD
port the structure of credit. which
"" ar" raising rs Wa expand com.
and induStrullv. Is the gold
stock forming the bank rcscrvc basis
~ credits and guaranteeing tho
soundness Of tho dollars IN which tho
world must. even more than now, ac-