The sun. [volume] (New York [N.Y.]) 1833-1916, 1916-01-21
CALL IN GREENBACKS
RESERVE BOARD AIM
Bankers Plan Approved and
Bill Will Soon Be Drafted
for Congress.
ISSUE TOTALS S346. OO0. 900

WASHINGTON, Jan. 2O.-Committces OF
the American Bankers Association sub
mitted to-day TO the conference OF gov
crnors of the Federal reserve banks q
plan to retire and cancel the s34s.ooo' ooo
of Treasury notes commonly known as
g~reenbacks. The plan was approved by
the governors and a committee appointed
to study it In detail with a view to draft
ing a bill for submission to Congress.
The proposal WAS put forward by the
bankers as a mcans Of remedying Inc
present inflated condition OF the cur
rcncy and of warding oT the financial
ills which some authorities have pre-
dicted will result from the maintenance
of the present volume of currency. Such
predictions. 1t became known to-day. AZ
ready have been voiced to the Federal
Reserve Board.
Proponents OF the plan for cancelling
the grecnbacks expressed the opinion
that the twelve Federal reserve banks
could absorb the issue of 5000 .0oO.OOo OF
bonds which would be necessary Tor the
cancellation II IL claimed that no de-
pletion Of the amount of currency Wouiu
he involved. as the sl50,O0O.Oo OF go'n
which now In held as "A reserve BACK
OF the ~greenbacks would he released.
Against this gold. in the event OF a bus1-
ness demand for such additional cur
rency. IL was pointed out. s3to.ooo'o""
OF Federal reserve notes could he issued.
Representatives of the American
Bankers Association said that they had
two purposes in proposing tho canccUa-
ton plan. Thu first Is to provide n ready
means Of currency elasticity. 1t was
pointed gu, that the demands OK Inc
country for currency arc variable Win
the seasons and the condition OF Dusi-
ness. In the present situation the
amount OF currency Is 81 large as 10
meet all needs ard the way Is open Tor
further expansion II necessary. nut no
ready means is offered for reduction OF
the currency save through Withdrawal
Of national bank notes at the rate OF
s25. 900. 900 a year. AS provided by the
Federal reserve act.
Gold formerly was the only elastic
element in our currency. II was said pS
"A banking authority to-day, ana TINS
has lost It's elasticity AS "A result OF the
great increase In our gold supply brought
on by war business. Under present con-
ditions. II was claimed, the country mas
little demand for Federal reserve notes.
because the outstanding volume Of "
IftllNlblt ullfINs 10 hf't '''' '''
ficient for the country's needs.
one of the advocates of the green
backs cancellation scheme said to-day 4:
ut was further pointed out that the
~greenbacks have been "A tremendous "N-
pense TO the country. Instead OF being
a loan without interest their continued
existence has caused many bond issues
through which funds were secured to
redeem them. They were promises OF
the Government: to pay on demand IN
gold. When they are not 50 redcemable
they depreciate. and the credit of the
Government depends almost entirely on
it's ability to redeem according to the
contract.
since 1879 1t has cost tho United
States Government more than a billion
dollars to maintain the status OF the
.greenbacks as redeemable currency.
From 1890 to 1898 bond issucs totallins
s31i.0oo. 600 were made To secure gold
with which to redeem Treasury notes.
In 1885 more thar sl7:.o0o. 600 gold WAS
paid out by the Treasury for redemption
OF ~grecubacks, and In 1894 and 1893 more
than 5000. goo. 600 were redeemed in gold.
Yet at the end of the latter year they
were all In existence as a result OF the
law permitting them to be rcissucd.
I'm January. 1898. President cleve-
land. in a special message to Congress.
urged a 3 per cent. bond issue, the pro-
ceeds to retire and cancel Treasury
notes. In that message he said that
the time had come when the Treasury
should bc relieved from the 'humiliating
process of issuing bonds to procure gold
to he Immediately drawn for purposes
no; related to the benefit Of the Gov
eminent or our people
took no action AT that time
and IL has taken none since. The prob