Evening star., 1924-10-12
BY I. A. FLEMING.

litical faith recently recounted the
strenuous. but useless, efforts made
bv the candidate in the United States
Senate to prevent the enactment: OF
the emergency currency Legislation
of 1907. an effort in which he was
ably assisted by some gentlemen OF
the Democratic persuasion.
1t is not difficult to recall the panic
of 1907, a panic peculiar In many
respects and entirely unlike anything
that the country had ever faced be-
fore. 1t has often been called the
rich mans panic,' but it was, indeed
very serious proposition.
During that panic, Washington
bankers stood up to the rack man.
fully and honored check after check
just as they are doing today, when II
was next to impossible to get cur
rency from the banks of other cities
and New York City exchange was
selling in Chicago at a discount OF
$50 on the $1,000, the express rate on
currency at that time, in contradis-
tinction to the free transfer of this
day, made possible by the Federal
Reserve act.
In those days the New York eX-
change rate was an essential factor
in the banking business; today 1t is
nil. In that day, and for years after
the Bank of England rate and state
ment was also essential but is non
entity today, as London is no longer
the financial center of the universe.
The Emergency Currency Act.
The 1907 panic was Il money panic
almost entirely. created by the in
elasticity of the National Banking
Act in it's effect on the currency OF
the nation
Naturally it hit Wall street first.
and hit it like a regular cyclone. All
outside banks demanded their money,
Withdrawing millions from the caIi
loan market The result was sharp
calling of loans and smashing de-
clines in the stock and bond lists.
1t required gold or silver dollars'
almost, to get accommodations from
bankers, the usual collateral being
considered as of small value OF re-
fused consideration at all.
The Secretary Of the treasury
turned loose a few millions. but the
panic run its course.
Hoped to Prevent Recurrence.
A Washington man came TO the
front during this summer, l9of. In
an effort to prevent future pan1cs OF
this character. conceivinS the spien-
did idea of bridging over the time be-
tween then and the passage OF a. ne"
currency bill, then largely talked o.
by the enactment of an emergency
measure on so-called asset currency:
Charles c. Glover, then president OF
the Riggs National Bank. sponsored
the measure and made such a strong
presentation of the needs for such
legislation on Former Senator AID
ridge, head of the banking and cur
rency committee in the Senate ana
also of the monetary commission ap-
pointed at that session of Congr ess.
that he secured his support. later
bringing to his views Former Repre-
sentative vreeland. New York
banker. the chairman Of the banking
and currency committee or the
House; Representative Fowler hav-
ing a measure of his own to which
he was committed.
Underwood were also convinced by
Mr.. GIoyer's argument that Congress
should not adjourn without putting
this emergency legislation into ef-
feet.
The House passed the measure.
providing for the formation of cur
rency associations in the various
cities by clearing house associations;
the appointment Of an examination
by each association with
authority to examine and pass upon
assets offered for security for cur
rency.
Emergency Funds Arranged.
The Controller of the Currency
was authorized to have prepared
currency to the amount Of
100000, 900. which would be Kept on
hand available on demand through
deposit of approved collateral, should
it be needed.
Senator La Toilette, assisted by
then Senator Stone and then Senator
Owen and a few other Democrats con-
Quoted a real fillibuster against this
measure. in the Senate, talking for
many continuous hours and rendering
void all the finesSe and adroitness OF
Aldrich. master politician that he
was.
Finally, however, there came a
time when a slip-up in the plans of
the opposition opened the way and
Aldrich quickly secured roll call
and the adoption of the measure.
Senator La Toilette, in his state
ment a few days ago, charged that
had been taken Of the
blind Senator Gore, who on finishing
MS lOHS duuIc IcSS, elIO0ohS 1/o SAASeSN
was waiting and ready to take this
place, and that the roll call was
started in his absence.
1t Served n Purpose.
1t was fortunate, indeed, if this was
the case. Emergency currency was
forgotten for some years; monetary
was appointed and toured
the old world looking over the cur
rency systems. 1t was a mixed COM
mission, non-partisan in way, with
Senator Aldrich as chairman. A Ii
brary of international currency and
banking practices was the result;
also the presentation of Federal
reserve bill similar to the act later
adopted and approved, and now lin
force, save that it provided for one
center banking. system, after the
manner of the Bank of England.
Later the Democrats amended the
law with a central board
of control and the IL main offices and
later branches were established in
other cities, centers Of business.
W.. Not In Eject In 1914. i...
The Federal Reserve Act was passed
in 1913, but the system was not ready
to function when the zero hour struck
that sent the world into the mighty
struggle that ended in November. 1918.
With the immediate declaration of
war. stocks commenced to melt away
in value and bonds followed. 1t seemed
for a time as If there was no bottom
and then the emergency currency meas
ure was brought into use in the big
cities. 1t helped to stem the tide. 1t
was more powerful than as originally
passed, for Mr.. Glover had pressed
for the enactment Of an amendment in
creasing the volume Of emergency TO
5 200, 100000.
England and all other foreign coun-
tries interested in American securities
-ushed their holdings of Americans into
Wall street and for a time the decline
was uncheckabIe. 49,