OCR Text |
Show REMEDIES FOR FINANCIAL PANICS. There is considerable discussion these days as to currency reform, elastic currency, etc.. but, as the subject is an abstruse one, tho average reader has neither the time nor the inclination to go deeply deep-ly into it. However, money supply is what causes good or bad times, and people are affected by its , influence in their daily struggle for this world'.-. I goods, becoming wealthy or penniless, according as j the supply of money is adequate or inadequate, and whether it is sound money or unsound. The supply of gold and silver as money would not le one quarter enough to do the business .of the country. Paper money is therefore used, to the extent of more than three times the amount of coin in use. Some of this money is issued by the United States government, and some by various banks throughout the country. In order that this papc money may not depreciate, the government agrees to pay gold for it at any time on presentation at tho treasury in Washington. People do not want the gold, and so long as they knolv they can get it at any time, they are perfectly content to take the paper money at its full face vak. The money issued is-sued by the banks is guaranteed I y the government in the same way, and in order ttii "protect itself from loss through the failure of th Lbanks. the government govern-ment requires the banks to dej: osit the full amount with the treasurer at "Washing ton, receiving therefor there-for a like amount of government bonds. This is the system, briefly, which has been in use for many years. The total aftiount of money now in circulation in this country isapwards of two and a half billion dollars, or a little(over thirty dollars for each man, woman and child. On account of the growing business of the country, and the danger of people getting panic-stricken and locking up several sev-eral hundred millions of this money, thereby making mak-ing it impossible for business men to pay tho banks, and for the banks to pay their depositors, the bankers bank-ers of the country have for some years been trying to devise a currency whieh will expand in times of emergency, or stretch like an elastic, and then, when the emergency is over, will automatically go back to normal. If such a thing existed in 1872, the worst panic in history would have been averted, millions of people would have been saved from distress dis-tress and want, and there would have been continuous contin-uous prosperity and progress instead of several years of stagnation. The plan now agreed upon by the Bankers' Association As-sociation is briefly as follows: Allow banks to print and issue money by depositing depos-iting only five per cent of the amount with the treasurer at Washington. The amount thus issued must not exceed one-fourth of the capital of the bank. The government agrees to redeem these notes in lawful money at any time. In order that the banks will not be too free in the issuing of this money, they must pay the government a tax equaling equal-ing about three per cent per annum on the amount outstanding. This i? an inducement to the brinks to retire such money or notes as soon as money gets plentiful In addition to the above, the banks may, in an emergency, issue other notes or money, upon which they must pay the government five per cent interest-per interest-per annum. On account of the high rate, the banks will naturally issue this kind only in extreme emergency. emer-gency. The government agree"s to redeem this kind also on presentation. Such an agreement on the part of the government is necessary to give such money any value, as otherwise it would be simply wildcat currency. .The banks issuing such money agree with the government to redeem it on presentation presen-tation in lawful money. Such a plan, if enacted into law, would, in case of necessity, .increase the volume of money over three hundred millions of dollars, or about one-eighth one-eighth the amount now in circulation. The tax or interest charged the banks by the government would be put into a fund, with which to redeem the notes of such banks as might fail. The statistics for the past fifty years show that such a percentage would take care of such notes, and leave an enormous enor-mous sum besides, which would be accumulating at interest. ' If there is any objection to this plan, it is difficult dif-ficult to see' it. It would increase the supply of money at critical times,' and as it would be expensive expen-sive for banks to keep it up, it is natural to expect that jt would be decreased when the critical time t ' I I ! ...... ..,(... ..; was passed. The money would be sound, hecnu- (t guaranteed by the government, and the govern inent would in turn be protected again-r lo-s. n;, very knowledge amongst business men that such :i thing could be done might prevent a panie. ''! , panic of 193 was caused by sentiment merely fear that there might be a panic, whieh caused pc- ple to b-ek money up in safety deposit boxes. aii thus caused the panic The niea-iire is not y, enacted into law. but it will be presented u ..:,. gross at its next session, and doubtless will In- ma-'..- into a law in substantially the above form. |