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ASSET CURRENCY
lfor (ho beno.'ll of IIkjmp renders of The Com
Yiionei who are not familiar with tlio argument
advanced (0 hIiow I he necessity of asset currency
loglulnlloii, the following quotations will ho made.
After referring lo Secretary Shaw's plan in Ills
annual iiioswaso to congress President Koosevoit
mild;
would lend to prevent. Hie spasms of high
money and speeulallon which now obtain in
Hie New York market; for al present there
Ih loo much euireney a( certain seasons of
(lie year, and its accumulation at New York
templH hankers lo lend it al low rales for
speculalive purposes; whereas, al other times,
when the crops are being moved there is
urgent need for a large, bul lemporary, in
crease in the currency supply."
Tile comptroller of the currency, Mr. Kidg
foy, in his annual report refers to "the great value
of crops and products which have to be moved
at certain seasons, calling for large and varying
amounts of cash," and says thai "the autumn of
each year makes more apparent the urgent neces
sity of some additional facility or means by which
the demand for the crop-moving fund can be sup
plied," and thai "the necessity for this is alwavs
most acutely fell In the lale summer and early
autumn, or at crop-moving time."
While President Roosevelt refers lo the high
interest rates on call loans in the New York eall
money market, and argues that' an addition to the
circulating medium in the shape of bank notes
would tend lo prevent il, yet his main argument
for an asset currency is that a large, but lem
orary, Increase of currency Is needed to move
the crops. And that Is the argument usually put
forth by all advocates of an asset currency, and
this argument is used because it sounds good and
Is more likely to be accepted by the masses than
any argument they could bring forward.
One would naturally expect that a law which
is lo provide an increase in the currency supply
for the sole purpose of moving the crops would
contain some provision specifying the time uf
year when the issues of bank notes may be made
especially in view of Mr Kidgley's statement iix-
ng he time when such increase is needed as
he autumn of each year" and again as the
late summer and early autumn." As not a single
asset currency bill that has been prepared, either
in congress or out of it, contains ho slightest
reference as to the time of year when bahks mav
Issue asset notes, the argument that such note's
are to bo used solely for moving the crops falls
0 the ground. The absence of a provision fixing
the time for issuing assel notes shows that the
advocates of the measure are insincere.
If congress passes an asset currency 'law with
out a provision speclneally lixing the tine of year
when banks may issue asset notes and the time
when such issues must be retired, Wall Street si ec-
with.n I , Uni!h UU opportunity for issuing t em
within ninety dajs, and when the banks issue
them to the legal limit Wall Street will be cry? '
for more. Secretary Shaw, in a resume of lo
;iu'lnl record for the year' 1900 which ap oared
in the papers on January 1, i)07, states thit 1?,
money in circulation increased o-er ?Ooioo 000
during he year. Notwithstanding tills vast in
J"J or the year found Wall Itreet spec-
1 tors struggling with high rates of interest 0,1
will loans and beseeching the secretary of the tret s
wry to come lo their rescue. The proposed asset
currency law, it is estimated, will permit the "
suaiice or about $200,000,000 of hank notes aid
as that ,,,(. was absorbed last year with v
Street crying for more, there is eery nrob ibllitv
bo absorbed in the same way i
President ltoosevelt, as well as all othor n,i
vocates of an asset currency, co ntc is t a it
notes are "to bo taved -if J ; H ,' f llle assot
'.t or iC , Jt I oS rar." ,tor forty "ei'
W so una wtat wnito'm't,"
The Commoner.
crop-moving lime comes around we shall hear the
same did story.
Hul grant that the tax will keep the notes
back until crop-moving time comes and also drive
the notes back when crop-moving time is over,
why should money for crop-moving be taxed and
money for all other purposes, including stock
gambling, go untaxed V To be sure the issuing"
bank will pay this tax directly, but it will event
ually and inevitably fall upon those who borrow
the money the fanners and farm laborers. Is
it because the farmers and farm laborers arc
getting rich too fast that the republican party pro
poses to compel them to accept taxed money for
their labor? If this bill passes and the taxed asset
notes are used only for crop-moving, the farmer
will he compelled to accept less for his produce,
for he will have to pay the tax.
Referring again to the above quotation from
President Jloosovolt's message, particular atten
tion is invited to the statement that "at present
there is loo much currency at certain seasons of
Ihe year, and its accumulation at New York tempts
bankers to lend it at low rates for speculative
purposes." if there isj.00 much money at certain
seasons of the year with the present volume, it
should be retired and reissued when legitimate
trade demands an increase. To permit it to re
main in circulation when not wanted in legiti
mate trade means that it will bo used in illegiti
mate trade, that is, it will be used to "bull" the
stock and bond market, or raise prices of stock
and bonds, and this in turn furnishes an opportu
nity to overcharge the public lo pay dividends
on inflated values. Every increase in the value
of railroad slocks furnishes an excuse for exorbi
tant freight and passenger rales, or at least an
excuse for not lowering transportation charges.
The remedy proposed by an asset currency law
will make matters worse in every way, for instead
of bettering conditions the increase of currency
will make money still cheaper, that is, prices
higher, and the stringency at crop-moving time
will be felt more than ever. Instead of making
it possible for the national banks to inflate the cur
rency still more, the national banking law should
be amended so that the present bond-secured cir
culation can not be increased except at certain
seasons of the year when it is known that legiti
mate trade demands more money. Under the law
as it stands national banks are permitted to issue
bond-secured notes whenever they choose to do so,
and they usually issue them when not needed la
legitimate trade. In a published letter to Mr. J.
II. Schiff dated February 7, 190G, Secretary Shaw
pointed out that the New York city banks in
creased their circulation $5,000,000 during July and
August, 1005, when money was plentiful and actu
ally contracted their circulation $2,750,000 during
the months of October and November, 1905.
Our financial history of the past forty years
should convince any intelligent, fair-minded man
that it will not do to give the national banks the
power to expand and contract the volume of cur
rency to suit their interests. If more money is
needed at crop-moving time it is the duty of the
government to issue it, and not delegate the power
to irresponsible hands. B. E. V.
OOOO
RAILWAYS AND POSTAL SERVICE
The San Francisco Star prints this strong in
dictment: b
Nowhere is graft more brazenly practiced tlrm
in the carrying of the United States mails No
where does the bare-faced robbery of the American
people exhibit at once the depUis of moral turpitude
to which the government itself has fallen aid the
absolute and imperious power exerted by the
rupt railway interests over the recreant miliiio
servants than are seen in the contracts with to
railways for mail service. The postal doflcit Is a
deficit only because our railways are owned bv
private parties on the one hand, and because the
government is also the servant of these rnscrun
ulous interests on the other. In his i niiX? '
The Railways and the Postal ServlV Professor
Parsons lays bare this unholy alliance on the S
of a department of government wihU?e railways
for the carriage of the mails Whiin ??ftl arfies
in other countries earrS'maTls for S lwa
at cost, our government has To pay ,nuei h ,1 0P
rates than private slUnrW m,,?aI, Vluch .hSor
the transmission of inte ligence is 0 0 of tT, ?"? 0Jl
handicaps resulting from mi ff . ,c Wl'st
tern. PorliniTn?lnii,.01ir.ransPO,tatloii sys-
tho government from tvly receI from
as they get from the ovnrn. . os as m"ch
kmof for equal
rylng commutation nnZ11 SQt for car-
VOLUME 7, NUMI5ER n
what they receive for some of their dairy m-in,
and sixteen times what tliqy get for the m-,
common freight." , s of
Professor Parsons cites at length from i-.-.r,,,
sor Henry O. Adams of Michigan: University ti,
statistician of the United States Commerce 7w,
mission, giving Professor Adams' tables .r Z.
which he continues: ' r
"On these estimates the railway receipt from
the express between New York and Boston w,,,,
average 50 cents nor hnnrlrnri. mii ..i. u
first-class freight, against 89 cents for the m uZ
New York to Chicago. 75 cents freight ei -' ':.
equal weights and d stances two? ba??age
tl-ir charges for WlAfiB, SSS
press and $3.5G mail; New York to Atlanta"". S1 -i
freight, $2 express, and $3.50 mail; Chicago 'To
Milwaukee, 25 cents freight, 30 cents express
cents mail per hundred (this seems fairly reason,
able); New York to San Francisco, S?3 froiHu
$G.7o express, and $13.28 mail (this seems u-rv
unreasonable); Atlanta to Savannah, Gl co,ts
freight, 87 cents express, and $3.17 mail (more un.
reasonable still).
"These and other data too numerous for m
sertion here indicate that as a rule railways vp
ceivc for express 50 to" 100 per cent more than r.ir
first-class freight, and for mail 100 to 300 per cc,t
more than for express.
"A specific case will show more clearly ti.o
relation betwen railway receipts from mail aul
express. The New York Central gets 40 per n-.it
of the gross earnings of the express company
operating over its line. The result is the following
relation between mail and express for the route
from New York to Buffalo, 439 miles:
Railway earnings per year for 125 tons
of mail daily ?l,447,sin
Railway earnings per year for 125 tons
of express daily 430,j:.o
"Railway officers claim that the value received
from the express should be put somewhat above
the 40 per cent contract division of earnings be
cause the express performs some gratuitous' ser
vice in the handling of railway packages, etc., but
even make full allowance for this and all other
elaims of the railroads in relation to such com
parison, as Adams does on page 22 of the 'Rail
way Mail Pay' report, the railway value from
express would only bo $570,312 in the above state
ment, against $1,447,840 from the mail without
counting receipts for postal-car rentals or value
resulting from the stimulation of traffic duo to
the mails.
The census of 1S90 affords the means of a
very broad and instructive comparison. From that
census we learn that the express companies naid
the railways $19,327,000 for carrying 3,292,000,000
pounds of express matter, or 6-10 of a cent a
pound. The same year Postmaster General Wan
amaker reported the weight of the mail, paid and
free, to ba, 3G5,3G8,417 pounds, or 1-9 of the ex
press weight, and by no means all of this was car-
by, the railways, yet they received $22,102,
000 for less than a tenth of the weight the railways
hauled for the express companies for several mil
lions less money. The rate per pound on mail was
fully ten times the rate per pound on express.
Ihe average haul for express is estimated at 25
to 50 per cent less than for mail. So that the ton
mile rate for mail appears to have been at least
live times as much as for express, according to the
qIoo0.,00118118 and thc postmaster general.
rSvninJ To Pross companies have carefully
ief rained from allowing the census people or any
s?rvrUnbl enau1tnories to acquire the facta neces-
L2? a bl0ad and accurate comparison.
J.ne express companies carry magazines and
SK,500 miIe? more at a celit a pound
and the railways get less than one-half a cent a
pound, or two cents a ton-mile. That Is not l
Any general express agent will tell l you that the
company will shade the rate for a large smnner
NewToSft 'Cosrarlitan cafrVd ?rPom
rsew York to Boston, 219 miles for is omta n
&atri
JLhls Is at the rate of l.G cents per ton-mile for
a tofmil88 rn?aiiynaild ee-fourths o?a cent
leSSl of tho J?,? ra,,way?' a rate about one-six-leonth
of the average mail rate and one-ninth of
the lowest mail rate on the lines where the volume
of mail is greatest. The railway i cmTrge the gov
ernment about three cents a pound for hauflng
anTe gChtcettaC,Cirdi?g esr AdS
WHson hi,??F ooCOrdIi pstmaster General
wuson, but the same stuff for the exm-osq mm-
buS rales Sl2nd ""y, serious objection to
vldea against them ?n tte SoSStaSS ftrtth tte'K
Dress companies. u wlm me ex
ran Steae""04' to bo" """Star than tin
snoumyDJoDabIy boTe? Sa? Sff ""WW and
baggage rate. It Is Ttrafflo aWilT1''160 cxoos3
eas..y bandlefl, JS&&2SS,
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