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About The commoner. (Lincoln, Neb.) 1901-1923 | View Entire Issue (June 19, 1908)
t-flSFJPP JV . r3f o v JUNE l'V 19,0.8' The Commoner. 7 THE REPUBLICAN CURE. FOR PANICS &' . jp- Careful Summary of Emergency Currency Law is ProtectedHow the Depositor is Ignored-- How Wall Street A Dishonest Bill- (Fjrom the Denver Dally News) Careful Summary ' of thouEmcrgency Currency Law' Here is a careful summary" of the '.'emer gency currency "law," the law which the do-notlw Ing congress passed at the last moment. It Is a confused, rambling bill; hard to reduce to orderly' meaning; but we believe we have here stated that meaning fairly. We call particular attention to the way in which the republican party protects the interests of the bank depositors. Now for the law: Before any emergency can even be asked for, national currency associations must be formed. These must consist of at least ten banks, each of which must have an unimpaired capital, and a surplus of twenty per cent; and the total capital and surplus of the association must not be less than. $5,000,1100. No bank can belong to more than one currency association. No bank can be kept out of an association in its district, if it can meet the requirements of the law. No association can be formed of wide ly separated banks, scattered over the country; and no more than one association can be formed in any one city. The currency association must file with the secretary of the treasury of the United States a certificate giving its name, the names of its members, and other information. On doing so, the association becomes at once, a corporation, with corporate rights and privileges. The association is governed by the usual officers and an executive board of five members. Having caught the hare, that is, having formed the association, . the next thing is the application for emergency currency. The pro cedure is rather involved. Any bank belpnging to a currency associa tion may make application to the association for emergency currency, depositing, at the same time, securities with the association. The offi cers of the association examine the securities, and pass the application on to the comptroller of the currency. The comptroller passes it on to the secretary of the treasury. The secretary looks into the matter, and if the securities seem good to him, if the bank making application has a regular circulation equal to forty per cent of its capital 'stock, and the conditions warrant such an action, he orders the Issuance of de sired currency. This is supplied to the bank by the government. The securities on which currency may be issued include "commercial paper," and the bonds of any city, county, Basis state, or town, which has for had a good record of pay- Currency , ing Its debts, principal and interest, for tho pre vious ten years, and which does not owe more than ten per cent of its assessed valuation. Banks depositing these state or municipal bonds may secure emergency currency to the amount of ninety per cent of the cash value of the bonds. Banks depositing other securities can secure only seventy-five per cent of their cash value In emergency currency. There are sev eral other restrictions. No bank may secure currency to tho amount of more than thirty per cent of the commercial paper it deposits, with the association. If it de posits state or municipal bonds, it can secure more than this, but always the total circulation, emergency, and regular, of any bank must be limited to the amount of its capital and surplus. The total issue of emergency currency In the United States must .never exceed $500,000,000. The currency thus issued is secured to tho holder by the United States government, which will redeem in coin all emergency currency pre sented at the United States treasury. The government is secured against Moss In several ways. In the first place, the issuance of th,e currency is in all cases left to the dis cretion of the secretary of the treasury. In the second place, "the banks, and the assets of all banks, belonging to the association, shall be jointly and severally liable to the United States for the redemption of such additional cir culation." In the third place, whenever state or mu nicipal bonds are made the basis of emergency currency, the title to those bonds is vested, ipso facto, in tho treasurer of tho United States, to be held in trust for the association. Finally, each- bank must keep on deposit with the treas urer of the United States money to the amount of five per cent of its emergency circulation. The treasurer can use this fund at need to redeem the circulation of any bank that has become In solvent. Tho emergency currency is distributed among the states In proportion to the capital and surplus of the national banks of thoso states. But if Colorado, for example, should not use up its possible emergency currency privileges, the secretary of the treasury could allow any adjoining state to take up tho balance. Wall Street will approve this provision. - ' . Provisions aro made for the manner in which the emergency notes are retired. A tax is levied at the rate of five per cent per year for the first month, and one per cent a month for each month more that an emergency note is outstanding, until the tax reaches ten per cent per year. In Scotland the average life of a credit note is a little over thirty days; in Canada about forty-five days. The tax would, there fore, cut" little figure. That is about all. But wo haven't told tho safeguards for the bank depositor? Gentle reader, there What are no safeguards for tho of tho bank depositor. Tho bank Depositor? depositor isn't even men tioned in tho whole bill. The wise men of the republican party who passed this hotch-potch didn't know, apparently, that such a thing as a bank depositor existed. You know it, and. we know it, you know and we know, that the bank depositor starts every panic that is ever started; that if he could be made secure the problem of emergency currency would be nothing more than getting out a cir culating medium to meet the varying volumes of business. But the republican party in' con gress doesn't know this to judge from the bill that parly has Bent out. Here is a bill, designed to prevent panics like that which swept over the land last fall. And nowhere In the bill do you find tho slight est mention of tho cause of that and all other .- "ITS PRESENT RANK". The Pittsburg Gazette-Times is quite sure that if 'the 'United- States is- to "maintain its , present rank and' continile as a leading factor in preserving the peace of the world" it must' build 'many more battleships and keep pace with naval growth of other countries. Time was when tho United States was recognized as the "greatest factor In preserving the peace of tho world," but it was not because of battleships and largo standing armies and imperialism dis guised as altruism. It was so recognized be cause of its peaceful example and tho profits accruing therefrom. The Gazette-Times points to what it calls the "helplessness of China'.' to show whither the peace at any price policy may lead, but this Is neither fair nor logical. " at any price" has never been the policy of this nation, and the only time that any foreign nation thought to impose upon the supposed helpless ness of the United States supposed because we had no boasted navy that foreign nation received a very lasting, lesson. An adequate navy does not mean a navy better than any other. It does not mean that we must enter Into rivalry with other nations in the building of battleships. The power of a righteous ex ample is greater than the power of "Dread noughts" and "Thunderers," and the sooner we dispel tho dream of world power by military and naval force and return to the power of example, the better off we will be. panics tho distrust of the bank depositor; If tho situation wero not so serious, this bill would bo the most colossal joke of tho century. And tho neglect of tho bank depositor is by no meaiiB tho only fault of tho bill. It is like most comprdmlso measures It has the faults of both sides, and tho virtue of noither. phonier eh neither gives the elastic currency of the "ft II y in"" plan, nor tho direct government action of tho democratic plan. Tho machinery for Issuing tho emergency currency is so roundabout that half a dozen panics could bo well under way boforo the circulating medium could get out. Tho plan for distributing it insures tho benefit of 'o big ' J money centers, and while they would doubtless' . permit the rest of the land to drink at tho foun tain, they would charge handsomely for that privilege. In a real emergency thoro would not be enough trained experts in tho United States to give more than the moat cursory examination of tho securities offered as a basis for tho emer gency currency. And so one might go on rais ing very real and valid objections for an hour. But tho principal fault of tho bill is that it isn't honest. The government is asked to go into partnership with the banks, oven farther into partnership than now. When tho United States government lends its name to an enter prise, the least it can do is to insure that every one dealing' with that enterprise gets fair play. If the govornment is to co-operate in the bank ing business, then tho government must securo tho bank depositors. If this is not done, then tho govornment should withdraw altogether and meddle no more with banks than with grocery stores. Either way would be honest. But the News believes, and feels sure that the country bo- r lioves, that only one wa would be sensC'. That way is for the government to guarantee every" deposit In national banks. That is the Bryan plan, tho democratic plan, tho honest and sen sible plan. It would abolish panics at ono stroke. This done, congress could proceed with confidence to work out an emergency currency measure that would facilitate trade without at the same time facilitating tho graft of a small clique of financiers. DEMOCRATIC LITERATURE Charles Stephens, Columbus, Kan. I herewith enclose $3.60 to pay for the following subscriptions. Since the sample copies you sent mo had much to do with securing over 200 subscribers in this town recently and an organized effort is to be made to Increase Its cir culation In other towns in this county, I take tho liberty to ask you to send fifty copies of last week's paper to each of the following parties. The propf circulation of ,your pape- " ia havlnc n worwlnrfitl f - -xcOUo'ev-wiJ ' TV may some of us aro offering".110 po;!"21 .8--working hard to further JKViln- fluence. ' Vs Y Jn'g) 0 ? . -. NO DEMAND FOR IT our judgment there was neither an economic demand nor a public demand for an emergency bill. New York Tribune. fr i&& dJ i&fr ALDRICIt IS BOSS The currency commission will not -lack, a certain kind of resourcefulness with Senator Aldrlch, general manager of the United States, at Its head. Boston Herald. ' l?0 10 fi & THE WORST TO COME It Is truo that tho do-nothing congress passed a makeshift currency act, but itsrmake-' shift currency commission Is yet to bo heard from. St. Louis Republic. " a. Y' I 9 'H