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The Commoner.
VOLUME 11, NUMBER 4 J
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The Commoner.
ISSUED WEEKLY
Entorcd at the Postofflco at Lincoln, Nebraska,
as second-class matter.
WnuAU J. Btiyah
Editor and rroprlotor
SUCH Aim L. MKTCALI'K
Assocluto Editor
OnAiu.ra W. Diitan
Publisher
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THE COMMONER, Lincoln, Neb.
MOBS
Associated Press dispatch: Washington, Oct.
15. Senator Jonathan Bourne, jr., president of
the national progressive republican league, In a
statement today, took to task Cardinal Gibbons
and Archbishop Ireland for their criticism of
tho initiative, referendum and recall as practiced
in Oregon.
The senator said that both reason and ex
perience were ignored by the two prelates in
their use of the words "mob Jaw" and "moboc
racy" in making tho objection.
rt "Mobs act under the sudden impulse of anger,
fear or hatred," says the statement. "Mob
action is absolutely impossible, under the initia
tive or referendum, because there is not less
than four months of discussion before, a vote
can bo taken.
"It is also impossible under tho recall be
cause the recall can not be invoked until peti
tions have been circulated and signed by at .least
25 per cent of the voters. This takes weeks
and gives the widest publicity. Thon the recall
election can not be held within less than twenty
days after filing the petilon. Voting under such
circumstances can not bonnob action.
"Nine years experience in Oregon demon
strates that the initiative, referendum and recall
are not injurious to any personal right or legi
timate property interest'
A LESSON FOR THE H6UR
On Page 10 of this issue of The Commoner
appears an article entitled, "The Beef Trust, the
Courts and the Law's Delay A Lesson for the
Hour." This is an editorial written by B. O.
Flower and printed in the Twentieth Century
Magazine.
Head Mr. Flower's article carefully and decide
for yourself whether it Is not about time for
every American citizen to do his part in mak
ing popular government a fact.
HARLAN!
A grand American has gone.
And thus they vanish one by one,
Strong pillars of the home and state,
Illustrious among the great!
His life in home and church and state
Was glorified by truth and fate,
And every impulse of his mind
Was tuned to love his humankind.
In war and peace he played his part
With splendid soul and loving heart,
Helping the people night and day,
Their champion ever brave and gay!
He loved the truth and loved the law,
A soul without a sinning flaw,
Whose glorious, honest, loyal name
Shall shine in golden halls of fame!
John A. Joyce, Washington, D. C, in Louis
ville (Ky.) Courier-Journal.
The Aldrich Currency Plan Means a Gigantic
Currency Monopoly
Henry W. Yates, one of Nebraska's best known
citizens and president of the Nebraska National
bank, Omaha, delivered an address before the
Laymen's club, Lincoln, Neb., in which he at
tacked the Aldrich currency scheme in this
vigorous fashion:
"First, as to the legal aspects of the case:
"The constitution of the United States does
not directly give the power to congress to
authorize tho Incorporation of banks or in fact
Incorporations of any kind whatever, that being
a prerogative jealously reserved by the several
states.
"The authority to incorporate the first and
second United States banks was found in that
clause of the constitution which, after enumerat
ing the powers given to congress, goes on to
say that it may make 'all laws which shall be
necessary and proper for carrying these powers
into execution.' In the celebrated decision ren
dered by the supreme court McCullough vs.
Maryland it was declared that a bank was a
useful and essential instrument in the prosecu
tion of the fiscal operations of the government
and therefore it could be incorporated by con
gress for that purpose.
"It was against this decision that President
Jackson launched his invectives and his messages
contain what seem strong arguments to sustain
hia contention. Nevertheless that decision
settled the question as far as it goes and is the
law under which the present national banks were
created and under which the Aldrich reserve
bank must owe its existence.
"Under the Aldrich measure the national
banks are deprived of any connection whatever
with the fiscal operations of the government,
the United States bonds they hold being taken
over, together with their circulation by the re
serve association. Their incorporation there
after would be without the constitutional sanc
tion defined in the supreme court decision.
"It. is not so much a question of a technical
violation of tho construction, which in these
days is considered a matter of small account as
to what would happen to a bank if in some legal
controversy, its incorporation should be assailed.
Especially may this apply to the proposed in
corporation of trust companies and savings
banks.
"The contention for the Aldrich measure as
well as measures somewhat similar which have
heretofore been proposed is based upon the claim
that the destructive panics with which this
country has been afflicted have been occasioned
by our defective currency system, that this
currency lacks elasticity and is not responsive
to the demands of trade and commerce. This
claim has been so constantly reiterated over and
over again by persons holding high positions,
that it is natural ordinary people should be
brought to believe there is something in it.
But as a matter of fact such a thing as an
automatic circulation one increasing and de
creasing in volume with the demands of trade
has never existed and can not bo made to exist.
It Is not claimed that the volume of circulation .
is Insufficient on the contrary it is admitted
to be redundant at the present time. To get
circulation out is easy and the business of the
country will absorb it as fast as issued; but an
other question is presented when it is to be
contracted. The issuing banks can not be de
ponded upon to call it In unless it is to their
interest to do so and forced contraction will
menace the public Interest and can not be
undertaken with impunity. A circulation once
issued and absorbed becomes a part of the
operating capital of the country and its destruc
tion by bank failures or its withdrawal will
havo the same effect as the destruction or with
drawal of a similar amount of capital in any
other form. The panic of 1873 was caused by
the attempt to withdraw the legal tender notes
which were never intended to remain In circu
lation. The process demanded a drain upon
the existing capital supply of the country which
it could not stand. The undertaking ceased and
hence we have the.legal tender notes still a part
of our circulation. Great Britain has a currency
similar to our own and no more elastic than
ours, yet with one-fourth of our volume that
country is enabled to handle the finances of the
world. The fixed circulation of the Bank of
England which corresponds to our national cur
rency has at times been increased but has never
bee decreased. Contraction would have the
same effect there that it has in this country.
"Tho trouble is not with our currency but
this has been seized upon to justify the most
remarkable attempts, ever undertaken to change
the fundamental basis of our banking business,
and convert it into a system somewhat like that
of European countries.
"The problem which Senator Aldrich has
undertaken to solve is a difficult one.
"The particular object of all the so-called
currency reform movements is to replace our
present bond secured circulation with the un
secured promises to pay of the bank or banks
organized for the purpose and to accomplish
this some proposition must be concocted that
the public may bo induced to approve.
"The American bankers' plan, which left the
privilege with the existing banks, had died
aborning; and the central bank plan at first pro
posed, although vigorously and ably pushed, did
not receive sufficient public encouragement to
justify even an attempt to get it adopted.
"The plan submitted by Senator Aldrich
seems to meet the objections raised to the other
schemes.
"Apparently all the banks in the country are
eligible for membership in the reserve associa
tion as It is called, and the central bank pro
posed, owned and managed exclusively by tho
banks, meets the views of those who would
favor one which should be, as they state it, the
servant of the banks and not their master.
"The centralization of Bank assets proposed
for times of panic might be depended upon to
prevent their occurrence or if they did occur
would enable the banks to meet them with
equanimity. These features would naturally
gain the support of banks.
"The partiality shown for the commercial
paper would be attractive to the great commer
cial and Industrial interests of the country.
"On the other hand the mild form of central
bank recommended would, from its weakness
alone, disarm the prejudice and antipathy so
generally existing against a great national bank.
"At the outset it should be seen that the plan
of a great banking institution being managed
and controlled by the many thousands of banks
in the country would be impracticable. Their
connection with the bank would necessarily be
perfunctory and somewhat similar to that ex
hibited in the cases of membership in the great
mutual life insurance companies. The bank
would be managed and controlled by the men in
whose chaTge it would be put, subject to tho
perhaps temporary control of the clique or syn
dicate who would show the largest voting
strength. But this phase of the question need
not be considered, for the reason that the
proposition is so constructed that only a com
paratively few banks in the country would sub
scribe to the stock of the bank and doubtless
this is exactly what is intended.
"In the first place, the state banks and trust
companies are eliminated from the scheme, who
are the double, both in numbers and deposits
of the national banks. The commission has
amended the original proposition so as to in
clude state banks, but the conditions are such
that they may as well come into the national
system. The plan also provides for the organi
zation under the national law of trust com
panies and savings banks, but it will not follow
that the existing institution would find it prac
ticable or to their interests to make the radical
change that would be required. It is optional
with the national banks to join or not and their
doing so would certainly depend upon the in
ducements offered and what they would gain by
joining.
"No bank can subscribe for either more or
less than 20 per cent of the capital stock of
the reserve bank. This would tie up one-fifth
of each bank's capital, and all the return it can
receive upon the investment is & maximum
dividend of 5 per cent per annum. This divid
end may be less than 5 per cent; in fact there
may be none and in case of loss the banks would
be called upon to stand it. One-half of the
subscription must be paid in cash and the other
half will remain & liability on the books of the
bank. Aside from dividends the only induce
ment offered will be loans from the association.
As & rulo banks are not borrowers and when
they do need rediscounts they have no difficulty
in obtaining in ordinary times what they may
need from their city correspondents. There l
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