U niversity of O regon M onthly
11
last session of Congress passed without making any provisions for
a need long recognized by economists and practical business men.
The recent financial panic, however, seemed to furnish a final
and decisive argument in favor of a more elastic currency. Our
.present monetary system seems almost wholly lacking in flexibility
and seems incapable of standing even a moderate strain. The is-:
sue of clearing house certificates by' local Associations' of bankers,
aS a temporary makeshift and without authorization of law, called
attention to the wisdom of providing for à recurring need in a
regular and orderly way' The present Congress is expected to reach
some solution of the currency problem. At present, however, there
seems to be little prospect'of an agreement between the two houses.
The Senate is considering'a bill authorizing national banks to issue
in times of stress not, over $250,000,000 of emergency currency se
cured by deposits of state and municipal bonds and subject to a
tax of one-half of one per cent, a month—a rate sufficient to secure
its retirement in ordinary times. In its present shape the plan
seems open to serious objections. The issue of notes would prob
ably depend largely, on the pricé of state and municipal bonds avail
able; •Îof’àecurify and the process- of' getting the notes into circula
tion Would be a slow and cumbersome one? Furthermore, nothing
is'offered to correct the defects of the present .system of redemption.
The lower house is engaged in formulating a plan that promises fo
approve itself to> studehts of monetary problems, for if proposes
to do away with the present vicious system of bond-secured circula-
tioh and to substitute à bank currency equal in amount tô capital
of the banks and'secured by the general assets and a guarantee fund
contributed “by the issuing banks. A system of this Sort,-coupled
with adequate provisions for redemption, would combine perfect
security With the requisite elasticity but the scheme is probably too
radical to command the respect of the senate.
—J. H. Gilbert.
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