! . LIBRARY Sound vs* Soft Money c4DDRESS OF cANDREW J. FRAME President Waukesha, (Wisj National ^ank ===== (Against == c/JSSET CURRENCY In Reply to cAddresses in Favor Thereof by Congress- man Chas. N Fo'wler, of Neft^ Jersey, and Hon* James H. Eckels, President of the Commercial National Bank of Chicago, BEFORE THE WISCONSIN STATE "BANKERS' cASSOCIATION cAT MILWAUKEE, cAVG. 5th AND 6th, 1903 DISPATCH PRINT, WAUKESHA. WIS. The Jury decides (Against c/lsset Currency and Branch Banking. READ A FEW COMMENTS FROM METROPOLITAN JOURNALS The nilwaukee Evening Wisconsin says: "The Wisconsin Bankers' Association is against branch banking, and is not in favor of asset currency. That is the tenor of the resolutions whicli it adopted yesterday after listening to the elaborate arguments of James H. Eckels and Congressman Fowler in advocacy of asset currency and tlie solid and brilliant address of Andrew J. Frame against it. Mr. Frame's address pierces the panoply of the asset currency form of fiat- ist at every point." The Milwaukee Journal: "Neither the persuasive oratory of Congressman Charles X. Fow- ler nor the careful elucidation of James H. Eckels was sufficient to convince the Wisconsin Bank- ers' Association, Thursday, that credit currency was wliat the people desire. The resolutions (m the currency system adopted by the association apparently infer that the sense of the convention tended more along the line of argument presented by A. J. Frame, of Waukesha, who pitted his logic against an elastic currency based on the credit of the financial institutions and their de- posits. Branch banking met with disfavor."' The nilwaukee Sentinel: "Credit currency and branch banking did not meet witli favor at the hands of the Wisconsin Bankers' Association. Strong arguments were presented in favor of elastic currency, based on the credit of the financial institutions and nu their deposits,^ by James H. Eckels, president of the Commercial National Bank of Chicago, and by Charles N. Fowler, chairman of the committee on banks and currency, of the house of representatives, but even such high authority as this could not shake the faith of the Wisconsin Bankers that a currency based on such security was not what the people wanted. It was combatted by A. J. Frame, of Wauke- sha, and the resolutions adopted at the close of the afternoon session show that he had the best of the argument, so far as the jury to which he made his appeal was concerned. "' Dr. Amos P. Wilder in the Madison State Journal: "Theorist and practical man in one is A. J. Frame, of the Waukesha National Bank. The immense deposits in his bank are the won- der and envy of institutions in many larger cities. Trained to tlie business from boyhood, the impression is strong that as a banker he is unexcelled. To his business capacity Mr. Frame adds power as a logical and forceful writer and speaker. By his particip; tion in national financial councils, Mr. Frame has done Wisconsin much credit." The Chicago Tribune refers to the address as one of the notable features of the day's ses- sion. Further says : "The anti-asset currency forces were led by A. J. Frame, President of the W'aukesha National Bank, who in a strong speech characterized asset currency with its boasted elasticity to be nothing else than a system of stretclied rubber currency, with the elasticity all gone." The Chicago Banker: "A. J. Frame, of Waukesha, in a masterful argument attacks credit currency as advocated by Congressman Fowler." And further says: "Mr. Eckels did not remain long unchallenged, for that veteran economist, Andrew J. Frame, of Waukesha, was on the pro- gram for an address on 'Sound versus Soft Money." He handled liis subject from a statistical standpoint, and marshaled convincing figures from our own and other nations" banking systems to prove the fallacy contended for by Mr. Eckels and later in the day by Mr. Fowler. Mr. Frame's, address was highly approved by the delegates present, as could readily be seen by their nods and words of approval."" The Chicago Economist calls the paper "a strong address." The Chicago Chronicle: "Congressman Fowler and other learned assetists who went to Milwaukee to teach Wisconsin Bankers things which they did not know about currency collided with something hard in the person of one of those presidents of country banks which urban financiers treat witli such patronizing condescension. This country hank president. A. J. Frame, of Waukesha, handled the elastic paper currency nostrum for our financial ills without gloves. He dealt in hard facts which assetists cannot brush aside and which are none the less facts and none the less cogent because they are stated by a country banker." The New York Financier dubs the address "a masterly one." The New York World: "Mr. A. J. Frame, President of the Waukesha National Bank, rendered the country a service in puncturing this scheme at the meeting on Thursday of the Wisconsin State Bankers' .-Association, and Mr. Fowler, who tried to defend it. got very little comfort from the bankers there assembled. Mr. Frame showed that so far as being in line with tlie best foreign practice, the plan proposed was 'not parallelled in any progressive country'." Many New York City and metropolitan journals in other cities quote liberally from the address. Hi, J^ Sound vs. Soft Money. P/ I grieve to disao^ree with some of my ^rood friends, yet I yield to no man in ])atriotism. I desire ameliorated conditions. When we sum up the years of a^Mtation for asset currency and a sound solution of the elastic problem and find that the only ])roduct that has been seriously considered to date is the Fowler Bill — to the fallacies of which I make specific reference hereafter — I conclude it is easier to criticise than j^rovide a remedy for incurable diseases. The disease under discussion niig'ht be diag"- nosed as "Hard Up." A lar^e majority of the human family have an annual attack of it, and many have it in chronic form. Issuinjjf I. O. U's will rarely cure the malad}', but liberal liba- tions of conservatism wonderfully ameliorates severe attacks. The battle of the Standards which has been fou7 Kussia 1.30 Canada "> i ., In 1873 the United States had $18., per capita circulation or a total of 750 millions of dollars, and practically all in promises to pa}', California and vicinity refusing" to adopt soft money. Today, after our battle for sound money, according" to above tables, we have about $30, per capita or 1250 millions of dollars of gold and practically the same amount of inferior money, our vast hoard of silver being" nearly two-thirds iiat. If an addi- tional quantity is needed, let gold flow in under natural eco- nomic laws, the same as the 1250 millions have alreatlv done. $62,000,000 in 1002 being- added to our stock. Let us not inject inferior asset currency on top of our present excessive soft MILLIONS. Uncovered Total Gold Silver . Paper. Total. Pel i-C: ip. Cir. rJ50 670 580 2500 $30.00 r/J8 117 117 762 18.21" 00.3 420 134 1457 37.a 7(53 207 153 1123 19.92 71.-) 10.-} 828 0.2.-^ 20 f) : say 50 75 13.G3 money stock and drive jifold out, thus undermining- our house- hold/ The unprecedented production of f the issuing func- tions of the currency, with a metallic fouiuiatioii as heretofore referred to in Prof. Thery's article? OXTEAM VERSUS 20TH CENTURY PROGRESS. What about former New England Banking? The Suffolk system, The Banks of Indiana and Louisiana and several oth- ers so often quoted by Asset Currency advocates? Simply: this. On pages 302-3 and 4 of the Report of the Monetary Commission, under the head of New England Bank Currency, we find that "in some states an loilhiiilcd linhilily for both notes and deposits was enforced upon the ofhcers in case of misman- agement. In some instances the stockholders were liable to* the amount of their stock for the ultimate payment of the notes, and in Rhode Island they were subject to unlimited liability.'^ • Under the "Suffolk System" each country bank kept S2, 000 on deposit in Boston without interest. Banks were compelled to pay out o}ily their o'i'ii )iotcs, and send all others to Bostorr. for redemption. This compulsory redemption, lack of confi- dence in paper money generally and scarcity of gold in those- days brought about the redemption of bank notes in that S3''s- tem ten times over every year, thus entailing exasperating an- noyances, constant assorting and expense for express, etc., ancP" history sa3"s "Country banks were loud in deniuiciation of thc- S3'steni, and there was alwa3's friction between the Cit3'' andi Countr3' banks." With all the rigid regulations the loss ta- holders of notes in failed banks in that small system was ?S77,- 327. As no man has ever lost a dollar in the past forty 3'ears, nor sleep either under our vast National system, distrust is en- entirely eliminated, therefore no one troubles himself about re- demption. In the Sound Currency Red l>ook in an articK- by Horace- White, a strong advocate of asset currencN , pages 2<>7 to 210. we find under the head of — STATE BANK OF INDIANA. *'On all a])[)lications for loans above S50()., a majority vote oF 8 live-sevenths of the l)oar(l was necessary, and this must be entered on the minutes with the names of the directors so vot- iiifif. Directors were individually liable for losses resulting from infraction of the law, unless they had voted against the same and caused their votes to be entered on the minutes, and had nolificd the Governor of the State of such infraction forth- with, and had published their dissent in the nearest newspaper. Any aljsent director to be deemed to have concurred in the ac- tion of the board, unless he should make his dissent known in like manner within six months." One-half of the stock be- lonjT^ed to the State. The bank's principal l)usiness was loan- ing- its own notes, its deposits bein<)f but a small fraction of its capital. We also find under the head of — LOUISIANA BANK ACT OF 1842. 1st. A specie reserve equal to one-third of all its (the Bank's) liabilities to the public. 2nd. The other two-thirds of its liabilities to be represented by commercial paper having- not more than 90 days to run. 3rd. No bank to pa}' out any notes but its own. 4th, All commercial paper to be paid at maturity, and if not paid, or if an extension were asked for, the account of the party to be closed and his name sent to the other ba)iks as a delinquent. It would take a powerful glass to spy out a g-aller}' of bank- ers that would stand such ridiculous rules as those. References warmly advocating the Indiana and Louisiana systems by Horace White and Cong-ressman Fowler were made at New Orleans before the American Bankers' Convention. I will ask in all seriousness! If w^e were to adopt the Louis- iana Act of 1842 of compelling the keeping- on hand of 33^ per cent in specie of all liabilities to the public, the National Banks would hold today — More tlum ". $1,600,(XX),000 specie WMereas, they hold say 8 per cent, or about 100,000,000 " The rig-id Louisiana Act would require an additional SI, 200,- 000,000 of coin reserve. Under the Louisiana, Indiana, Iowa and Ohio experiences which are almost parallel as to reserves, we would be compelled to keep three to four times as much specie reserve as we do now. Where would the coin come from, and who would retain their National Bank Charter un- der such rigid rules and many others not enumerated? Prog-- ress would simply be throttled. 9 Aofaln, under the Indiana experience, the hanks were limited in their ag't^rej^'ate loans to two and one-half times their capi- tal. The aili contains these sec- tions: Sec. 1(1. "Thc'it for the jnirposes of this xVct, New York, Chicag"() and San Francisco shall be redeni[)tion cities, and all of the national banks redeeming" their notes at any one of these cities shall constitute a redemption district, and the New York redemption district shall be known as number one, the Chicagfo redemption district as number two, and the San Francisco re- demption district as number three. Sec. 11. That if any national bank shall receive such circu- 10 latin-" or "to the redemption city of its own district" and then they shall be returned (by express ao-ain) to the issuing- bank or — I will add to the nearest and cheapest spcjt where they can be g'ot rid of, then vice versa to reimburse i)anks for cash re- serves. AVould not this process, with its localized currency, pettv and expensive annoyances, /)ett//'oo-o-/;/a- at redeniptioii, fail in its object, to-wit: — Direct compulsory redemption? Would it not be clearly an act of credit currency inflation? A stretched rubber with the elasticity gfone? The element of distrust doubtless would be small, because of the o'uarantee fund and first lien on assets, but that same ele- ment in times of financial trouble would be deep-seated with the g^reat army of depositors, because of that first lien. The depositor has just as much rig-ht to know he has equal rig-hts jn assets, as that a banker will rest more sweetly if he knows his borrowing* customer has o^'ivenno Jirst //en to another on his assets. DEPOSITORS LOSE. If we prefer the note holder by a first lien to the depositor who takes the dreg's this will surely be the result. Under the present law for every $100,000 of circulation issued S100,000 of Government bonds are deposited to secure it. These bonds can- not be spouted for any other purpose and in case of a bank fail- ure the S100,000 circulation is fully cared for and the premium on the bonds is left for the depositor, together with all other assets. Under the asset currency scheme in case of failure of a bank, the S100,000, which ougdit to be in Government bonds to care for circulation, is loaned on commercial paper. The 1902 Report of the Comptroller of the Currency, pag"e 386-7, shows for banks that have failed in the past fortv years this result — 11 Nominal assets at date of suspensiou 81-i0,5r)i,311 Collected from assets 77,529,051 Leaving losses of 872,()24,7(>0 or about 48 per cent of assets. Is it not clear that for every S100,0()() in commercial loans instead of in bonds the depositors would receive S48,()00 less in dividends than under the bond se- cured plan? The third point is the only one that oufi^ht to be considered seriously. Under ordinary conditions the fluctuation in the in- terest rate should be the barometer which ouj^Mit to check undue expansion and inspire conservatism. Under fear of occasional i^xtraordinary disturbed conditions, if cash could be provided on sound principles to loan to all solvent parties, serious losses would doubtless be prevented; but such cash should at once by a heavy tax be forced to return to its reservoir as soon as its work was accom])lished, so that no act of inflation would result. Its operation should be like a water reservoir, always ready to put out an inci])ient lire and at once refill ag-ain. In the panic of 1873 about S33,0(JO,(:)()0 of Clearino- House certificates were issued, and in 1893 but S(>6,00(),000. Last fall the New York Clearino- House Bank reserves were short S23,000,()00. ^Ir. Gao-e stated that that shortag-e compelled 592,000,000 in licpii- dation of loans and de])osits, the reserve being" one-quarter of the de])osits. li $23,000,000 to S6(),000,000 will put out a se- vere hre, why do we need 8175,000,000 as provided by the Fow- ler Bill as the entering- wedg-e and more than $500,000,000 later as the intoxication gfrows under the stimulus of soft money, as indicated by Mr. Fowler in his address at St. Paul on July 7th, last? Let us not forg-et thougfh that under the Fowler BiU forced rcdoiiptio)! is a farce; therefore the reservoir will likely be empty when the lire g-rows warm. The proposition to issue ' asset currency to the extent of 100 ])er cent of National Bank capital, I consider positively dang^erous. Kig"ht here permit A SUGGESTION. It may not be a perfect plan in accomplishing" the end soug"lit, but no ])r()position yet offered is ])erfect. 1st. A bill somewhat on the lines of the AUlrich measure ougfht to be put upon the Statute books to prevent locking- up lumecessary funds in the United States Treasury. 2nd. Leg"ali/,e Clearing" Houses as banks of issue on same form as National Bank currency, secured by Clearing- House Certificates issued on same plan as heretofore, to any bank in 12 c-lc.'irin (ierniany has 207,0CX),W0 loSAXXOCHl Kussia has 103,(XXl(XtO None. Canada has o.OOO.lXK) 50,000,000 Nearl}' all silver Is subsidiary' except that of France and the 13 United States. Does an}' one think from the foregfolng- im- mence issues ao-orefj-ating- $1,250,000,000, which exceeds the combined stocks of silver and uncovered paper in Great Britain, France and German}', that we need more soft money injected into our circulation? Never in the history of our country was our credit system so expanded as it is today. We do not need additional I. O. U. or assc/ cicrroicy, which only adds fuel to the iire of speculative frenzy. What we need, if anything-, is less inferior money and more gold for a foundation that will stand throuo-h storm as well as sunshine. Under natural economic laws over $550,000,000 of o-old has come to us in the past five or six years. More will not undermine, but streng-then the foun- dation. It will only come to us, if we need it, by keeping- out cheaper money, and especially credit currency which is not as o-ood as what we now have. We have ample assets with which to buv more gfold in the world's markets if the natural needs of commerce demand it, and we only need some provision for ex- traordinary emerofencies, as noted under the third clause. In the emerofency of the Baring-'s failure in Great Britain in 1890, the Bank of England borrowed from the Bank of France /-3,000,- OOO and from other outside sources ^"2,000, 000 more. If we keep our credit unstained and unstrained, the wt)rld will lend to us in need, as we have plenty of collateral. INTEREST RATES. A late writer in a New York mag-azine advocated asset cur- rency in the United States to lower and hold steady interest rates, in order that New York mig-ht wrest from London the title of the world's financial center. What log'ic! Great Britain has the most rigid and least elastic of all currency systems in the world, l)ut she has a metallic foundation that the world never questions. Her surplus cajiital is invested the world over and is subject to her beck at all times. These are clearly the reasons why rates of interest are more steady, and her pres- tig-e would doubtless wane under credit currency expansion such as we are now discussing*. Our friend Fowler also advocates asset currency to lower the rate of interest in the United States. Rates of interest with us now are al)out one-half those of thirty to forty years ag-o, and every decade sees a decline in rates. After carefully reading- the best authorities on political economy I conclude the cause is accumulated surplus capital and not running- the printing- press increasing- outstanding I. O. U's. Mr. Fowler also says 14 present rates of interest for the benefit of five million borrow- ers oufjfht to be cut in two, but how about the benefits to the fifteen million depositors, the ei<4"hteen million holders of insur- ance policies and millions of other saving's of the people g"ener- all}'? The g-reatest g-ood to the greatest number clearly does not require ruinously low rates for interest. I challeng-e any man to show me a countr}- wliere a very low interest rate pre- vails that can compare with ours in general prosperity. Then what is the PRIMARY CAUSE OF TROUBL,E? My answer is over-speculation. Let me quote and see what the consensus of opinion is: The Chicagfo Economist of November 15th, 1902, says in speaking- of the New York Chamber of Commerce action on "Currency Reform:" "The present impulse in New York comes from the recent string^ency in the nione}" market, the decline in stocks and the inability of the promoters to bring* out a larg"e number of new issues that are proving- rather burdensome to them. After all, what new York really needs is an act to re- form human nature. No amount of leg'islation respecting the currency will prevent the human animal from g^oingf too far when he g^ets into a speculation. That is what is the matter just now at the financial center of the United States." From American Banker of October lltli, 1902, I quote — "It is believed," says the London correspondent of the New York "Evening- Post," who is well informed, "that the effect of the New York market's over-speculation and diversion of capi- tal into liug-e combines is still to be felt. European banks are clearly not willing* to spare gfold for New York, and the reason apparently is that they think such shipments would serve merely to fan speculation on the stock exchang-e. This position appears to have been distinctly taken by the president of the Imperial Bank of Germany, who declares, in substance, that American financial interests are paying* the penalty of loidiie rashness in speculative activity.'''' The New York Financier of October 13th, 1902, says— "Financial institutions have been more than liberal in their support of the rising* markets, but they recog*nize the fact that an end must come sometime to all upward movements and the consensus of opinion inclines to the belief that now is the time 15 to put on the l)rakes. The firm foundations alread}' laid will support Icjyitiniate expansion, but the}' are not able to carr\' the top-heavy supcrstnicturc u/iich IVa// street has bee)i attempthi^ to build of late. ' ' "Bankers admit that present reserves are too low. The}' feel that their plain duty from now on is to increase them. The country has adopted a dan^-erous g"ait in the last year and the wisdom that is leadinj,*- bankers to refuse longfer to be a party to it is to be commended. On their conservatism rests the con- tinuation of real prosperity." The Journal of Commerce, Commercial and Financial Chron- icle and The Bankers' Magazine of New York have articles in a similar strain. In the New York Evening- Post of November last in the ^Vmerican Bankers' Convention, New Orleans, Special issue, I find— "The simple truth of the matter, recogfnized by every ob- server with his eyes open and his wits at work, is that our \)VO- moters and speculators have pushed their undertakin(^2, in a well written article by "^V retired Chicaj^o Banlver," I (piiite the i()llowin<^': "There is a certain ironN' of fate in the tact that we are de- batinj^- this cpiestion eij4"ht-and-lit ty years after the settlement which stands for the enliiiditened jud^^-meiit of Rnj^dand's finan- ciers. The directors of the Bank of iCnLi'l.iiid had the unlimited ri<4"ht to issue notes aj^'ainst their portlojin, until l^eel's Act of 16 1844 jifave the Old Lady of Threadneedle street the strait jacket she has worn ever since. As Bagfehot says in his classic Avork, entitled 'Lombard Street' this authority was, in more than one instance, used with the extremest unwisdom, so that de- vastating" panics followed hard upon the heels of the reckless speculation which too great facilities fo)- borrozvi)i^^ had oi- gendered. ' ' W. R. Lawson writinof to the London Bankers' Mag^azine said: "Whoever else may be to blame, the New York banks did not owe their recent trouble to undue zeal on behalf of the trade of the country. It was not their commercial discounts that reduced their cash reserves below the legal minimum. A specially bad feature of the situation was that so much bank money had been diverted from commercial to stock financing-." In another article he says — "Fears of there not being- money enougdi to g-o around always appeal to the mercantile imag"ina- tion, and American bankers have for a g"ood man}^ years per- sistently harped on this chord. They have not been discour- ag-ed by the paradox that the United States has one of the most copious currencies enjoyed by any country of equal com- mercial rank." He laug-hs at our follies and declares the "Combineers" are the source of trouble. Metropolitan journals everywhere make similar comments. Does not this compilation of opinions made more than six months ag'o, seem in the lig^ht of later events prophetic? It seems needless to quote further than to say that the nota- ble address of Prank A. Vanderlip in October last at Wilming- ton, N. C, oug-ht to ring- the death knell of any methods to bring- about further inflation with its resultant hig-li prices, in- creased imports, decreased exports, thus bring-ing- about much sooner a reaction in our progTess which is as certain as that history repeats itself. If any one seeking- truth and will see the hand- writing- on the wall, he is commended to carefully read the standard authorities on Political Economy for parallel con- ditions, and the fog-s of the common error as to the cause of trouble would be illumined by a clearer lig-ht. In view^ of all these facts, is our trouble lack of mone}' or is it over-specula- tion? Doubtless some are clamoring- for asset currency because the}' think there is profit in it, but as sure as there is material profit in its issue and it is not confined to g-reat centralized in- stitutions which are more likely to be prudent in issuing- it. 17 there bein«- no monopoly in banking- the multiplication of banks would soon destroy such profits. I assert that a national bank has no more ri^^^ht to issue currency when its credit is strained and force it on an unwilling- public without interest or penalt}', than hav'e state banks, or a merchant or manufacturer under like conditions. It never should be done except in emerg-encies. In an^' case collateral should be put up as security, and a ta.x imposed high enough to drive it out of use as soon as its work is done. The interest rate is the check valve to prevent undue expansion and inspire conservatism, not onlv in banking, but in all commercial pursuits. I assert with conlidonce that no parallel case is extant toda}' that compares with our subject under discussion. Large centralized institutions onh' have the rigfht anywhere of issuing- a limited amount of asset currency. Germany is financially depressed today because of the abuse of tlie license accorded her g-reat centrali/A'd bank, as hereto- fore noted. Canada which is harped about so much, is one of the most un progressive countries. The early ox-team days when bullocks, wampum, beads, skins, etc., were leg'al tender; when collateral and g-old were scarce, have g-iveu way to abundance of g-old, plenty of collat- eral, abundant prosperity and a confidence that has built a colossal sui)erstructure of credit unknown in ancient or modern times. Shall we build a metallic foundation on which this structure shall sta-nd, broad, strong- and enduring-, or shall we undermine the house we have built by piling- credit on credit and misname it Reform? Oh Reform! Reform! What crimes are committed in thy name. Blow up the balloon to the limit, and then gfive it another puff; gfivethe rubber another stretch after it has been drawn almost to the point of breaking-; take another drink when the intoxicated patient is over-loaded. No! No! Let us pour oil on the troubled waters, put the brakes on the over-worked engine, put more l)allast in the hold, instead of adding- to the sails. This country is to be cong-ratulated that in the year 1*^02 no asset currency was allowed, thus causing a check to the wild and reckless pace of the promoters assisted by some over- greedy bankers. Another safety valve was the wonderful prosperity of the country as a whole, even if we did not have asset currency. If l>anks could Iiave issued asset currencv, thus still lurther inflating- conditions under the g-et rich quick 18 l\'vcr, I fe.'ir results would have l)een somewhat like German^^'s r)()0 experience. Forei<:;'n hanks realized our condition and put the brakes on by raising- the rates on mone}' so hif^h that fur- ther expansion was checked. The interest rate should be the corrective for all troubles except occasional enierifencies which niij^dit call for more heroic treatment. The world is open to us to borrow in case of need and with ([uick transportation and plenty of gfood collateral, with slifjfht fluctuations in interest rates, legitimate interests will rarely suffer. An occasional ]\'inic is inevitable in all proo-ressive countries. It has its day like the measles and the^ifrip. Political Economists of all ages have wrestled with the knotty elastic problem in the hope of evading- panics, but failed. In these latter days the woods are full of popular elastic nostrums to cure a case of short cash to move the crops, when the true diagnosis proves that the com- mon principles of prudence have been violated, and over-spec- ulation and excessive promotions have run riot. The shock of last fall has probably sobered up the more conservative, there- fore as the unexpected usually happens, the forewarning will probably prevent a repetition of the trouble. It is to be hoped that the bargain counter which has been laden with rich pickings for conservative buyers with cash, in the past few months, has been nearh' cleared; that the undi- gestible securities w\\\ be dumped into the sewer, and progress along conservative lines once more be resumed with Anglo Saxon energy. THE PARAMOUNT QUESTION. A weighty responsibility rests upon our American Bankers' Commission, and more with our Statesmen if this question of asset, elastic or emergency currency is to be settled on sound and enduring lines. Our patriotism for country ought to rise higher than to settle this momentous question wnth a view of larger profits to the banks. If New York is to become the world's financial center, the quick-sands of asset currency, added to our present over-supply of soft money, will retard the day on account of loss of confidence in our standard, and onl}' a gold foundation of international mone}" will hasten it. If this country will continue its wonderful onward progress, it will not advance on exploded academic theories or populistic nos- trums, but on sound and conservative lines. I firmlv believe from a careful survey' of the World's History on banking, that 10 as^ct currency, as a cure-all for economic troubles is a Iniud, a delusion and a snare. The remedy is worse than the disease. Waukesha, AVis., Auo-. 1, 1903. AXDKKW JAY FRAMK. QUKRY. In these days of great accumulation of surplus capital, as indicated by- low interest rates, expanded credit generally and large per capita circulation, permit this pertinent query : If a bank extends its loans to the limit of its assets, then swaps its I. O. U's without interest — secured by a first lien on its assets, the depositor taking a second mortgage— for its customer's note at 5 per cent to 6 per cent, thus carry- ing out the asset currency advocate's ideas, does not that act smell loudly of "kiting" ? Confidence upbuilds, distrust paralyzes. UC SOUTHERN REGIONAL LIBRARY FACILITY AA 001 023 643 8