New-York tribune. [volume], February 11, 1908, Page 3, Image 3

About New-York tribune. [volume] (New York [N.Y.]) 1866-1924

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ALDRICfI OX HTS RILL
EXPLAINS ITS TERMS.
t
Makes Argument for Passage of
Currency Measure.
I from Th* Trilu:-.« r.urea.u.]
Washington. Feb. 10.— Senator AJdrich. chair
man of the Committee on Finance, addressed
the Senate to-day in support of the financial bill
vhich bears his name. He was listened to at
tentively by practically a full Senate and by
crowded galleries, which contained a number of
notable people, including J. Pierpont Morgan,
the Belgian minister, attaches of the German
and British embassies and a number of other
diplomats.
Without the slightest attempt at elocution. Mr.
Aldrich delivered his explanation of the bill and
reinforced his arguments with history and logi
cal deduction to an extent which not only
demonstrated his thorough command of his sub
ject tut made a strong impression on his hear
ers. On closing he was surrounded by his col
leagues, who extended their congratulations. At
no time was he interrupted, and no one under
took 10 enter into a debate on the currency
question.
After reviewing the history of the recent p-anJo
«nd the expedients resorted to in it Mr. Aldrich
»aid:
Of the expedient? adopted, the use- of clearing
). >-i«i* certificates wan unquestionably the most
•rffective. I need hardly say that the clearing
bousrs by which these certificates are issued are
voluntary associations of banks formed for mutual
convenience, assistance axid protection. In many
ways the usefulness of these associations has been
ihown from a public point of view.
The employment of clearing house certificates for
r^li'f in time of financial disturbance commenced
in ' IS6O. and l.as since been repeated from time to
time on eight different occasions, ending in IPO7.
These certificates, it should be remembered, are
or.lv available for settlement of balances between
T>a£ks in the localities in which they are Issued.
Trey are issued upon a deposit of bonds and other
*fK-urltle!«. v <■ best assets of the bank, made satis
factory In character to the loaning committee of
w., clearing hou%e. Certificates are issued to the
amount of 73 per cent of the value of the securities
<^r".slted Interest Is charged by the clearing house
in the depositing banks at varying rates, from 6
rir " cent to 9 per cent. They take the place of
currency In settlements at the clearing house, ln
ceasln? by this means the amount of money
aLVB vn a ,trie for other purposes. Their employment
v«s V^-n beneficial at times in preventing a serious
-'sastfr but it has sometimes resulted, as in 190«.
vTVuch* a deraxfrement of eTcbariF<--s as to make
•• doubtful whether, from the standpoint of th*
rnl.iic interest, the dl?advantages were not greater
Fv, n the benefit* derived frojn their Issue.
The conservative bank officers of New Vorfc. for
'«Ar of -he effect their issue would have upon th«
orrd't of that great commercial centre-, resisted
,v e « r u « e urtli It b-came aparent that th«»re
•MMBtfaeT mean* available to prevent reneral bank
rmjtcr The scrip Issued by clearing houses and by
*ank« and private individuals in the form of cir
rSattar notes. Rnd used as currency, were issued to
" I^ l local necessities for payrolls, for moving
£ot« £c ' In the spirit If not by the letter of our
S£ener laws these notes should have been taxed
&££&<&£ amwr.t lsyjed. cf the country
_ rrt . ~. c^. 9 which the peoplw of the- country
c _, r^m the partial breakdown of our credit
through bank euspensioni.. and which the
r™«! nT*a«» In the volume of money anfl Its
b^TuteSgal and HierU-Yaflea to *£*;
rnf-r-«i to seriously consider the question
as shall prevent the recurrence of these
conditions in the future.
LESSONS OS 1 EXPERIENCE.
U the experience of last year should be «p«f^
be in Motion to make Increased deposits of public
■»!«• solict- government deposits In national Dan«.s
muTt. P and- I am quite willing to say should, be
''^ond^Thffactthat a very large P«g»rtl«ot
rnited States bonds is now held by t^e national
dm&i&oa^SSer than In increase of "ttonaltank
°ctes based upon United States bonds. In f act, it
SSuM be almost if not quite tapossl^Jo*" 1 ? 1"*1 "*
increase the volume of such notes In case or an
' TWrdffc is quite possible that we may not be
aw" to command large importations of E^fr. The
. -v large increase in the exportation of produces,
wi'h reduced Importations, which took place in the
last fo^- months of 19« produced an unusual bal-
L- '« of trade of more than $300,000,000 In our favor,
■ -M* tod was of great assistance In making
£ difficult to ,nduct I *^;
. r gold shipments in our favor. In fu->
?vent imports of gold can never be made In time
to relieve an acute condition of panic. __ ftf> ,.
ronrth men may not be found 1- another
currency v.ih the patriotism courage and ca
' tvof those who in this crisis rendered such
.ouVand invaluable service to the financial
iD FMth: S the f su^SSSSTof bank payment,, with Its
resulting strain upon the credit of the country and
Its resources, will not be tolerated again.
I am quite well aware that financial conditions
Lastly improved over what they were six
So. and 1 think we may feel quite confident
■ - prolonged period of which fol
■ ■■„ par.lc cf 18<iS may be avoided. It is a.fo
c ...,, certain that in all the financial centres within
2 - short time there will be a great excess of
furV^O' and probably a surplus of loanable cap
"wblie th» jrereral conditions have improved And
fire improving there arf -- still many cause? ■.! s
qnlet In industrial and financial circle- It Is quite
probable thai there will be considerable addiunn,
to the army of the unemployed, and it Is quite im
i-*s!ble fof any man to predict with eny degree
of Vr,nfir?e--e what the Industrial and financial con
dition of the country will L-« next autumn. In any
-le-'t. if the business interests of the country are
kit defenceless through the Inaction of congress
the most serious consequences may follow Lnder
these circumstances I believe it to be the Impera
•ive duty of Congress in its wisdom to provide
f^me mean* of escape from another calamitous
< ri'^s The expedients which the responsible offi
'■*r "cf K the Rovernment and of the gr»-at financial
Institutions were obliged to adopt in the panic of
1907 point the way to effective curative legislation.
There Hi/an to be only one way In which Una
ANNUAL
FEBRUARY SAXX
UNUSUAL REDUCTIONS
PRICES CUT ONE-THIRD TO ONE-HALF
A large assortment of desirable articles in
STERLING SILVER
SILVER MOUNTED GLASS
HIGH GRADE SILVER PLATED WARE
PORTABLE BRONZE ELECTROLIERS
LIBBEY CUT GLASS, LEATHER GOODS
CUTLERY, ETC.
AT TREMENDOUS SACRIFICE IN PRICES
These articles are all choice and
especially suitable fcr Wedding or
Easter Gifts, or for one's own use.
REXD & BARTON CO.
Jewellers & Silversmiths
FIFTH AVE.NUL, COR. 32D ST.
NLW YORK
can be accomplished, namely, by some provision
for li:«* authorization of additional notes to be used
on'y in emergencies. Th« -widespread diversity of
opinion as to the character of general legislation
to be enacted, and the further and more significant
fact that there is no considerable consensus of
opinion on any general or special plan, led the
committee therefore to the conclusion that It is
not possible at this time 10 enter upon a thorough
reform of our entire currency legislation.
The committee after full consideration, felt that
It was eafer to follow, in the form of legislation
they should recommend, the experience of the
great commercial nations, who have found It
necessary to provide means to meet or prevent
panic conditions by the extension of note isFues
under different restrictions and conditions from
those imposed on ordinary issues.
The German government gives the Imperial Bank
of Germany, which is under the direct control of
the imperial government, the practical monopoly
of the banknote issues in that country. The Im
perial Bank has authority to issue an arbitrary
amount, $119,000,000, of notes not covered by specie.
A further issue is authorized equal to the amount
of specie held. A still further amount may be is
sued subject to a tax of 6 per cent per annum, the
average Interest charge in Germany being less than
this rate of taxation. Against these additional
notes specie must be held to the extent of one-third
of the amount and good bills of exchange against
the remaining two-thirds. In recent years, and es
pecially during the last year, the privilege of In
creased Issues under the o per cent provision has
been freely used.
The plan for additional notes vvhich the com
mittee recommends for your adoption is substan
tially the plan of the Imperial Bank of Germany,
with a change In class of securities required and
a change In the rate of taxation. In Us general
features the plan of note Issues adopted by the
German law of ISTS followed the English bank act
of 1544. but amending and improving that act, how
ever, by adding the provisions for note expansion
that I have explained.
FINANCE COMMITTEE'S PROBLEM.
The problem before the committee was to find
some simple method of remedy and prevention
that was- merely an extension or supplement to
the existing system and that could be provided
through the use of existing machinery- The sys
tem of issue and redemption, which has existed
for forty years, is continued by the terms of this
bill. The currency Is Intended for temporary use
only and not to be retained in general circulation,
and we have made the most careful provisions for
Its enforced retirement when not needed. The
notes to be Issued are nominally national bank
notes, but they are in substance national currency
of the United States. Issued through the agencies
of the national bank*.
The remedy we provide Is simple, prompt and
efficient. At any time within forty-eight hours, if
an emergency requires It. $500,000,000 of new
money can be put into the channels of traae to
allay public excitement and to meet extraordinary
demands.
The committee believes that this great fund,
placed by the government at the disposition of tho
bankers and business men of the country, will
have a strong tendency to prevent financial crises
end to preserve public and private credit at homo
and abroad.
In periods of distrust large numbers of people
are controlled by sentiment. Experience has
shown that at such a time the strongest element
in allaying excitement and creating confidence, i«
the knowledge that a remedy exists which can and
will be promptly and effectively applied. The ex
istence of this great fund is like the creation of
an ample water supply with effective apparatus to
check conflagrations.
The emergency issue we propose should enable
the solvent banks of the country to meet at all
times their demand obligations and to respond to
nil unusual but legitimate business demands. It
will save bankers and the public alike from fur
ther humiliating confessions of general insol
vency, It will be used In time of trouble to take
the place heretofore tilled by clearing house cer
tificates, and it will render the use of illegal or
Questionable substitutes for money unnecessary.
There should be no misunderstanding as to the
pole controlling purpose of this MIL It proposes
by its provisions to prevent panics and furnish
the means of relieving panic conditions. We do
not claim that it is a universal panacea for all,
financial ills. It is to give the national banks the
means of accomplishing by legal methods that
which. in this crisis, they felt compelled to ac
complish by illegal and destructive methods, to
the great logs of the country. It makes no pre
tence of providing a new monetary system an«l
tries no new experiment with our currency. It
surrounds' notes to be Issued by safeguards for
ultimate payment similar to those now In use.
The measure we offer can L* .supported without
a violation of convictions by those who believe in
a central bank of issue, or by the advocates of nn
asset currency. It will not interfere with the
adoption of any general plan of revision in the
future.
r.EI>LIES TO CRITICISM.
I will now ask your attention to certain specific
objections which have been made to the bill, criti
cisms more or less serious In their character, but
of such a nature that they should receive our care
ful attention. The first of these is that the issue of
notes proposed would be unprofitable lor the banks,
and therefore that the rate of taxation fixed in the
bill is prohibitive, and consequently that no use will
be made of the authority to issue additional notes
in times of financial stress.
Public discussion of the bill has turned largely
upon the question whether the measure proposed
was satisfactory to bank managers, ignoring the
fact that the question of th«» soundness, character
and volume of currency is one in which the public
Is vitally interested. I must confess that, in con
sidering relief measures, it did not occur to the
committee that their first duty was to provide ad
ditional profits to the banks. The banks are not
applicants for charitable relief. The report of the
Controller of the Currency shows that the divi
dends paid by the national banks for the sixteen
months prior to June 30. 1907, were at the rate of
13 per cent per annum of the capital and surplus
of the national banks- In the ten years prior to
■HI the average annual rate of dividend waa but
little over 5 per cent.
I have every reason to believe that the over
whelming majority of the national banks which
have been accorded valuable privileges, recognizing
th<iir obligations as fiscal agents of tho United
States, will cheerfully co-operate in carrying out
any measure adopted by Congress as a means of
relief, without reference to whether their action
in this regard would add greatly to tbf-ir profits.
In times of public peril, when great interests were
at stake these banks have given the strongest pos
sible evidence of their patriotism and unselfishness.
I decline to believe that the criticisms under con
sideration reflects the views of thoughtful bank
managers. They too keenly appreciate the value of
public confidence. . ,
As a matter of fact, th« effective operation of
the bill proposed by the committee would not re
sult in a loss to the banks In time of stress or at
any other time. We have a right to assume that
every well managed bank will hold a portion of its
Invested reserves in a class of securities readily
convertible Into cash. If a bank holds the bonds
designated In the bill, there could be no loss on the
note issues authorized unless the rate of Interest
chanced by the bank to its customers was less
than 6 per cent. If the bank rate was less than 6
per cent no additional nous would be required or
S The "second objection urged is that banks gen-
T] V . second objection urged is that banks gen
erally do not have, and would not purchase ami
hold securities of the class which the Secretary
of the Treasury Is authorized to accept under the
provisions of the bill. The committee were of the
opinion that they would deserve general condemna
tion if they did not require, as a basis of the- notj
Issue contemplated, the very best available se
curities. ,
mzrr-rrmK oait.y tribune, Tuesday, February it, ioos. €
The plan of th« bill restricts the securities to be
accepted under its provisions to government issues
and the bonds of railroads that are. by recent
legislation, under government regulation. I think
1 am Justified in designating the bonds of states
and communities as government securities. To sus
tain the credit and facilitate the borrowing power
under proper conditions of the various political di
visions throughout the country is quite as im
portant to the general welfare as it is to take steps
to maintain the credit of the national government.
In large portions of the country considerable
sums are constantly needed for local imprjvements,
and nothing would bring the benefits of the na
tional banking system more closely to the atten
tion of the great masses of the people than wouki
the willingness on the part of the banks to give
value and stability to local securities by their pur
chase as a basis for security of note circulation.
BONDS AS SECURITY.
The committee recommend the use of first class
railroad bonds because they are the only securi
ties, outside of state and municipal bonds, issued
by corporations whose public records, showing con
dition and earnings, as now provided by law, would
enable the Secretary of the Treasury definitely to
ascertain the value and the safety of the security.
In theory and by existing legislation railroad com
panies are quasi-public corporations ana under
strict governmental control and regulation, im
mense amounts of money will be required in the
near future in the development of rallroaaa in
various parts of the country, especially in the
South and West. Anything- which the government
can do. within the limits of absolute | safety ana
without any cost to itself, to give a better stand
ing to the railroad securities which must be issued
to provide transportation facilities in sections or
the country that existing roads do not reach should
be done without hesitation. .
The securities named rind universal acceptance in
settlement of obligations. No securities except
United States bonds have a better credit and stand
ing in all financial circles. They have a definite
value, readily ascertained, on all the preat. ex
changes of the country, and they are always sal
able under normal conditions at full market price.
These, in- brief, are some of the reasons which
led the committee to restrict the operations of the
bill to the two classes of securities I .have named
The objection under consideration in its OHM
(-...lysis rests upon the question whether it is
prudent or desirable for what is known as a com
mercial bank to invest a portion of its own ana
Its depositors' money in this class of securities as
a part of their invested reserves. \V ould it be a
hardship to the national banks to require them, if
they desire, to avail themselves of the privileges
conferred by this bill, to hold to a limited extent
this class of securities as a part of their assets .
The Congress, in my judgment might properl>.
in the wise exercise of its supervisory control over
the investments of national banks, require these,
institutions to invest a portion of their assets in
this class of securities, and this without reference
to use as securities for possible note issues or
United States deposits. This requirement wou d be
in the Interest alike of the public and of stock
"f an' the national banks of the country should
hold the entire amount of bonds that would be
acceptable for security for note issues to the
amount of $500,000,000. it would mean the Investment
of little more than 6 per cent of the total resources
of such banks in this class of securities.
To allege that a relatively small amount or casn
is the only reserve necessary for sound banking 13
to assert a dangerous fallacy. The national banks
of the country hold reserves of specie and legal
tender money equal to little more than 10 per cent
of their demand obligations.
Common prudence requires that this should lie
supplemented by a substantial invested reserve in
first class securities. The banks of the country
might wisely and without difficulty or loss invest
$500 000 000 In first class state, municipal or raiiroaa
bonds. This investment would be an exercise 01
that care in management which should charac
terize institutions which have and expect to retain
the confidence of the American people. The wis
dom of this course finds ample confirmalton in me
example of the banks in every commercial nation
The Imperial Bank of Germany, with a capital
of $43,:!00 000, has an Investment of *i3.10a000 in gov
ernment bonds. Tl.o Bank of England, with a
capital of $70,500,000. has in its banking department
government securities amounting to $.9 (HKKOOO.
and other securities amounting to Sl^A'. The
Bank of France, with a capital of W.mjm, has
government securities amounting to *^■•'■•: •"' ' ■ mc
Canadian banks, with a capital of heia
on November 30. IW7, municipal securities to m»
amount of J20.000/00. Dominion securities o the
amount of $9.<vtt.mo and railway bonds to the
nmo-jnt of $41,500,000! making a total of these se
curities heM of $70.000,0C0. The Canadian banks are
also required by law to hold 40 per cent of their
reserves in Dominion notes. On thejlat* named
they had on hand of these notes $«.200,<M>.
The evidence if overwhelming that prudent bank
managers everywhere invest a considerable portion
of tlieir aF«et.« in securities of the class wnlch we
designate In this bill for the security of not© cir-
C ' Another objection which Is urged Is that tbetuejj
Imposed by the bill will result in an Increased rate
of Interest on loans, which would necessarily be
paid by the borrower, and that this Increase n
fate would apply not only to loans made possible
by the additional issue of notes, but would also
apply to the entire amount of loans and dscoiints
made by all the banks. It Is further claimed In
this connection that the Increased rate wouM low
the prices of products marketed at the time. 1
think this remarkable claim will disappear upon
very slight examination.
The rate of Interest in any country or com
munity 13 fixed by the demand for and feneral
supply of loanable capital. It cannot J>e raised. or
lowered arbitrarily on a small portion of loans or
In one locality without reference to rates on other
loans or in surrounding communities.
OBJECTS TO ASSET CURRENCY.
It is asserted by objectors that the government
should not exact from the banks a pledge of den.
nlte securities, but that it is perfectly safe to ac
cept the general credit and assets of the banks as
security I think it is sufficient answer to this to
say that the banks do not follow this rule In their
dealings with each other. The various Clearing
House associations do not accept the credit of in
dividual banks, or a claim against their general
assets as security for advances in the Issue of
Clearing House certificates. They require a pledge
of carefully selected securities upon which they
advance 75 per cent of their value, and they follow
the most rigid rules in enforcing payments. I do
not see why the banks should expect the govern
ment of the United States to accept from them dif
ferent and less \-aluablo securities than those that
they require in similar transactions between them
selves.
The Funeral assets of a bank, outside of its
specie reserves, are composed almost entirely of
debts of Individuals, corporations or governments.
It certainly cannot be claimed that the definite
pledge of the securities representing debttt of gov
ernments and. railroads, which wo propose. Is not
as good security as an Indefinite claim upon the
mass of individual and corporate evidences of in
debtedness which are held by the banks. We can
find a good illustration of the difference there would
be between a general and a special pledge of se
curities and of government and bank redemptions
in considering the recent bank failures. The notes
of these banks are secured by a deposit of United
States bonds, and redemption will bo made under
our law without delay by the government and with
out loss to note holders or the government. If the
United States was a general creditor of these
banks, the result, as to time or security, would be
tO f.?y,.. th *., leas l- J very Questionable. If the con
vertibility depended on the failed banks discredit
would nt once attach to the entire issue of note*
Those who propose to base circulation upon general
assets claim great advantage to their plan, as they
propose to give the note holder a prior lien upon all
bank assets, apparently forgetting that the govern
nVui 0W ♦"' and , will have by* the provisions of
In nfliVti ° ?a c " Upon B P ecl «c securities, but
In addition a prior lien upon the general a«=«ets of
Sftsass: ssjskm; ■<■»• ««*
I k j£, s f " the ext *nt to which securities Trl
held. This claim presupposes that there >„ fi J5
sum available for loans to borrowers and that th -
amount I* equal to the entire loanable rV-sources of
the hanks. I assume that no bank officer ' wou" l
consider It prudent to invest the entire amount of
the capital and deposits of his bank in loans r on
one kln-i of commercial paper. Hanks known to
have this character of Investments would not have
the cor.iidpnc^ of the public That every bank
should have varied Investments, with a certain pro
portion of liquid Resets, is a rule of universal ap
plication, if a certain amount of convertible <-.-
purities reduced the loaning capacity of a hank.
that capacity Is reduced to a greater extent by its
reserves and by the, amount of its deposits 1n
banks and other financial Institutions If it' In
volves a locs to Invest part of the funds in first
class bonds upon a 4 or 3 per cent basis, it Involves
a greater loss to continue deposits in other hanks
at 2 per cent, and a still greater loss in holding a
portion of Its funds as reserves, which nay no In
terest.
BANKS' RESOURCES AVAILABLE.
There la another objection which perhaps de
serves some attention. It is said that tije bill
could not be carried Into effect, as banks .'would
have to take money from their reserves for the
purchase of the necessary securities, and that this
would involve the use of JluO ot reserve money to
obtain $'.> In notes of an inferior character. This
criticism has heretofore been applied, and with
equal force, to transactions involving the purchase
of United States bonds Cor to. basis of note issue.
It Is quite certain that no national bank has pur
chased United States bonds at any time Li the last
twenty-live years that it has not paid more for the
bonds than it has received in notes, and it la also
equally certain that none of these purchases was
made with money taken from the bank's lawful
money reserve. No bank would be permitted,
either by law or by the exercise of sound .mdi,-
rn«ni. to Invest nny part of its cash reserves in
any kind of securities in times of panic, or. in
fact, at any other time. When we consider that
the average cash reserves form but a small propor
tion — about S per cent — of the resources of the
banks, and that the reduction of these reserves
b^low the legal amount would be such an Infrac
tion of law as to warrant the Controller of the
Currency taking possession of the business of the
bank, it is easy to st-e that no such transaction
would take place. A conclusive answer to this ob
jection la found in the fact that a large part of the
remaining 92 per cent of {he bank'! resources would
be available at all times for use In exchange or
for the purchase of these securities.
it ins been objected to th.- piovisions of the bill
that It would have the effect of unduly and un
naturally Increasing the market value of the securi
ties which are to be deposited under its provisions.
11 was the purpose of the committee to designate
classes of securities in volume so large that .1
criticism of this kind could not be fairly made.
There are now outstanding state and municipal
bonds which might ba deposited under the provi
sions of the bill to the amount of $2,000,000,000, and
Judging by our past eaperience this amount will
be rapidly added '■• by the Issue of new securities.
■( the class cf raiiro.nl bonds described; competent
authorities estimate that there are at lejmt $2,000,-
CflO.OOv outstanding This would make 54.000.CM».000
as usjtasl a possible maximum purchase of JCOO.-
OjO.OOO. 1 da not think tbai these purchuea, even
£var\s
Ale
TO the man who knows,
BREWERY bottling means
much. That's the Evans way.
Who bottles the ale you
drink?
Restaurants. S.iloong. Oyster Houses
to the full amount, would materially affect the
prices of the securities.
ELASTICITY OF CURRENCY.
The criticism of our currency ■ system which is
most frequently urged Is that it does not auto
matically expand and contract to meet the ae
mands of trade and that it Is rigid in volume. me
frame rs of the act of 1500 believed, that with a.
circulating medium of gold and notes equivalent
to gold, our currency would respond to the demands
and requirements of the business of the country
and that we should thus secure the required ele
ment of elasticity. "
1 think it may be said that an examination of
the statistics of the supply and movement of Cold
will, to a considerable extent, at least, be found
to justify these anticipations. From these statis
tics it appears that an average of $100,000,000 has
been added annually to our stock of gold, . and
that in the months of greatest demand for cur
rency—namely, the last live months of the year
there was an average excess in each year of im
ports of gold over exports, from 1900 to Mm. in
clusive, of $32,476,415, while during the five months
next preceding, when the normal demand for cur
rency was less, there was in each year an average
excess of exports over imports during the sams
period of $3,712,946. „
The discussion of our monetary system usually
proceeds upon the theory that national hank noio
Issues form its most important element. This is by
no means the fact. Thirty years ago banknotes
formed 41 per cent of our total money. This pro
portion greatly decreased, until it was less than
10 per cent in 1831. 1592 and 1833. The recent rapid
increase of note issues has brought the percentage
up to about 20, where it now stands. In consider
ing the question of the elasticity of our currency
this fact should bo remembered, as the fluctuation
of this comparatively unimportant portion would
have no considerable effect upon general condi-
In a general way it is undoubtedly important that
the volume of money should respond to great in
dustrial and commercial movements, to the groat
swing of national progress or decay, and I believe
that our existing system has been found by ex
perience to be as responsive to these changes as
any in existence, but I also believe that the value
In so far as it relates to the public interests, of
constant changes in volume of note issues I
greatly overestimated. In modern times, with the
business and bank methods now in use, there is
little if any connection between the amount of
notes outstanding from time to time in a country
and the accommodations which banks extend to
their customers. Most of the business demands
of a community are met by the granting of bank
credits, which do not involve. In the great major
ity of cases, at ny stage or the transact the
use of actual currency. It is an elasticity In bank
credits responsive to business demands that is
usually in the minds of those who demand elas
ticity There is a variable demand In every com
munity for actual notes largely for use in payrolls
an.l for moving the crops, but the fluctuations in
demand for this purpose are- not sufficient to re
quire considerable changes in the necessary vol
ume of money.
DEPEW PRAISES MORGAN.
Defends Cortelyou's Course in Re
cent Panic.
Washington, Feb. 10. — Senator Depew to-day re
plied to a recent charge made in the Senate by
Senator Culberson, of Texas, that in the recnt
panic the Secretary of the Treasury favored New
York City in depositing public money In national
banks. The danger that wa3 so great, he said,
was avoided by the wise action of the Secretary or
the Treasury, assisted by "that phenomenal genius,
Pierpont Morgan, who, associating with hlmseit
the bankers of New York, provided the means by
which the assailed banks could be saved."
At the time this utterance waa made Mr. Morgan
occupied a seat in the private gallery and was a
careful listener to all that was said,
Sir. Depew eaid that the New York banks ara re
quired to keep a reserve of 2 5 per cent, while some
Institutions in other parts of the country keep a
much smaller amount. The danger in New York,
he Bald, waa realized.
"If there should be a run there," ho said, "there
would be one billion to pay thirteen billions of de
posits, and they are all entitled to cash. Under
such conditions commerce stops, and the whole
trade of the country is subject to paralysis. No
chain i 3 stronger than its weakest link, and the
weakest link is the trust company with 5 per cent
or less reserve doing a banking business without
banking conditions. These institutions are strons
in their surplus and rich in their conditions; never
theless they are hopelessly unable to meet any sud
den demand which may be made upon them."
Texas, ■ha said, would have been affected hy a
calamity in New York, and prices would have
fallen there.
"It waa at that critical momtnt," Mr. Depew de
clared, "that the Secretary of the Treasury came
to the rescue of the situation and made these de
posits for which he has been criticised."
"The letter of the. Secretary of the Treasury," he
eaid, "rings with clarion notes." Ilia wise and
prompt action had "stopped the panic and saved the
country." The Issue of securities was lawful and
within a fair interpretation of the statute. The
Panama bonds were to be sold from time to time to
mei-t the needs of the canal. Money had been
spent, and it had to be replaced in the Treasury.
"This," he declared, "disposes of the charge that
the money wag not needed."
He declared that New York City banks had gone
to the relief of other banks by providing money for
the sale of cotton and wheat shipped to Europe.
"That money." he said, "was furnished the people
of the country at the most critical part of the
panic." The deposit of money in the New York
hanks placed It In the proper place for its distribu
tion over the country.
"In a crisis like that through which we have
just passed." he said, "the country banks get In
their demands for currency after the people on the
spot have got In theirs." No bank could transact
business and liquidate at the same time. The
monkey for which Southern banks paid a premium
<»f from 3 a to 5 per cent had not come from
banks, but was drawn out of safe deposit vaults
by the offer of that premium.
There w;ts $100,000,000 less loaned on collateral
In the Stork Exchange in 1907 than in the preced
ing war. The banks had stood by their patrons
and had lent money for commercial purposes nt
rfpular rates of Interest rather than secure from
100 to 25 per cent by landing in th« stock market,
and for that reason there had bf-en 50 few commer
.•<.•■! failures.
GREETS BRIDEGROOM-ELECT.
A Young Kentuckian Cordially Welcomed
by President.
. [From The Tribune Bur-". \
Washington. Feb. This was Kentucky Day at
the White House, but among all the callers from
the feudist state Done received so warm a welcome
as young Captain Jackson .Morris, who coyly in
formed the President that he was on his way East
to pet married. Governor Wilson of Kentucky
called to pay his respects, • and a delegation of
Congressmen visited the President for the purpose
of straightening out • ; atronage tangle. Captain
Morris, who is Assistant Secretary of State of
Kentucky, just wanted to shake hand." and tell the
President about his trip.
"I wish you all kinds of joy"" exclaimed the
President, giving Morris's hand a few extra shakes.
"And who la the fortunate- girl."
Morris told him that Miss Men a Christian, of
Newark, N. •' . had agreed to take him for better
or worse, and added that Wednesday was the
day set.
"Goi>d for you:" cried the President, again flap
ping him on the back. '"The next time you come
to Washington I want to shake hands with Mrs.
Morris. If you don't bring her with you l won't
see you."
Morris is a crack rifle shot of the Kentucky
National Guard and distinguished himself at lam
year's championship shoot.
Pueblo, Col.. Feb. 10.— Joseph Uuss and ulx A1:--trianA 1:-
trian companions »•«•!•* held up las) night 1. a
lone highwayman, in a flffht that followed Ku»*
vu kiiFtoU by the bandit.
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a Embracing in its twelve
galleries of well appointed
showrooms all that is possible
in higher cabinet making— is what we
offer to the seeker after individuality in
furniture.
In our productions for the Dining Room.
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of character and skilled craftmanship is
apparent in every simple line and detail.
Grand Rapids Furniture Company
34 and 36 West 3*! Street
BrfvccaßnaAnaFas* Fiftkianai
URGES POSTAL REFORM
REPORT BY COMMISSION.
Especially Advocates Long Term
for Administrative Head.
[From The Tribur.e Bureau]
"Washington. Feb. 10.— The Postal Commission,
which was created by Congress one year ago, sub
mitted to the Senate and House to-day the report
of the experts, a considerable portion of which
was made publio in The Tribune last Saturday.
The publication at that time occasioned consider
able comment, as only through The Tribune could
members of Conjjress learn of the findings of their
commission.
The commission also submitted its own report to
Congress to-day. In so doing it declares that It is
f?r> impressed with the importance of the task as
signed to it that it refrains from making any defi
nite recommendations at this time, but confines it
seif to a recitation of those recommendations of
tha experts which particularly impressed it. The
commission says in part:
The postal service constitutes the only large
business operation In which the government Is en
gaged. It is a cash business, involving an ex
penditure of more than $210,000,000 during- the cur
rent year, and this stupendous expenditure is des
tined to grow with the growth of the country. This
being the first effort in the history of the govern
ment to thoroughly Inquire Into and ascertain th«
defects and infirmities of the system under which
this great business has been, and Is being, con
ducted, and to devise, If possible, a more efficient
and satisfactory system, it Is deemed prudent to
submit to the Interested public generally and to
the Congress and those engaged In the postal ser
vice particularly, the facts disclosed and the con
clusions reached by the expert accountants, with si
view to calling forth such comments and criticism
as persons interested in the subject may think
proper to make.
As an indication of the views at present enter
tained it is proper to say that the commission Is
profoundly impressed with the wisdom of the ac
countants' report in recommending the following:
A. That the actual direction or the business of
the Postoffice Department and postal service be
committed to an officer, with necessary assistants,
to be appointed by the President, by and with the
advice and consent of the Senate, for long terms,
so as to insure the continuity of efficient service,
and that the Postmaster General, as a member of
the Cabinet, be chargeable only with general
supervisory control and the determination of ques
tions of policy.
B. That the business of the department be de
centralized, so as to avoid the congestion at the
national capital, which is believed to seriously Im
pair the efficiency of the service throughout the
country, while at the same time greatly increasing
its cost. i
C. That the bookkeeping-, auditing and account-
Ing be simplified, unified and centralized as far as
practicable, so as to secure greater accuracy, tin
record of profit and loss somewhat in detail, .1
more prompt method of accounting for money and
property, and the elimination of apparently seed
less duplication of work.
D. That the practice of requiring needless de
tailed reports from small postoffices be discontin
ued. This will undoubtedly result in large savings
In the matter of bookkeeping, while in no sense
Impairing 1 the efficiency of the service. The mod
erate application of the non-accounting system to
email offices will eliminate about thirty thousand,
or nearly one half, of all the postoffice accounts
from the present complex report and bookkeeping
system, or would at least greatly simplify the
same.
It appears too obvious to require argument that
the most efficient service can never be expected as
long as the direction of the business Is, as at pres
ent, intrusted to a postmaster general and certain
assistants selected without special reference to ex
perience and qualifications and subject to frequent
change. Before the Postmaster General and his as
sistants can become reasonably familiar with the
rations of the service they are replace.l by
others, who. In turn, are called upon to resign *♦*-
fore- they can. In the nature of things, becom"
qualified "by knowledge ami experience to perform
ih'ir allotted tasks. Under such a system a larsrr
railroad, commercial or Industrial business would
inevitably »;•. into bankruptcy. .•:■ ' t:>- l\>st<»fiie^
Department has averted thai fate oniy becatMO
the United States Treasury ht«s been available Us
meet deficiencies.
The report of the weighing of th» malls, au
thorized by the postofiVi appropriation act fi-r the
current year, will not it* completed until April or
May next, and inasmuch as OStS expected to <•«
disclosed thereby will he Important for ronsidem
tiors In connection with the final report of the
commission, the same cannot re made until after
the date named, becaus* chances of fxl^tinp law
shouUi be maturely considered frrm every avail
able point of view Vi ml in the l!?ht.of nil tne defi
nite knowledge obtainable.
The commission consist* Si Bmaswii pes>ro«e.
Carter and Clay, sad llaajnsaartattves Overstree?,
Gardner, of New Jersey, and Moon.
SPEAKER COLE'S CASE ARGUED.
Quashing of Indictments Asked in the Has
sachusettts Superior Court.
Salem. Mass., Feb. 10.— After extended arguments
to-day by counsel on both sides. Chief Justice
Aiken. of the Superior Court, took under consid
eration the question of quashing the indictments.
containing i.'3 counts, returned against John N.
Cole, Speaker of the lower branch of the legislat
ure, in which he is charged with soliciting reduced
faros for school children. The Chief Justice an
nounced that be w..ul l take th»« pap»-r«i in Ik* c— '.
and then adjourned the court until to-morrow. H«>
did not say when he would render his decision.
H. L. Hurlburt based is plea for the quashing
of th. indictments on lbs jtroun'l that no offence
against the law hail been committed, and also that
the specific cause of the statutes under which the
indictment was drawn was unconstitutional. L>s
trlct Attorney Peters replied that the indictment
was In strict keeping with the provisions of the
statutes.
DECISION FAVORS AVERY AUTOGAS COM
PANY.
Milwaukee. AVls.. Feb. 11. — The United States*
Court of Appeals, at Chicago, sustains Judge
Quarles in his order restraining the Commercial
Acetylene Company, <.f New i'ork. from bringing
suits against agsatts, customers or users of .1 .i. -
mobile lighting equipment sold by the Avcr> Port
able Lighting Company, of Milwaukee.
RURAL PARCELS POST.
Senator Burnham'a Bill Said to Hera
Presidents Approval.
"Washington. Feb. — Senator Bumham. ««
New Hampshire, to-day Introduced a measure at
Importance to rural Interests throughout th»
United States. It Is a bill to provide a rural de
livery parcels post for merchandise and other ar
ticles actually mailed on rural delivery route*.
The rural free delivery routes now number mor*
than 38.000. and on them over 15.000,000 person*
receive a daily postal service.
The measure introduced by Senator Buroham .
has the Indorsement of the President and Poet
master General Meyer. It provides. In brief, for
the establishment of a domestic rural parcels post
at special rates of postage, for the delivery of
foodstuffs, drygoods. drugs, books and other mer
chandise. The rate of postage shall be 5 cents for
the first pound and two cents for each additional
pound or fraction thereof and on parcels weighing
less than one pound as follows: Two ounces or
less. 1 cent; over two and under four ounces. -
cents; over four and not exceeding eight ounces. 3
cents; over eight and not exceeding twelve ounce*.
4 cents, and over twelve ounces and under one
pound. 5 cents.
Two important limitations are placed on the ■—
of the proposed parcels post by the followlns
provisions:
That nothing herein contained shall be taJcen as
authorizing the acceptance or delivery at the spe
cialrates of postage herein provided of an;. par.-*!
o^red by any person acting as agent or represent
ative upon commission or otherwise, for anyP?r»OT
or company not resident on such rural, delivery
r °That only such parcels shall be received for .*»
liver? at thf sp^ikl rates of postage herein pro
vided as ar« offered by bona fide merchants «r
yjaiArW whose regular places of business are on
rurll deUx^ routes covered by this act. in th*
ordinary an.? regular course of their business, and
by ?esTdent S on such routes in their Individual
capacity.
The bill provides that the parcels carried »h»:t
not weigh more than eleven pounds or be more
than three feet six Inches lon* Perishable articles
will be sent at the sender's risk and wBl cot be
accepted at any postofflce more than three hours
before the departure of the mall from tie offlc«.
Senator Kean. of New Jersey. Introduced a meas
ure presenting Postmaster General Meyer's plan
for reducing the rate on parcels sent through the
mails from 15 to 12 cents a pound and Increasing
the weight limit from four to eleven pounds. Tn«
bill provides that such parcels shall be carried bm
fourth class matter at tha following rate.: One
ounce one cent; over one ounce and cot exceeding
three ounces, two cents; over three ounces and not
exceeding four ounces, three cents; orer four
ounces and not exceeding five ounces, four cent*;
over five ounces and net execeedln? six ounce*
five cents: over six ounces and not exceeding eight
ounces, six cents: over eight ounces and not ex
ceeding twelve ounces, nine cents, and over twatr*
ounces and not exceeding one pound. 13 oeat*,
TOBACCO HEARINGS RESUMED.
After two weeks spent in taking tastlmcay la
the South, the hearings In the government^*; salt
to dissolve the American Tobacco Company were
resumed yesterday before United States Commis
sioner Shields. Only one witness was examined.
General Auditor Shroeder of the American T»
bacco Company, who produced a vast array of
prepared s.u. all of which had been previously
brought out verbally by various witnesses.
LARGE HIGH SCHOOL REGISTRATION.
Th~ registration in the entrance classes at the
high schools was reported yesterday by Supertn
t*:Kt':it Maxwell to be phenomenally large. Taat
Sgurai are: Manhattan. :.23: . Tho Bronx. »Tt;
Brooklyn, 5.151 : Qiifi -. 612: Richmond, 150; total.
t>.7*". It Is rxpectpd that ',000 will be reached «•
;.,-■• aurins the w«;«>!i.
Ihe man who uses his
bra in inplanninc and exe
cuting valuable idea.^ ha*
practically no limit to hi*
monc\ -making success.
I he daily waste of brain
and nerve cell* caused by
mental activity must be
promptly replaced by new.
material -proper food. Thi»
is a natural process.
<irape-Nuts ha* tor
years been the ideal food
for the brain worker It
i> madeof w heat and barley
including the natural '"vital
phosphates" otthese train*,
which form, with the al
bumen of the food, the nat
ural material for brain ceils.
Try Grape-Nut* with
cream or good milk for
brcukiast and supper — it's
delicious as well as up
building
♦•There's a Reason."
Kea J the little booklet -Th*
Road to Well v iilc, " in pkgs.
■