lic Library.

THEODORE ROOSEVELT

Contributing Editor

R. D. TOWNSEND

Managing Editor

The Currency Bill is now passed, signed, and is a part of the law of the land. The sensible business men of the country will not want to waste time discussing its theoretical possibilities, but will begin at once to prepare themselves to conduct their business under its provisions. It is not, however, It is not, however, a waste of time briefly to review its history and the forces which brought it into being, and to consider what, if any, changes it will make in the daily work of the merchant, manufacturer, banker, and farmer.

To the average man or woman who has a bank balance or a check-book there will be no visible changes whatever in the banking system of the country, except such as may possibly appear in the form or typography of the five-dollar National bank note. Receiving tellers will go on accepting deposits, paying tellers will cash checks, and presidents, vice-presidents, cashiers, and boards of directors will continue to make loans under the new Currency Law just as they do to-day under the National Bank Act. The daily operations of the National banks will be unmodified; the depositor or borrower will have no new window to go to, no new officer to see, no different kind of a signature to make to his check or his note, and no new formulas or red tape to understand. The man who will feel the immediate difference is the merchant or the manufacturer or the farmer who is a legitimate borrower of money and who has assets or credit which entitle him to borrow money.

again in 1907, many of the richest and biggest National banks in the country practically suspended payment-that is to say, were technically bankrupts-because they could not get the bank-note currency necessary to pay their depositors' demands. During those panics practically every bank in New York adopted the rule not to pay out more than a very limited amount in bank notes to any one customer, no matter what the customer's credit and assets were. These banks adopted this rule because they themselves could not get the currency. Under the new law no such currency panic will be possible. merchant who has tangible assets and unshaken credit may go to his local bank at any time and borrow money on his personal note properly indorsed. If the local bank has not the currency to give him, it may go to the Federal Reserve Bank in its district and, presenting the borrower's note as security, it may get bank notes for him which will circulate all over the country. If the Federal Reserve Bank has not the necessary bank notes, it can go to the United States Treasury and get them, provided the original borrower's assets or credit are good.

A CONSTRUCTIVE

MEASURE

This is a simple statement, shorn of all technicalities, of the fundamental and important operation of the law in commercial and financial transactions. It will be no easier than before for the man with poor assets or bad credit to borrow, but it will be immeasurably easier for the man engaged in a legitimate and profitable business to turn his wealth or his credit into a form which will be accepted without question throughout the country. The Outlook Company will probably never again have to pay its employees in checks because its bank has not the bank notes with which to meet The Outlook's legitimate demand on its weekly pay day for the money which it has deposited in the bank during the

There is another type of man who will welcome the operation of the law, and that is the banker of moderate capital in a moderatesized city or town who knows his customers personally and wishes to take care of their legitimate needs, and who has been prevented from doing so in times of stress under the old National banking act. In 1893, and

week. The technical statement of the matter is that at last we have an elastic bank-note currency, the volume of which expands as the number of the trade transactions throughout the country increases and which contracts as the number of Nation-wide trade transactions decreases. We do not wonder that President Wilson, who signed the bill on the night of December 23, expressed "a very deep gratification" at being able to sign it. He was entirely justified, by the provisions of the bill itself, by its history, and by the spirit with which both houses of Congress have treated it, in calling it a great constructive measure.

THE HISTORY OF THE
CURRENCY BILL

To what body of men is the country most indebted for the enactment of this great constructive measure? To the bankers. This may seem paradoxical in view of the vigorous, united, and some of the time bitter opposition of the bankers to the bill during the past calendar year, but it is nevertheless true. For ten years the bankers of the country, aided by the economists and the scientific students of finance, have been urging the people to adopt a system of "elastic currency,' " based upon assets, in place of the fixed system based upon Government bonds. When this idea was first preached by the bankers, it was regarded with surprise, not to say with dismay, by the average man who had been taught to believe that the National bank note, fortified by a Government bond, was the best bank note in the world. But the bankers persisted with their campaign of education. One of the earliest advocates of an "elastic currency" was Lyman J. Gage, who often spoke in public on the subject ten years ago. Mr. Gage was then the president of one of the great trust companies of New York City, and had only recently retired from the honorable post of Secretary of the Treasury in the Cabinets of Presidents McKinley and Roosevelt. He was an ardent and accompched advocate of an elastic currency, and ne knew how to make its advantages and its operations clear to the layman by simple language and concrete illustration. Such publicspirited bankers as Mr. Gage finally created a common knowledge in the country of the meaning of the term "elastic currency " and a common desire to enjoy its benefits. But, having set the great ball of public

opinion rolling in the direction of elastic currency, the bankers then made the mistake of trying to deflect its course in the direction of private banking control of that elastic currency. The Monetary Commission of 1908 was formed and the Aldrich Bill was framed, providing for an elastic currency, but for almost rock-ribbed private control. The Aldrich Bill failed. Public opinion was determined to have elastic currency with parámount Government control. The GlassOwen Bill was written and introduced into Congress in deference to this public opinion. The bankers as a class, although there were many honorable exceptions, fought for private control to the last ditch. But they had created a Frankenstein monster which they could not manage. Thus we have had during the last six months of 1913 the anomalous condition of the bankers of the United States banded together to fight a reform which they themselves had instituted. Their very opposition, however, simply served to clarify public opinion. It is for these reasons that we say that the country owes the new law first of all to the bankers.

It also owes much to the Monetary Commission and Senator Aldrich, who collected the statistics, figures, and opinions regarding the best currency practice from all over the world. It owes much to President Wilson, who, although not a financier, quickly saw, as a student of history and economics, the great human importance of the reform. To his combination of authority and patience is due the fact that Congress persisted in the face of many difficulties until the bill was passed. Much is due to Congress itself, of course, and especially to its spirit in laying aside to so large a degree the ordinary considerations of political partisanship. The Currency Bill was the favorite measure of a Democratic Administration; its passage will redound to the political credit of the Democratic party; and yet all the Progressives in Congress and many Republicans voted for the bill. Perhaps the most marked instance of patriotism rising above political partisanship or class consciousness is found in the example of Senator Weeks, of Massachusetts, a Republican and a banker, who advocated the bill and voted for it. We take off our hat to him.

Credit is also due to Senator Owen, of Oklahoma, whose name is attached to the bill, and who followed its fortunes in the Senate with assiduity and loyalty.

But the one man of all who should have

the statue, if a statue were ever to be raised to commemorate the new financial epoch which it is hoped and believed the bill introduces into this country, is Carter Glass, of Virginia. Representative Glass was, until the introduction into Congress of the new Currency Bill, unknown outside of his own State, and was certainly not the most widely known man in his own State. He is not a banker; he is not even a lawyer. He learned the printing trade and became a newspaper man, and is now the owner of a daily paper in Lynchburg, Virginia. But he has studied night and day both the scientific and the practical bases of currency reform. He learned both the theory and practice of banking, and he was able in debate to meet the strongest bankers on their own ground. He has been frank, sincere, and open-minded, and he has been actuated by his own almost passionate belief, not that the Democratic party or the bankers or the borrowers or the lenders should be considered in framing the bill, but that the United States of America should be considered. He has won the confidence of his colleagues and the respect of his opponents, and by his course has contributed to the reputation of his native State of Virginia, as mother of statesmen."

ground for concern when men of inexperience face those same difficulties. The speeches at this dinner consisted mainly in statements of what those difficulties in the islands were and of what had been done towards overcoming them.

Mr. Dean C. Worcester, who has recently been displaced as Secretary of the Interior of the islands, dealt especially with the problems of the non-civilized tribes-in particular, the Moros. The point which he emphasized was the necessity of giving to the Moros our civilization not by word of mouth so much as by example.

The principal speech of course was that by Mr. Forbes himself. He told how political discussion by the native agitator had been met by providing those material things that will supply the economic independence on which political independence must rest-improvements in ports, roads, buildings, wells, bridges, and the like. He dwelt at some length upon the importance of the question of land titles, pointing out the fact that the settlement of the land title question lies at the foundation of citizenship. He recounted also the work that had been done against unusual obstacles in providing adequate titles for land. He told of what had been done in training Filipinos on the financial side of government. He expressed regret

that those who had been chiefly instrumental in dealing with the problems of land titles and of the education of young Filipinos in finance had been displaced under the present Administration. He contrasted the primitive means of transportation that prevailed about Manila when he went there with the hundreds of miles of road and of railway that now run in all directions. He contrasted the former polluted water supply that carried death with the artesian wells that are now in operation. He contrasted the former disinclination of the well-bred Filipino to soil his hands or to make physical exertion with the present vogue of baseball. He likened the turning of the present Filipino government over into the hands of the Filipinos, with their undeveloped capacity for self-government, to the turning of a high-powered automobile, which may be safely driven by a trained chauffeur, loose in the street with the throttle wide open.

Even the most prejudiced against what they call the imperialist policy would, we think, acknowledge the sincerity of the speakers at this dinner in their concern for the future of the islands. We believe that a