PREFACE

DURING the past three years a marked change in public sentiment regarding the money question has forced its way into the national councils. In the act of May 30, 1908, the two houses of Congress, for the first time since the Civil War, agreed that a bond-secured currency was not the only kind of bank paper fit to circulate in the community. Although no bank notes have been issued under the act, authority exists to issue them on the security of commercial paper owned by the banks and retained by themselves in associations formed for the purpose.

The preconceptions of the past having been shaken, other steps followed. A National Monetary Commission was formed, which has collected and published a mass of facts, of legislation, and of historical and general information on the subject of banking far exceeding in magnitude anything ever brought together heretofore in the world’s history. Most, if not all, of this compilation is well worth its cost, for although no person can be expected to read the whole of it, all who are qualified to take part in the discussion, and in the work of framing monetary legislation, can readily find in it what they need.

Another indication of the drift of opinion is found in the act of Congress providing for the issue of bonds for the construction of the Panama canal, which are not available for security for national-bank circulation. These are the first bonds so issued since the national banking law was passed.

It implies that the government now looks to the end of a bond-secured currency.

What is to take its place has not yet been decided. The chairman of the National Monetary Commission has outlined a plan for a Reserve Association of America, with a capital of $300,000,000, which shall be the fiscal agent of the government and be owned by the national banks participating in proportion to their capital, their shares not to be transferable. The full text of this plan is printed as an appendix to this volume, and an analysis of it is given in Chapter XXI. The American Bankers’ Association has given a favorable reception to the plan through its Executive Council. Altogether there is now a fair prospect of legislation in some form which shall give us a flexible currency redeemable at all times in gold, and a loan market for commercial paper of standard grade which shall be available at a rate of discount uniform in all parts of the country where participating banks exist.

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