Financial Legislation and its Limitations. 



21 



reserve against government notes, and by giving to the United 

 States treasurer additional facilities of borrowing. The best 

 way, however, would undoubtedly be to abolish government 

 paper money altogether and to enforce strictly redemption of 

 bank circulation by the banks themselves. But it was not felt 

 that the country was ready for such a liberation from financial 

 swaddling clothes ; the labors of a long series of monetary re- 

 formers were neglected. So the act made a slight move towards 

 greater note elasticity by allowing the banks to issue notes up to 

 lOO per cent, of the bonds deposited instead of the 90 per cent. 

 theretofore permitted, and to re-issue notes immediately after 

 they had retired them, instead of observing the period of delay 

 which a law of 1882 had prescribed, and by reducing the tax on 

 circulation. At the same time it lowered the interest on the 

 bonds deposited as security. Action of this sort is noticeable in 

 .the present connection chiefly as showing that the question of 

 elasticity of the currency was under actual discussion, and that 

 the legislature, although reluctantly, was compelled to acknowl- 

 edge the pressure of enlightened ideals. 



§ 18. The Hon. Charles N. Fowler, of New Jersey, has, in a 

 series of often amended projects, offered to the country a measure 

 of real reform, and may be regarded as one of the leading 

 educators of public opinion found in political circles. Even his 

 bills do not go to the full extent of complete freedom of issue, 

 but are largely influenced by the German model. He proposes to 

 remove the bond guaranty ; advocates the safety fund ; and, until 

 his last bill, proposed to tax additional note issues at an increas- 

 ing rate. For some reason he has supported, in his latest proposi- 

 tion, a uniform tax on all issues. 



The safety fund principle would appear to be in accord with 

 the political movement of the time. The tendency now is for all 

 interests to unite, each in its own domain, thus forming separate 

 guilds or economic classes. The consolidation of the laboring 

 classes into national trade unions on the one hand, and of almost 

 numberless manufacturing interests into national and inter- 

 national trusts, on the other, is an evidence of this spirit of the 

 age. That legislation should help the banks to combine into one 



135 



The gold 

 standard act of 

 1900 recog- 

 nized the need 

 of greater 

 elasticity of 

 issue by some 

 concessions in 

 that direction. 



A safety 

 fund assessed 

 on the banks 

 themselves to 

 guarantee both 

 deposits and 

 notes would 

 seem to be 

 politically 

 expedient. 



