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MR. TIMOTHY COLE
WHOSE REPRODUCTIONS OF GREAT PAINTINGS HAVE BROUGHT HIM FAME

AS ONE OF
TO MEMBERSHIP IN THE AMERICAN ACADEMY OF ARTS AND LETTERS
THE WORLD S FOREMOST WOOD ENGRAVERS AND RECENTLY BROUGHT ABOUT HIS ELECTION

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MISS LILLIAN D. WALD WHO RECENTLY COMPLETED HER TWENTIETH YEAR AS HEAD WORKER OF THE HENRY STREET SETTLEMENT IN THE EAST SIDE OF NEW YORK CITY, WHERE SHE HAS ACHIEVED AN INTERNATIONAL REPUTATION AS A HELPFUL AND PRACTICAL SOCIOLOGIST

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THE GROWTH OF AMERICAN CITIES UPPER PICTURE: VIEW OF MAIN STREET, DALLAS, TEX., IN 1887. LOWER PICTURE: THE SAME VIEW IN 1913. THE POPULATION OF DALLAS INCREASED FROM 42,638 IN 1900 TO 92,104 IN 1910, A GAIN OF 116 PER CENT.

FOR AN ELASTIC CURRENCY The new currency bill provides a Federal

Reserve Board and twelve Federal reHE chief advantage of President serve banks. These banks have the power

Wilson's reform in the currency to fix the discount rate each in its own 1 is that we are going to have it. district subject to the approval of the For the last fifteen or twenty years we

Federal Reserve Board. have known that our currency system

That there should be some wise and was inadequate, but nothing was done. responsible agency to have this rate-fixing The bill that passes will not be perfect power is generally accepted. but it will in all probability improve the The two fundamental objects of the present status. For that and the prompt- bill are undoubtedly sound. How good is ness and vigor with which this part the machinery created to attain these obof the public business is being trans- jects will not really be known until it acted we may be grateful.

has been in actual operation. It has proOur currency at present is of two kinds: voked all manner of criticism, some loose that which is issued by the Government, and unscientific, some from men whoseopinconsisting of metallic money, gold and sil- ions deserve most serious consideration. ver, United States notes, and Treasury At the head of the national banking notes; and that issued by the national system will be the Federal Reserve Board, banks in the form of notes secured by consisting of the Secretary of the Treasury, United States bonds. Whether the coun- the Secretary of Agriculture, the Comptry is doing a big business or a little busi- troller of the Currency, and four members ness, the amount of currency in circulation chosen by the President with the approval stays about the same. Of course, it ought of the Senate. to vary with the country's commercial Under the control of this Board will be transactions.

twelve (or more) national reserve banks, This the new bill proposes to effect by each one serving a certain district. Beallowing the issue of bank notes secured sides a general supervision of the adminisby commercial paper, so that when com- tration of the reserve banks the Board merce is large and its paper plentiful the will have the power to order the reserve currency will automatically increase and banks to rediscount one another's paper; when it is scarce the currency will contract. to suspend all reserve requirements for When a man puts a note in his bank, the thirty days and to renew the suspension bank forwards it to the Federal reserve for periods of fifteen days each; and to bank which can issue notes against it. regulate the issue and retirement of When the man's note is paid, the currency treasury notes - the new elastic currency. secured by it is withdrawn from circulation These notes shall be obligations of the by the reserve bank.

United States. They shall be legal tender, This first fundamental change in our and redeemable in gold. When a Federal currency system is generally approved. reserve bank issues these treasury notes Most other countries have a central it must have commercial paper of equal bank which has the power to fix the rate amount as security and must besides keep a of discount for which a bank will accept gold reserve of 33 per cent of the amount commercial paper for collection. This is of currency issued. As the commercial paa kind of ally to an elastic currency in per coming in to a Federal reserve bank vatimes of emergency. There has been no ries, so will vary its issues of treasury notes. institution in the United States to do this. It is obvious that this currency will In panic times we have to count upon some ultimately drive out of circulation the makeshift measure, like the Aldrich-Vree- present national bank notes, which are land law that was enacted after the 1907 secured by government bonds. Therepanic to provide for the issue of "emer- fore the law provides that as the present gency currency," if the country's financial bank notes are retired, banks may turn machinery should happen to break down in the 2 per cent. bonds of the United again. In 1914 this law expire

States, which they have hitherto used

as.

security for notes, and receive 3 per cent. bankers. It would have in a measure bonds which do not carry that privilege the same feeling toward a group of bankers and which will run for twenty years. on the Federal Reserve Board as it would

The Federal reserve banks will get have toward half a dozen railroad presitheir capital from the national banks of dents as members of the Interstate Comtheir district, which are to invest 10 per merce Commission. cent. of their own capital in the reserve The bankers, and many other people, bank and to be liable for another 10 per too, fear the power of the Federal Reserve cent. on call. In addition, every national Board in the hands of politicians. Another bank will be required to deposit without in- set of people fear such a power in the hands terest 5 per cent. of its own demand deposit. of the bankers.

The reserve banks financed in this The solution of the problem is a great manner are to deal in gold and bullion, opportunity for the President - an opporat home and abroad; to invest in govern- tunity to appoint great men.

The real ment (of this and other countries) and opposition to the bill comes from people state bonds; to deal in foreign commercial who are afraid that the great power given paper and to open and maintain bank the Federal Reserve Board will be used accounts abroad, and to establish, every unwisely or abused. But the wide powers week, a minimum rate of discount. This is of the Board also give it a magnificent the second fundamental change that the opportunity for public service. In the new law brings about.

hands of the proper men it would be a There are other important provisions tremendous advantage to the trade and of ne law drafted in an effort to increase commerce of the country. A Federal the farmer's facilities for borrowing money Reserve Board, composed of the Secretary on his land and to establish foreign of the Treasury, the Secretary of Agribranches to help our foreign trade. These culture, the Comptroller of the Currency, provisions, like the rest of the bill, will be and four permanent Presidential approved by service. If successful they will pointees of a character that would combe of tremendous importance to the whole mend them to the whole country, would be Nation, because improved rural credit viewed somewhat as we look upon the could add wonderfully to the productive- Supreme Court, much as Englishmen look ness of our farms, and American branch upon the directorate of the Bank of Engbanks abroad could be of inestimable land (which is, by the way, not generally advantage to our growing foreign trade. made up of bankers.)

It is, of course, inevitable that in making Not even the appointment of justices to a new banking and currency system a great the Supreme Court of the United States is deal of controversy is stirred up. There a greater opportunity or responsibility for are many criticisms of minor provisions the President than the appointment of the which may be changed in the passage of members of the Federal Reserve Board, the bill. But besides this there is a vigor- and incidentally it greatly increases the ofous criticism of the machinery for carry- fice of the Comptroller of the Currency and ing out the two fundamental parts of the adds to the tasks of the Secretary of Agribill, and this criticism is particularly from culture and of the Secretary of the Treasury. bankers. They complain that it is folly to have the Federal Reserve Board WHY POLITICS IMPROVES composed of seven members only one of whom must be a banker. They who are

NE of the tests of a President's experts are, inferentially at least, almost

ability to succeed in the hardest excluded from the Board which controls

task in the world is the promptness the currency of the country. The criti- and wisdom with which he handles such cism is natural. On the other hand the situations as that which arose out of the public, as the discussion of the Aldrich Attorney-General's order to delay the bill showed, have not complete confidence trial of the Diggs-Caminetti case in Caliin a central organization dominated by fornia. The Attorney-General made a

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