The fact is, these bond-secured Bank Notes are only another form of Government credit put into circulation through the disguise of Government bonds.
Every single criticism and objection that I have made tonight to the United States Notes are applicable equally to these bond-secured Bank Notes.
First: For all banking purposes, economically speaking, they are practically rigid and inflexible, at least so far as current needs go.
Second: These bond-secured notes do not spring into existence, or into being, as checks and drafts do in connection with some business transaction, but are tied up with a bond speculation.
Third: They cost those who use them as currency from five to six times as much as the right kind of currency would.
Fourth: If we adopt the right kind of a currency system, it will set free $750,000,000 of capital which is now tied up in these Government bonds, and this vast sum which would be realized from the sale of the bonds will assist to an amazing degree in supplying much needed capital to the commerce of the country.
Mr. Merchant: How is that?
Mr. Banker: The banks could then sell all the bonds now deposited to secure these bond-secured Bank Notes. They amount to $750,000,000.
That these bond-secured Bank Notes are a monument of our stupendous folly, and have been a curse to the business interests of the country, I am sure no one here will attempt to deny.
Mr. Lawyer: The Japanese, thinking that we were a smart people, copied this bond-secured bank scheme from us, but immediately discovered that it was worse than worthless and repudiated it. No one else has been foolish enough to adopt it.