New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1882-06-17
TIE R4NKJYG PROBLEM

1t is unfortunate that the Senate is called to
act upon the Bank Charters bill, with pro-
posed amendments, before the House has taken
any action on the proposed repeal of taxes.
On many accounts, the delay of the House in
acting upon the question of taxation is TO be
regretted, but it is especially embarrassing, be-
cause, in the hope that taxes will be reduced,
some Senators may be led to support provi-
sons which, in the absence of any reduction
of taxes, will probably cause the surrender of
their circulation by many banks. At it stands,
the bill now in the Senate can be safely sup
ported only on the theory that material con-
traction of circulation is desirable, or that such
a contraction would not result from the legis-
latiOn proposed, even If there should be no
modification OF taxation. This theory, we be-
leve, the Senate ought not to adopt. 1t can
hardly be that a majority in that body will
vote Intentionally for a contraction of the cir
culatiOn, and it would be a mistake to assume
that there is no danger of contraction from
the measure pending, if adopted without
change.
Senators Sherman and Allison have proposed
amendments, which arc designed in some meas
ure to guard against dangers that the passage
of the House bill involves. BY attaching
provision for the issue of three per cent bonds,
which are not to be redeemable until all the
outstanding three and half per cents have
been retired Mr. Sherman seeks to make
basis for bank circulation which will last little
longer than the three and half per cents now
held by the banks. But there are only
about $3.50, 100000 of the three and half
per cents now uncalled, and these would be
tIo "a IF ratip in
about three years. Mr. Sherman's plan would
not lessen in the slightest degree the rapidity
of retirement, but would only give the
banks the advantage which most of them
have now of being among the last
holders to lose their bonds. For this change,
which would place the greater part of the
banks i'll no better position than they hold
now, inasmuch as they hold large proper
ton of the earliest extended five per cents. the
banks would have TO surrender half of one
per cent interest. Some would assent, acting
quickly. Others, having early bonds of the
issue now outstanding, would wait a little,
and then, when they find that half of the
new bonds have been taken, so that they
would be liable to lose either the old or the
new within about two years, would be quite
apt to decide upon a surrender of circulation.
The plan of Mr.. Sherman does not appear to
escape any difficulty or danger, after all. 1t
merely transfers the trouble from one set of
men TO another.
| Senator Allison proposes to revive the issue
of gold certificates on deposit of gold, which
shall be held for their redemption. This is a
reasonable and proper provision, and will serve
the public convenience, but it does not appear
that the banks will in any way be helped
thereby. Gold certificates can be issued in
stead of bank otes, if the contraction should
become severe, but there is nothing in this
provision to prevent complete collapse of the
banking system. The fact is that Congress
has the cart before the horse. 1t is exceed
ingly important, first of all, to make such pro-
vision that general surrender Of circulation
| by the National banks shall be prevented.
None of the amendments in the Senate will
prevent that, without action which the House
has not yet shown a willingness to take Oh
the bill to reduce taxation.