Wheeling Sunday register. [volume] (Wheeling, W. Va.) 1882-1934, 1891-10-04
A NEW BANKING sYsrAA1.

]
national banking system the basis OF
the one be proposes, but he would so
change and modify it as to make it per-
manent while at the same time enlarg-
ing it's functions and increasing its use
fulness.
In the first place, to give an outline
OF Mr.. HARTER's plan, the list OF bonds
acceptable as security for circulating
notes are to be enlarged so as to include
state, county, city and railroad bonds.
Street railroad bosds are excluded be-
cause their franchises are usually Of
short duration. According to Mr. HAIR
TER, bonds secured by mortgage on
farms and other real estate have always
proved inferior and usually unsafe
security for banks. Hence, under his
proposed system, real estate, the basis
Of all wealth, is to be outlawed.
All bonds thus rendered available
must be registered, and the principal
and interest must be payable in gold OF
the present standard Of weight and fine
ness. Hence the new system has mon
ometallism as it's basis. All such bonds
must have been listed for at least five
years prior to their deposit for security
as circulation, upon at least one stockex-
change located in some city OF the
United States having population OF
100000 or more. This rule would ex-
clude all bonds $50 Mr.. HARTER says
except those having well-establiShed
character as well as recognized high
value.
No bond which has ever been in de-
fault for nOn-payment Of interest, or
which has. sold on any stock exchange
below par for within five years, or
which has sold on any stock exchange
at less than a premium Of 5 per cent
above par within three years of propos-
ed deposit as security for circulation, is
to be accepted under this law. The re-
suit Of this, Mr.. HARTER thinks, would
be the bonds deposited as security for
circulation would have an average gold
market value OF at least ITO, which
would make them to-day very much
better security for bank note circulation
than United States bonds were from
1862 to 1865.
No State bond representing a per
capita debt Of over two dollars for each
Of its citizens, no county bond repre-
senting a per capita debt of over four
dollars, and no city bond representing a
per capita debt of over eight dollars, is
to be accepted as security for bank |
notes. All railroad bonds deposited are
to be secured by mortgage, and none |
are TO be Of the form known as trust or
debenture bonds. No bank is to have
more than 90 per cent. Of its bonds on
deposit of the issue of any one State,
county, city, or railroad. Whenever
any bond on deposit under this law sells
at an average price Of less than los for
a period Of thirty days, the comptroller
OF the currency is to require it to be
replaced by bond fully meeting the
quirements Of the proposed law.
There are other provisions in the
Lature Of safeguards, which we need
not notice here. Among other things, !
Mr.. HARTER's proposed law provides
and this is the important point-that |
the present United States tax on the
circulating notes Of State banks shall |
cease, provided such notes are secured
in precisely the same manner as ma
tional bank notes, by bonds deposited
with the Auditor and Treasurer Of the
State, and it further provides that the
State in which the bank IS located shall
guarantee the payment of its circulat-
ing notes. This is sort Of extra ma
ton twist FOR which no good reason
exists, since II the notes are guarded as
those OF the national banks would be,
no further precaution would seem to be
necessary.
The amount Of the notes issued by any
State bank under this proposed law is
to be under the contract of the State in
which it is located, and nothing in the
law shall restrict the circulating notes
OF any State bank to 90 per cent. OF the
capital paid in; but no bank shall issue
notes in excess Of 90 per cent. Of the
par value OF the bonds deposited by it TO
secure the payments of the notes. Mr..
HARrER says this provision will be re-
cognized as sound by most competent
bankers, and ne thinks that experience
will lead to its extension ultimately to
national banks. IL gives the banks the
power TO promptly increase the money
circulation when urgently needed, such
extra supply being retired under the in
huence of the 2 per cent. tax on circu-
Iaeon, thus giving flexibility to the cur
rency.
This is an outline of Mr.. HARTEB's
proposed scheme. While we are not
prepared to endorse it, it is, neverthe-
less, we'll worthy of careful considera-
ton as one solution Of question that
must soon be settled in some way.
As INTERESTING a piece OF news as
any that flashed over the wires yester-
dov wes thar contained in the bulletin