Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1892-12-08
Prot. kiniev'S AOle Paper Before
the Contemporary
Club.
4 Wisconsin University Professor
lntelligently Discussed an
Important Question
Work of Clearing Houses, Merits
OF i. S. Bonds aud Many
Other Topics Treated.

! III AaC-SOn a few evenings since
! Prof. David Kinley. of the economic de
partment Of the Wisconsin university,
gave Il practical address on The Use of
/ National Banks in Government Finan-
{ cial Operations.
! An unusually large and Gull
tured audience assembled at the meet
ing of the Contemporary club at the
/ Unitarian church last evening. The
public had been well informed as to
the program, the reading of an original
paper on The Use of National Banks
! in Government Financial Operations,
by Professor David Kinley, Of the uni
I yersity, and a discussion of the paper
by Mr.. n. 3. Van Slyke, president of
the First National bank, and other citi-
zens versed i'll finance Mr. Kinley's
paper was q very able production and
showed careful research.
'The opinion has been expressed"
said Prof. Kinley, that the proper in
situations for keeping the government
deposits and for managing crises are
the banks and the clearing houses.
The statement can be narrowed some
what TO the national banks and the
clearing houses. It is not necessary to
discuss here the comparative merits of
national and state banks. But only the
national banks should be used because
they are the only ones over which the
national government can exercise di-
! 80
TEN has faults, but it has served It's
purpose of furnishing a uniform and
safe currency so long that it ought to
be preserved. It's failure to make our
currency elastic is due in part to I'M
wise regulations as to the security and
redemption of notes and to the use of
the reserve; but more so to other indie
pendent features Of our currency sys-
TEN, especially the use of government
notes, and to our silver policy But
these are defects that can be renedied.
"Any proposal for a more extended
Use of the national banks as public de
positories, and for enlarging their func-
tons as regulators of the currency"
confined the speaker. "nust, Of course,
+
years more the system will pass out of
existence. and must, therefore, include
some suggestion for it's preparation in
some form. The plan about to be out
lined assumes that the national bank
ing system will be continued. There
is really no good reason why it should
be allowed to disappear for the only
condition affecting its existence which
will soon change in the extinction of
the national debt But it is difficult to
see what valid objection can be made
TO basing the circulation on other bonds.
The law permits the secretary of the
treasury to accept other than United
States bonds as security for public de-
pOsits; if there are other bonds which
are, in the opinion CT congress. sufft-
GENTLY secure for that purpose, it NAV
fairly be assumed that congress should
consider these same bonds a sufficient
surety for bank issues.
'Premising then that he national
banking system will be continued,
Prof. J\inlqy said that the independent
treasury with it's bad Influence on the
money market, could be replaced with
the banks as repositories by modifying
the banking laws in accordance with
the following suggestions:
Il Make the clearing houses Of the
four or five most important cities in
different sections of the country agents
of the government in it's relations with
the banks, dividing the country into
departments and putting one Of the
clearing houses at the head, for govern
ment business of all the banks in a de-
partment.
$50. Every national bank to become a
member of the clearing housa in its
section or department
50. Deposit all government money
In the national banks with the excep-
tons noted below, and require all gov
eminent receipts and payments to pass
through these banks as far as possible,
on these conditions:
''The bank seeking to become a gov
ernm9nt depository shall deposit with
its clearing house bonds Of the charac-
ter required as security for circulation,
Of such amount as in the discretion of
the secretary may be required, but
never to be suffered to become less
than the par value Of the amount of
public money held by the bank. The
clearing house shall have the right to
reject, under general rules adopted by
all the clearing houses and approved
by the secretary of the treasury, any
Of the bonds offered that it deems IN
safe, and shall then forward those
deemed safe to the United States treas
urer at Washington. On receipt Of
these bonds by the treasurer, the banks
shall on the order of the treasurer, re-
ceive a deposit of public money from
its clearing house, If there is a surplus
there, or else by transfer from any de-
partment where a surplus lies, and
shall also be appointed a collector and
disburser of public money under proper
regulations
In continuing the speaker said that
another condition was that all deposi-
tory banks should make daily reports
to their respective clearing houses, and
the clearing houses to the secretary of
the treasury. Any loss to the govern
ment from false returns from any bank
or from depreciation Of the bonds de-
posted should be made good by the
clearing house to which that bank be-
longs. All drafts for government money