Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1892-12-08

III which the defaulting bank is stunt
ed. All government mon Y shall be de
posted in the banks in accordance with
the foregoing provisions, exc pit The
S1o0,000,0OO of gold commonly known
as the sreenback reserve, and tn gold
or silver bullion Oh deposit To secure
coin or bullion certificates.
The following provisions for elastic
city OF the currency are suggested:
Circulating notes should be issued on
deposit ut Washington of such bonds us
have already been described. CIR On de
post of gold or Of gold and bonds. and
the amount of issue should be the par
value of the deposit. IN Il crisis ZACH
bank should be allowed to expand It's
issue OF notes % per 1T. ov,r the par
value of the bonds deposited. provided
the bonds do not fall b low par on ac-
count Of the crisis. and each bank should
also be allowed to deposit gold coin or
bullion rs i basis for the further issue
of not,S i'll the same ratio. 10 he held
on special deposit at its clearing house
for the purpose of redemption. In or
der to avoid delay in a crisis each bank
should at all times keep at its clearing
house on special deposit. Il certain
amount of extra notes. These notes
should be sealed away under the seal
of United States inspector. and an
account of them should at all times be
kept with the treasurer of the United
States.
Permission to use tn 50 extra notes
for the purpose of the expansion just
spoken of must be secur9d from the
secretary of the treasury" said Prof.
Kinley. "and the secretary shall give
such permission under the following
circumstances and then only: he must
have received from the clearing house
notification of the necessary deposit,
and the rate of discount on call loans
in New York city must have reached
eight per cent. All net profit over one
per cent. accruing from this extra issue
of notes must be credited to the gov
eminent. No bank shall discount below
eight per cent. while any notes of this
extra issue are outstanding, and any
bank may offer Il premium on such
notes in order to call them in. If any
of them are outstanding at the end
Of one month the bank may be reqUir-
ed at the discretion of the secretary of
the treasury to deposit gold coin or
bullion to cover the excess, and at the
end of two months such deposit shall
be required. All the uslIry laws of the
states should be repealed, so far at
least as they relate to short time loans,
and no national bank should be allowed
to make discounts for a longer time
than ninety days.
THE payment Of interest Oh de-
pOSits," said Prof. Kinley, should be
forbidden and the law which allows de-
poSits Of country banks in banks of
reserve cities to count as part of the
reserve of both, should be repealed
Every national bank should be forbid
DIN to pay out the notes Of any other
but should be compelled to receive
them at par and forward them to it's
clearing house for redemption. Each
bank should keep at its clearing house
4 redemption fund equal to five per
cent. of its circulation. If any bank
should fail to redeem Il note of it's own
issue on demand, the holder may seek
its payment by either Of the methods
provided for the payment of govern
mont drafts and the affairs of the de-
fauIting bank shall Immediately be put
into the hands of a receiver and its af-
fairs wound up. a reserve of at least
twenty per cent. Of deposits shall al
ways be kept on hand, except when
the discount rate on call loans at any
Of the central cities in which the clear
ing houses are situated rises to ten
per cent, the reserve Of any bank in
that department may be allowed to
fall to fifteen per cent. of its total de
posts. In a crisis clearing house GER
tificates may be issued subject to the
regulations which now govern their
issue in New York city.
There is nothing in these proposals,
continued Prof. Kinley, that involves
wide departure from institutions and
methods already familiar, and they pro-
vide for the ultimate safety and the
prompt payment of the public deposits
for expansion of the currency in crises,
for the prevention of congestion of
money at great centers, and for vari-
alton in the volume Of bank currency
in response to business demands. No
mention is made in them of lawful
money other than gold as a provision
for reserve. 1t would be a great pre-
caution for future safety if the exist !
ing government notes were retired and
their place supplied by bank currency.
In that event the banks should be taxed
so IS to secure for the public at least
as much as the net profit, allowing for
trouble and expense, derived from the
government notes. The currency Of
the country would then be more elias
tic. because more purely commercial.
The provisions for the safety Of the
public deposits are ample, for only
bonds Of first class character could be
of both the clearing house and
the secretary Of the treasury Finally,
the adoption of this or some similar
plan,' concluded the speaker, "would
put an end to the injurious influence on
the business of the country which the
action Of the independent treasury has
so long exercised, and which increases
as the years pass by. The time has
come for the adoption of a more en-
hghtened system /
An Attractive Power.
Professor Smithe was once featuring
in provincial town on natural philoso-