The times. [volume] (Richmond, Va.) 1890-1903, 1892-11-20
STATE BANK NOTES.
Bond Based OF Real Estate Suggested as
Safe Security for Redemption.
Editors Richmond Times:

/ Editors Richmond Times:
Appropos Of your very able defense of
that plank in the Chicago platform de-
handing a repeal of the 10 per cent.
penalty clause in the National Banking
law, will you consider a suggestion from
the mountains Of Virginia? 1t goes with
out saying that this demand is in re-
Spouse 10 d felt want" for a very con-
siderable increase in the circulating me-
dunn Of the country. Leaving out Of
consideration for the present the ques-
ton as to whether the bonds Of the
United States were ever "a just and
fair basis for circulation, since the plan
upon which our national currency was is
sued gave to the holder Of bonds the
interest on them i'm addition to the profit
Of lOaning a currency based upon them,
we are bound TO admit the wisdom Of
a financial policy (fOr the tines that
at once inspired faith in national bonds
by making them the basis Of the peoples
money and inspired faith in that cur
rency by pledging the Governments credit
for its redemption, and as a result gave
us a truly rational paper currency. If
bonds were still outstanding and could
be bought at price which would justify
banks in purchasing them as a basis of
issue the necessities Of the country might
still be met by the national banks as at
present constituted; but, the fact Is, that
bonds of the United States are now at
so high a premium that national banks
find II more profitable to loan their funds
in the first instance than to invest in
bonds upon which they can only utilize
% per cent as loans. All national banks
are tending towards receiving banks Of
discount and deposit merely, and not banks
Of issue. as originally contemplated. and
the most ardent friends of the system
admit that Government bonds have ceased
TO constitute an adequate basis for ma
tiOnal banks Of issue.
To revive State banks Of issue. whilst
I believe the policy to be right and just TO
the country, and with the improved means
of gaining Information by telegraph and
through commercial agencies safe to the
country. is to invite attack and to make
1t possible to charge up to the Demo
cratic party what will in the very@ nature
of things be Il long catalogue of abuses
for many Of which il would be only in
directly responsible, since many Of the
States will still remain under Republican
control. To repeal the penalty clause is
to interfere only to that extent with Ma
iional banks, which in the present cOndi-
ton of affairs is not to interfere at all.
II, therefore. the present National bank
ing system, is TO be maintained why main |
tain it as a moclIery and delusiOn? Why |
lot utilize it, and so manage and control /
the system as 10 meet the wants of the |
As # now exists the system is /
ased on the Government indebtedness TO
individuals. Why not reverse the process
at this point. ard make individual in
to the Government, created |
for that purpose, the basis Of issue for
our National banks?
/ can conceive Of nothing that could be
more substantial as the basis of bank
issue than the bond Of an individual Sc
cured by mortgage on real estate unin-
numbered and triple the value Of the
amount secured. and that bond guaran-
ICED by the United States Government.
Such a bond should be non-intercst bear
ng and redeemable by the obligor in
gold at his option but he should be forced
% contribute annually a certain fixed
ow per cent. in gold, to be applied TO it's
'edemptioE-say l to per cent. Such
,onds might take the place Of Government
)onds in the present National banks
Being nOn-interest bearing, they would
lever command premium. Being guar
nteed by the Government they would re-
main always at par
l do not believe in sectional or class
egislation on any question, and yet per-
nit me TO say what must be evident TO
/
he polls on the Sth instant is 10 be car
led out there must be at least the APP
,earance of sectional and class legisla-
ion. because the evils and wrongs 10 be
directed arise from sectional and class
egisatiOn.
The result Of making Government bonds
he basis Of issue was to give a sectional
preference. because the funds were held
n the North. and TO make the North by
legislature the home Of our currency.
he interest on the bonds went North.
nd largely the interest on loans Of the
urrancy issued upon them.
This ] merely state as fact, without
making il a ground of complaint. But be-
ind this are two serious grounds Of COM
laint First. that capital existing in the
orm Of money and securities was given
nder the national banking system as
devised an undue and unfair
reference over capital invested in lands
nd real estate Second, the continued
Of the tariff laws for thirty
ears has been TO enable the manufac
urer to carry away from the agricultural
ections of the country an unfair and un-
ne proportion of ~ circulating medium.
nd the result of this has been 10 further
oncentrate capital in manufacturing cen
res.
To make bonds loaned on real estate
ne basis Of issue is the natural and
bvious correction Of the wrong first
lentioned TO so distribute the benefits
mong the several sections Of the country
$ 10 tend to equaliZe the distribution OF
ne circulating medium is the remedy
Or the second.
have given 4 mere outline, which /
ave no doubt will be literally criticised
noticed at all But If there is nothing
| the suggestion worthy Of approval, let
receive the condemnation IL merits
svoral years since r published the same
lggestion in a local paper. and sent
ippings 10 several acquaintance. A
INK president wrote me that real es-
tie could not be paid out over the coun-
r OF "A bank" and a college professor
lat THE idea was as old as the Pyramids
Egypt" but / was ENCOURAGED when a
lancer OF the acknowledged ability OF
,nator Sherman. advocated the bin max
z silver bullion "the basis Of an issue
paper money" Surely. as a commodity.
liver bullion stored In the Government
lults cannot be regarded as a higher .
curity than bonds secured by mortgage
real estate and guaranteed by the
Dvernment. Y.
Va Nov f6 1902