The midland journal. (Rising Sun, Md.) 1885-1947, 1892-08-05
An impending Danger.

In answer to an inquiry in regard
to the financial system of the coun-
try Comptroller Lacey recently said,
speaking of the national banks:
"While the issue of circulating
notes is now reduced to a compare
lively small amount, the machinery
for issuing them is still in operation,
and there is no reason it should re
main SO, so long as the existing
issues of government bonds are un.
redeemed.
"They insure in my opinion, the
continuance of the system for at
least fifteen years, and it may be re-
garded as in the highest degree prob
able that during these fifteen years
the government will again become q
borrower. If. for instance, our recent
difficulties with Chilli or Italy had
resulted in extensive war prepare.
tions, the government would, of
necessity, have become a borrower.
In such an event the government
could have placed $100,000,O0O, or
even a greater amount of p per cent
bonds at par within 30 days, without
Withdrawing any money from the
commercial centres. Such an issue
would have been Immediately taken
by the 300 National banks of the
system and made the basis of note
issues, thus incre asing the circulat.
ing medium without Withdrawing any
loanable funds needed by the indus
trial and commercial interests of the
country.
"A loan of S5OO,OOO,OOO can be
placed with the National banks in
this manner at any time when the
necessity arises, and it can be done
in 80 days without disturbing the
commercial interests of the country
in any way"
We ask thoughtful examination
of this monstrous statement so cody
made by financial officer of the gov.
eminent. The danger lies, first, in
the authority vested in the hands of
the Secretary of the Treasury to issue
unlimited bonds. The purpose ofthese
bonds is stated to be to enable the
government to borrow millions from
the national banks. That is, the
national banks would order the Treas.
urer to issue currency to the amount
of 80 per cent on the bonds now held
Tor them and with these notes they
would pay the government for the
$5OO,0OO,O00 p per cent bonds.
Under present conditions the banks
would pay one per cent for the cur
rency and sell it back to the Treas
urer for bonds drawing p per cent
interest. The probability is that if
such an opportunity offered the bank
ers would insist on Congress repeal.
ing the one per cent tax at present
paid for the use of the notes. This
issue Of national bank notes to the
government would in a few days find
the way back to the vaults of the
banks to be loared and reloaned ad
The Comptroller claims that such
issue by the banks would be far pref
cradle to the government issuing
legal tender direct to the people, and
the bank currency would be the more
flexible" The cool assumption that
the government should create a
$500, 100000 debt IN order to accom-.
modate the national banks and place
the entire tax paying population of
the country in the situation of inter
est payers to the banks, when calmly
considered, is so preposterous that
it fairly takes ones breath. Why
should the government pay National
banks for issuing money which it is
responsible for, in place of issuing it
direct? The people should get fro N
under this bank dead fall. 1t may
be sprung on them at any moment.