The gold leaf. [volume] (Henderson, N.C.) 1881-1911, 1892-09-15

Government supervision of the oper
tlons of the Banks and a circulate
based directly upon the securities an
the guarantee of the Government.
The germ from which the Nation;
system has been developed seems
have been suggested by the organic;
ton of the Bank Of England, a lare
portion Of the capital of said Ban
being invested in Government stock
Alexander Hamilton is said to ha,
proposed a similar policy previous t
his appointment as Secretary of tn
Treasury, when on being asked b
Washington " What is to be done wit
our terrible debt ?" he answere
" Bank on it as our only availabl
capital, and the best in the world.
That is, using the bonds of a Govern
ment, which are only evidences of tn
debt Of said Government, as securit
for the money said Government emits
This feature is severely criticised b
one school of financiers. But it doe
not pertain to this occasion and tn
limited time allowed to 90 into thi
question, SO l will briefly point ou
some objections that have been urgee
against the National Banking system
and the arguments used in advocatins
return to the State Banks of issue a
solution of the financial problem.
OBJECTIONS TO THE PRESENT Ma
TIoNAL BANKING SYSTEM
Isto6yeetion. Hredzese,ve required
Says a great writer on finance, "lend
ing cures panics, while non lending,
or nlggardly lending aggravates
them"
Chlcago's eminent fnancier, Lyman
J. Gage, has set forth in concise
terms, the true remedy for panic:
Ist. The maintenance in all ordi
nary times of adequate cash reserves.
end. A liberal use of the cash
reserve IN times of panic by judicious
loans.
The present law is imperfect in the
light of both these admonitions. The
National Banking Act draws a line of
steel with penalty OF blood when it
forblds any National Bank to make
loans or discount whenever legal
reserve shall fall below the established
minimum and authorizes the Comp
troller to appoint Receiver and wind
up any such Bank failing to make its
reserve good in thirty days.
When proposition to introduce
into the Canadian law a feature of
this kind came up in 1890, the great
Bankers Of Canada, sat down upon it
by large majority.
1t was pointed out that to insist
upon the Banks keeping locked up in
their safes at all times any fixed sum
Of money would interfere with the
rights, of creditors, to meet whose de-
nand all the Banks cash is held. 1t
vas shown that such a measure had
never been tried in practice except in
he United States, and that there,
when the Banks attempted to keep
he law, violent fluctuations in the
ate Of interest ensucd; and further,
hat circumstances occurred nearly
very year, that compelled them to
disregard the law altogether. The
of fixed reserve was there
ore Withdrawn.
end objection. No elasHtiv in tile
,u,reaty. A Bank currency redeema-
'le when its purpose is accomplished
md re-issued when again needed, is
he only currency that can be kept in
ouch with the business Of the country.
Notwithstanding the popular notion
hat our National Bank currency is
he best the world ever knew, it is a
act that the unscientifc character of
hat currency is the very thing that
as brought us to the present uncom-
ortable condition of our finances;
hat is to say, the rate, reduction and
edemptlon of Government Bonds
as caused thus far, by retirement of
'atlonal notes, contraction of over
23o, 100000 in our currency and |
lst at a time when more currency
as been needed. On account of our
reat field and forest production, we
equre at certain seasons of the year
rapid and substantial increase in
ur medium OF exchange, the volume
f which should, to avoid imitation,
S rapidly shrink when the need is
asst.
Says Mr.. Geo. S. Coe, President of
1e American Exchange National
ank, Of Yew York, criticsing this
eject in the National Bank law,
Follow for a moment the movement
a single staple crop. How can
lat be best carried from harvest to
'arket? Those who take it from the
round, have in hand the vital thing
lat the world requires. At the very
art, the producers desire to subdivide
in such manner that it will itself
lrnish money to pay for the labor
nd expense OF gathering the harvest.
"This they should be able to do by
lodging the crop to responsible
ersons competent to accept it, who
ould Immediately issue against it, at
lie place of departure, an amount of
REGULATING notes, evidences Of posses
on, with means for redemption.
hesc would be local currency, re-
-lvable throughout that community,
their moneys worth, for such other
,lngs as the holders and laborers
'und necessary to purchase. The
rop would then be transported to-
ard the sea. either for consumption
for re-shiptnent, by means OF larger
ills of exchange, and the proceeds of
carried back, either in money O, in
Il