The Helena independent. [volume] (Helena, Mont.) 1875-1943, 1893-01-13
National and State Banks Of Issue
Are Discussed by Learned
Gentlemen.
Some OF the Speakers Supposed
to Be Confidential Advisers
OF Cleveland


scientific session ct the American Academy
OF Political Social Soiencs convened herr
this evening in Drsxsl institute. The pres
tdsnt, Prof. Edmund j. James. Of Wharton
school Of Finance and Economy, Was in th.
chair. Representative bankers Of Phiis-
dslphia. New York and Baltimore ocou pied
seats on tho stage. The topic Of the even.
ing was ''National versus State Banks Of
ISSUE" Papers we're submitted BY Hon.
Horace White. editor Of the New York
Evening Post; BY Hon. W. L. Trsnholm, Of
Ohio. and A. g. Hepburn. present. COMP
troilsr Of currency. The discussion had q
significance far beyond . more academic
debate, - the first three gentlsnsn are
known to be intimate advisers Of President
elect Cleveland In financial masters, while
Hepburn represents Harrison's adninistss-
tion.
White. IN the leading paper Of the even
Ing gave sketoh Of good and bad sys-
TENS OF banking that existed BE-
fore the war. In the former ostspory
tho governing principle was that bank %.
ssts should redeem circulating notes. This
In the speakers opinion, was the true
theory Of banking. The bad systems were
ffss banks. more especially Of the north
western states. which copied after the New
York system Of issuing notes Of security
lodged with public officers. The free bank
system is . step backward in the evolution
Of banking, because IL absorbed the bank'a
sapital before it, doors were opened fol
business. White theuaht tho system OF
banking on bonded security WAS destined
to perish soon. because all securities
ft TO be used for that purpose were fast
disappearing. Tho national bank note
system could be preserved and improved,
however, by q very slight change in the
present law. viz: Out of the present tax on
bank notes constitute safety fund to bs
lodged in the treasury, the amount Of
II to be computed BY actuaries
taking the national bank mortality of the
past twenty-five years - basis. Let the
government continue to be responsible for
notes and hold q Arst lien on the assets and
personal liabilities Of shareholders for its
own protection. All other parts of the
bank law to stand a. now. When
ever the safety fund reached an ascsr.
tanned amount let the participating banks
withdraw bonds and sell them If they
choose.
This plan would dispense with the craving
for silver currency, bscRuse it would fur
would dispense with the need Of state bank
notes, because every facility for sound
banking that the state could possibly grant
would be granted by the national govern
ment.
Hon. M. D. Hartsr, of Ohio. laid down
the conditions to be adopted which, in his
opinion, are essential to tho successful
must continue the sole standard of value,
and bi-mstallism must and can only be
maintained by limiting the coinage of sill
YER as We do now. nhe government must
stop the issue of legal tender paper, retire
in the best manner and at as early date as
can properly bs dono, all the paper il has
out. and thereafter contine itself to collect
ing taxes, disbursinR the proceeds. and
keep its hands off the money market.
With the government simply coming
freely all gold and restricting tho coinage
of baser metals. every other form of money
would be promptly redoemable or convert
ible into gold, and the volume under any
good banking system would always be what
the business of the nation needed. Harter
then presented a bill introduced in con-
gress. and pictured the business of the
United States, free from congressional con-
troll, which would follow the adoption Of
this plan, and said while it provided for
state banking, the banking Of the future
would. under the bill. be very largely done
BY national banks and by banks and bank-
ers not issuing notes.
Comptroller Hepburn's paper was on
state national bank circulation. 1t said in
part: "The constitution provides that
congress must provide all money that pos
lesses full debt. s.paying power. BY every
of sound business principles
it should provide all the money that the
country required. Az in tho past. SO in the
future, every period of financial depres-
aion would result in more or less general !
suspension OF specie payment by banks.
If state banks are allowed to circulate notes
heir acceptance becomes a business ne
,essity.
"State bank circulation loses its money
sower in crisis; instead OF paying debts
sdds to danger. II states are to share with |
he United States the issuing of paper
money, Wa will have chain OF sovereign
les, ench with varying laws and systems.
The profit of \ banks circulation depends
lpon tho length of time it is outstanding.
n order to get their notes into general use
nd keep them outstanding, state banks
'ondents for their redemption. As a re-
ult of intense competition for bank ac-
ounta all of our cities would be drawn
nto the meshes. and weak and bad notes
rould not be confined to the place of issuc,
Circulation could be secured. When
United States bonds cease to exist othcr
uitable securities will exist. The function
{ government. is mot merely TO protect the
otsholdsr. but AZ far a. possible to pro-
aot all creditors. In recent years banks
ave become large owners of securities.
ince this 10 the oase il would not be an
nerous provision to require them TO own
roper securities ~ basis for circulating
otes."