The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1893-01-13
Papers Read Before the Academy
of Political Science.
GOOD AND BAD SYSTEMS.
Representative Bankers OF Eastern
Cities Present at the Meeting.
Views of Horace White of the New York
Evening Post, A. S. Hepburn, Comp
troIer of the Currency and
NJ ID. Harter.

PHILADELPHIA, Jan. 1.-THE seven
teenth scientific session of the American
academy of political and social science con-
vened here this evening IN DrexeI insti-
tute, President Professor Edmund j.
James, of the Wharton school of finance
and economy in charge. Representative
bankers of Philadelphia, New York and
Baltimore occupied seats on the stage.
The topic of the evening was ''National
VS.. State Banks of Issue.'' Papers were
submitted by Hon. Horace White, editor
of the New York EUening POST by Hon.
w. L. Trenholme, of Ohio, and A. S.
Hepburn, present comptroller of the cur
rency. The discussion had significance
far beyond mere academic debate as the
first three gentlemen are known to be
intimate advisers OF President-elect
Cleveland in financial matters, while Mr..
Hepburn represents Harrison's admins
tration
Mr.. White, in the leading paper of the
evening, gave a sketch OF the good and
bad systems of banking that existed be-
fore the war, in the former category the
governing principle of banks was that the
assets should redeem the circulating
notes. This, in the Speakers opinion,
was the true theory OF banking. The bad
saystems were free banks, more especially
of the northwestern states. which copied
alter the New York system OF issuing
notes on securities lodged with public
officer. The free bank system was a step
backward in the evolution OF banking be-
cause it absorbed the banks capital be-
fore it's doors opened for business.
Mr.. White thought the system of bank
ing on bond security was destined to per-
lsh soon, because all securities fit TO be
used for the purpose were fast disappear
ing. The national bank note system
could be preserved and improved, how
ever, by very slight change in the pres
ent law, viz: Out of the present tax on
bank notes constitute safety fund TO be
lodged In the treasury, the amount of it
to be computed by acGuaries taking ma
tional bank mortality of the past twenty
five years as basis. Let the government
continue to be responsible for the notes
and hold the first lien on the assets and
personal liability OF shareholders for its
own protection.
All other parts of the national bank law
to stand as now, and whenever the safety
fund reached the ascertained amount let
the participating banks withdraw the
bonds and sell them if they choose. This
plan would dispense with the craving for
silver currency, because it would furnish
all the circulating notes needed, and it
would dispense with the need of state
bank notes, because every facility for
sound banking that the state could posi-
bly, grant would be granted by the ma
tional government.
Hon. NJ. d. Harter laid down the con-
ditions to be adopted, which, in his opin-
ion, were essential to the successful finan-
cial future of the United States. Gold
must continue the sole standard value,
and bi-metalliSm must and can only be
maintained oy limiting the coinage of
silver as we do now. The government
must stop the issue of legal tender paper,
retire in the best manner and at as early
date as it can properly be done, all the
paper it has out, and thereafter confne
itself to collecting taxes, disbursing pro-
ceeds and keep its hands off the money
market.
With the government simply coming
freely all the gold and restricting the
coinage of baser metal, every other form
of money would be promptly redeemable
or convertible into gold, and the yolumn,
under any good banking system, would
always be what the business of the nation
needed. Mr.. Harter then presented bill
introduced in Congress and pictured the
business of the United States free from
congressional control, which would fol-
low 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 bankers not
issuing notes.
Comptroller Hepburn's paper was on
state and national bank circulation. 1t
said in part: The constitution provides
that Congress must provide all money
that possesses full debt paying power.
i
principles, it should provide all the money
the country required. AS in the past so
in the future every period OF financial de-
preston would result in more or less gem
eral suspension of specie payment by
banks. Ii state banks are allowed to cir
culate their acceptance becomes bust
ness necessity. State bank circulation
loses its money power in crisis. In
stead of paying debts, it comes forward to
be paid and so adds to the danger.
If the states are to share with the
United States in issuing paper money we
will have chain of sovereignties each
with varying laws and systems. The
profit of banks circulation depends on
the length of time it is outstanding. In
order to get their notes into general use
and keep them outstanding state banks
would seek TO arrange with city CORE
spondents for their redemption. AS re-
suit of the intense competition for bank
accounts all of our cities would be drawn
into the meshes and weak and bad notes
would not be confined to the place of
issue.
The circulation should be secured, and
when United States bonds cease to exist
other suitable securities will exist. The
function of the government is not merely
to protect noteholder, but as far as
possible to protect all creditors. In re-
cent wears banks have become large |
owners OF securities. Since this is the
case, it would not be an onerous pro-
vision to require them to own proper Sc
c1lritias rs q basis for circu lation