Evening star. [volume] (Washington, D.C.) 1854-1972, 1893-01-13
NATIONAL OR STATE CURRENCY.
Discussion Before the Academy of Political
and Social Science.

4
Discussion Before the Academy of Political
| and Social Science.
The seventeenth session of the American
Academy Of Political and Social Science was
held last evening in the large hall Of the Drexel
Institute in Philadelphia The topic of the
evening was National vs.. State Banks OF
Issue
Papers had been submitted by Horace White,
editor Of the New York Erening Post: W. L.
Trenholm Of New York, ex-controer Of the
currency; NJ. D. Harter of Mansfield, Ohio, and
A. s. Hepburn, controller of the currency.
The discussion had significance far beyond
mere debate, as the first three gentlemen are
known to be intimate advisers Of President-elsct
/ Cleveland in financial matters, while Mr.. Hep
/ burn represents Mr.. Harrison's administra-
| ton.
Mr.. White presented the leading paper Of the
| evening, which was discussed either impromptu
] holm, Harter. Hepburn and others. The views
advanced are OF peculiar interest at this juno
/ ture, as they undoubtedly represent the leading
tendencies which will make themselves felt in
the approaching struggle in Congress and In
| the country at large on this issue.
BANKS BEFORE THE WAR.
| Mr.. White gave a sketch of the good and bad
systems of banking that existed before the war.
In the former category were the state bank Of
Indiana, the Louisiana bank law of 1912 and
the Suffolk bank system of Massachusetts,. The
governing principle of all these was that the
i banks assets should redeem the circulating
notes. This was, in the speakers opinion. the
true theory Of banking, because any system
which takes diligent of the assets will
always take care of the circulating notes. That
it Is entirely possible to have such bank sys-
nd To hoy al was
proved by these
Mr.. White thought that the system Of bank
| ing on bond security was destined to perish
soon because all the securities fit to be used for
this purpose were fast disappearing.
The national bank system could be pre-
served" he said. "and improved, however, by
very slight change in the present 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 actuaries, TAX
ing the national bank mortality of the past
twenty-five years a basis
LET the government continue now to be
responsible for the notes and let it continue to
hold as now first lien on the assets and on the
personal liability of the shareholders for its
protection, all the other parts Of the national
bank law to stand as now. Whenever the safety
fund reaches the ascertained amount let the
participating banks withdraw their bonds and
sell them if they choose. There have been only
$4,000 900 of failed bank notes under the ma
tlonal system since it was started, twenty-siX
and half years ago. safety fund of IS, 000.-
OOO. replenished out Of the tax from time to
time, would have been abundant to redeem all
failed bank notes. The same statistics show
that the assets of these failed banks realized
nearly S44, 200, or nearly three times the
amount of the notes. Upon these assets the
government, under the safety-fund plan, would
have held a first lien.
Mr.. White has every confidence that this plan
would solve the bank problem and furnish a
better currency than the present national sys-
tenn. because it would be really elastic. 1t
would dispense with the craving for silver cur
rency because it would furnish all the circulat-
ing notes needed, and it would dispense with
the need of state bank notes. because every IA
cility for sound banking that state could pos
slbly grant would be granted by the national
government.
MR.. HARrERs IDEA.
Mr.. Harter, Representative in Congress from
the fifteenth Ohio district, spoke on American
Banking and the Money Supply of the Future
The system Of banking established by the New
York state legislature, which provided for
securing circulating notes by stock collateral
deposited with state authority, Mr.. Harter said.
was the greatest single advance in banking
science since the world began. and in 1914
England adopted the idea with but trifiing
changes, and under it the Bank of England has
since been conducted, and upon it hinge the
finances of great Britain, and therefore of the
world.
Mr.. Harter presented the bill introduced in
the House of Representatives. Mr.. Harter's
plan provides that the United States shall no
longer guarantee the payment of circulating
notes issued by any bank; that the circulation
OF any bank shall not exceed 80 per cent of the
par value of the bonds deposited by that bank:
that the state bank circulation shall be re-
pealed; that bank circulation shall be secured
by approved bonds, deposited either in the
United States treasury or in the state treas
uries; that tax of one-ffth of per cent shall
be levied on all bank circulation, the receipts
from which tax shall be turned into a reserve
fund to secure the circulating notes, and that
no bank notes shall be legal tender.
MIR. Hepburn. controller of the currency. on
the subject Of state and national bank circula-
ton said:
The Constitution prohibits the states from
coming money or making anything except gold
and silver legal tender. State bank bills could
not become legal tender, neither national
bank bills. In times of prosperity state bank
bills would circulate freely, but in times of
stringency they would return to the banks for re-
demption. and they would have to be redeemed
in legal tender money provided by Congress-
The Constitution provides that Congress must
provide all the money that possesses full debt
paving power. By every consideration Of
sound business principles it should provide all
the money the country requires"
MI Irenholin, ex-controller or the currency
and now president of the American Surety
Company of New York city, took part in the
discussion OF Mr.. Whites paper. He said: The
recollection of the hard times during the period
of greeuback redemption should make US care
full to have our money of the best that is OBJ
tainabe. II We do not keep our money of the
best and keep the gold standard will have
to go through another period of that sort or
worse If we once let go of the gold standard
it will cost us wears of sacrifice. toll and tribu-
lation to get back to the gold standard again."
Mary Washington Monument
A Fredericksburg dispatch says; Much dis
satisfaction exists here on account of the action
of the National Mary Washington Monument
Association in contracting for monument to
mark the grave of Mary Washington, the mother