The record-union., 1893-01-13
Special to the RECoRD-UNIoN.

! Special to the RECORD UNION.
| PHILADELPHIA, Jan. 12.-The seven
| teenth scientific session of the American
Academy of Political and Social Science
convened here this evening at the Drexel
Institute, President Professor Edmund
J. James OF Wharton School of Finance
and Economy, in the Chair. representa-
| tive bankers of Philadelphia, New York
and Baltimore, occupied seats on the
stage.
The topic of the evening was National
versus State Banks of Issue" Papers
were submitted by Hon. Horace White,
editor of the New York Ece1,ing Post;
by Hon. w. L. Trenhold Of Ohio and A.
S. Hepburn, present Comptroller of Cur
rency.
The discussion had a significance far
| beyond a mere academic debate. as the
first three gentlemen are known to be in
| innate advisors of President-elect Cleve-
land in financial matters, while Hepburn
represents Harrison's Administration.
White, in the leading paper of the even
! ing, gave a sketch of the good and bad
| systems of banking that existed before
I SAAO wal LII lll6 lOIIuSI category Ile
| governing principle was that banks
assets should redeem the circulating
notes. This, in the speakers opinion,
was the true theory of banking. The
bad systems were free banks, more es-
/ pecially Of the Northwestern States,
which are copied after the New York sys-
tenn Of issuing notes on securities lodged
with public officer. Free systems step
! backward in evolution i'll banking, be-
cause it absorbs the banks capital before
the doors are open for business.
| White thought that the system of bank
ing on bond security destined to perish
soon, because all securities fit to be used
! for that purpose are fast disappearing.
The national bank note system could be
preserved and improved, however by a
very slight change in the present law,
| viz: Out of the present tax on bank
notes constitute a safety fund, to be
! lodged in the Treasury, the amount of it
to be computed by actuaries, taking the
| national bank mortality of the past
twenty-five years as a basis.
Let the Government continue. as now.
to be responsible for the notes, and hold
the first Iien on the assets and personal
liability of shareholders for it's own pro-
lection. All other parts of the National
Bank law stand as now. Whenever the
safety fund reaches the ascertained
amount, let the participating banks with
draw bonds and sell them if they choose.
This plan would dispense with the crav-
ing for silver currency, because it would
furnish ali the circulating notes needed,
and it would dispense with the need of
! State bank notes, because every facility
! for sound banking that State could pos
sibly grant would be granted by the Ma
tional Government.
Hon. M. D. Harter of Ohio laid down
conditions to be adopted which, in his
opinion, are essential to the successful
| financial future of the United States.
| Gold must continue the sole standard
value, and bimetallism must and can
only be maintained by limiting the COIN
age of silver as we do now. The Govern
ment must stop the issue Of legal tender
paper, retire in the best manner and at as
early date as can properly be
done, all papers it has out, and there
after confine itself to collecting taxes.
disbursing the proceeds and keep its
hands off the money market. With the
/ Government simply coming freely all
gold, and restricting the coinage of baser
metals, every other form of money would
! be promptly redeemable or convertible
! into gold, and the volume under any
good banking system would always be
what the business of the nation needed.
| Harter then presented bill introduced
in Congress, and pictured the business of
the United States free from congressional
control, which would follow the adoption
of this plan, and said that while it pro-
vided for State banking, 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 1.-THE Constitution pro-
vides that Congress must provide all
money that possesses full debt-paying
power. BY every consideration of sound
business principles, it should provide all
the money the country requires. AS in
the past, so in the future, every period of
| financial depression would result in more
or less general suspension of snecie nav
ments by banks. If State banks are
allowed to circulate, their acceptance he
comes a business necessity. State bank
circulation loses its money power in A
crisis. Instead of paying debts, it comes
! forward itself 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
upon 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 citv
correspondents for their redemption. AZ
a result of intense competition for bank
I account all of our cities would be drawn
/ into meshes, and weak and bad notes
would not be confined to the place of
issue. Circulation should be securad
When the United States bonds cease to
exist other suitable securities will exist.
| The function of the Government is not
merely to protect the noteholder, but as
far as possible to protect all creditors
In recent years banks have become large
owners Of securities. Since this is the
case, it would not be an onerous proyi-