The Dakota chief. (Gann Valley, Buffalo County, S.D.) 18??-1913, 1894-12-13

reny obligations claiming this peculiar
gold redemption. Our small gold reserve
is thus subject to drain from every side.
The demands that increase our danger
also increase the necessity of protecting
this reserve against depletion, and it is
most unsatisfactory to know that the pro-
lection afforded is only q temporary pallia-
ton.
1t is perfectly and palpably plain that
the only way under present conditions by
which this reserve, when dangerously de-
pleted, can be replenished, is through the
issue and sale of the bonds of the govern
e for gold; and yet Congress has not
only thus far declined to authorize the
issue of bonds best suited TO such a pur-
pose but there seems Il disposition in some
quarters to deny both the necessity and
power for the issue of bonds at all. l can
not for a moment believe that any of our
citizens are deliberately willing that their
government should default in it's pecuni-
airy obligations or that it's financial OPP
e~rations should be reduced to a silver
basis. At any rate I should not feel that
my duty was done if 1 omitted any effort
1 could make to avert such a calamity.
Questions relating to our banks and
currency are closely connected with the
subject just referred to, and they also
present some unsatisfactory features.
Prominent among them are the lack Of
elasticity in our currency circulation and
its frequent concentration in financial
centers when it is most needed in other
parts of the country. The absolute d.
vorcemcnt of the Government from the
business of banking is the ideal relation
ship of the Government to the circulation
of the currency of the country.
This condition cannot be Immediately
reached, but as a step in that direction,
and as a means of securing q more elas-
tic currency and obviating other objec-
tons to the present arrangement of bank
circulation, the Secretary of the Treasury
presents in his report a scheme for modi-
flying present banking laws and provid-
ing for the issue of circulating notes by
State banks, free from taxation under
certain limitations.
The Secretary explains his plans so
plainly ond its advantages are developed
by him with such remarkable clearness
that any effort on my part to present ar
gument in it's support would be super1u-
GUS. l shall, therefore, content myself
with an unqualified Endorsement of the
Secretary's proposed changes in the law
and a brief and imperfect statement of
their prominent features.
1t is proposed to repeal all laws pro-
viding for the deposit of United States
bonds as security for circulation; to per-
nit national banks to issue circulating
notes not exceeding in amount 70 per
cent. of their paid-up and unimpaired
capital, provided they deposit with the
Government, as q guarantee fund, in
United States legal tender notes, in
Guiding Treasury notes of 1890, a sum
notes they desire to issue, this deposit
equal in amount to 30 per cent. of the
to be maintained at all times, but when
ever any bank ~retires any part of it's
circulation a proportional part of it's qua
ranty fund shall be returned to it; to per-
nit the Secretary of the Treasury to pre-
pare and keep on hand ready for issue in
case an increase in circulation is desired
blank national bank notes for each bank
having circulation and to repeal the pro-
visions of the present law imposing linn
itations and restrictions upon banks de-
string to reduce or increase their ~circula-
tion-thus permitting such increase or
IcuICtlOu WllIIu Tic IlllllI " ~ per Ctlt.
of capital to be quickly made as emer
gencies arise.
In addition to the guarantee fund re-
quired, it is proposed to provide a safety,
fund for the immediate redemption of the
circulating notes of failed banks by i'm
posing a small annual tax, say one-half of
1 per cent. upon the average circulation
of each bank until the fund amount to 5
per cent of the total circulation outstand-
ing. When q bank fails its guarantee
fund is to be paid into this safety fund
and it's notes are to be redeemed in the
first instance from such safety fund thus
augmented-any impairment of such fund
caused thereby to be made good from the
Immediately available cash assets of said
bank, and if these should be insufficient
such impairment to be made good by pro-
rata assessment among the other banks,
their contributions constituting a first lien
upon assets of the failed bank in favor of
the contributing banks.
1t is quite likely that this scheme may
be u~sefully amended in some of it's de-
tails; but / am satisfied it furnishes a
basis for a very great improvement in
our present banking and currency system.
l conclude this communication fully ap-
preciating that the responsibility for all
legislation affecting the people of the
United States rests upon their represen,;
tatives in the Congress, and assuring
them that whether in accordance with
recommendations l have made or not, l
shall be glad to cooperate in perfecting
any legislation that tends to the prosper
ity and welfare of our country.
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Ir--ls-I- Iano Aaor