Mexico weekly ledger., 1894-12-06
An Exigency.

svery noint' hut to be nearer a relic of haroar-
ism than anything that exists nnaer ea1 PEI
earnestly recommend its prompt repeal
An EFFICIENCY.
THE RECENT SALE OF BONDS.
During the last month the gold reserved IN
the treasury for the purpose OF redeehiihg me
notes of the government circulating az notieS
and its further depletion in the near future
seemed SO certain, that IN the exercise %
proper care for tho public weiIare II pSe thns
necessary to replen!Sh this reserve anu tnus
maintain popular faith in the ability and ae-
termination of the government TO meet. rs
agreed, its peeuniary obligations II woula
have been well if in this emergency authority
had existed to issue the bonds of the govern
ment, bearing "a LOW rate nerioS
and maturing within u Special lfeEIot.
But the congress having failed TO CONFER such
authority, resort was necessarily had 20 the re-
sumption act OF ls's. ana parsaans ~ 1893, - at
the ratio OF 3 per cent. Per annufn an" mstuE.hs
ten years after their issuing, that PeIns .nS
shortest time authorized by the act, am giau
to saw, however, that on the sale OF these
bonds the premiums received operated to re-
duce the rate of interest to be PAID by the gov
eminent to less than 3 per cent.
NOTHING BE WORSE,
or further removed from sensible finance tlan
the relations existing between the currency
| the government has istued, the goIt lfeia ior
lis redemption, and the means which
must be resofted to for the purpose 81 repleh-
, ishing such redemption fund when impaired
Even il the claims upon this fund were con-
fined to the obligations originally lhtenaeu.
| and if the redemption of these obIlsatohs
| meant their cancellation. the fund WoHld DC
very small. But these obligations when re-
ceiyed and redeemed in gold are not eanceieu.
| BY wav Of drawing gold from the treasury.
Thus We have an endless chain IN operation
constantly
DEpLEriSG THE TREAsURY's GOLD
| and never near 4 final rest. ASST this was not
| bad enough, we have by Il statutory dec!ara-
ton that it is the policy of the government
| TO maintain the parity between gold and silver
| aided the force and momentum of this exhaust
| ing process, and added largely TO the currency
| obligations claiming this peculiar soIa re-
| demntion. Our small gold reserve Is thus sub
| ject to drain from every side. The demands
| that increase our danger also increase tle ne
cessity OF protecting this reserve against de
that the protection AFFORDED IS Only Temporary
paIltation. 1t is perfectly and palfflplN 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
government for gold; and yet congress has not
only thus far declined to authorize the issue OF
| bonds best suited to such Il purpose, but thefe
seems a disposition in some quarters TO deny
both the necessity and power for the issue Of
bonds at all. L cannot for a moment believe
that any of our citizens are deliberately willing
that their government should default IN
its pecuniary obligations, or that its
silver basis. AT any rate, l should not feel
that my duty was done II / omitted
any effort l could make
TO AVERT such A
As long, therefore, as no provision is made for
the final redemption or the putting ASIDE OF
the currency obligation now used TO repeatedly
and constantly draw from the government It's
gold, and as / ong as no better authority FOL
bond issues is allowed than at present exists,
such authority will be utilized whenever ana
as often as it becomes necessary to maintain a
sufficient gold reserve, anu IN abundant time
to save the credit OF our country and make
good the financial declarations or our govern
ment.
BANKS AND CURRENCY
Questions relating to our banks ana curren'
cy are closely connected with the subject 5uS'
referred to and they also present some uhsat-
isfactory features: prominent among them ere
the lack OF elasticitFin our currency cirguia'
ciaI centers when it is most needed
in other parts of the country
The absolute enforcement Of tho
government from the business of banking J.
the ideal relationship Of the government to The
circulation OF the currency of the country. Thu
condition can not be immediately reached; bu
as q step in that direction, ana as a means O
securing a more elastic currency and obEiatin:
other objections to the present Arrangement @
bank circulation, the secretary OF the treasnri
; presents in his report d scheme
MODIFYING PRESENT BANKING LAWS,
and providing for the issue OF circulating note
by state banks free from taxation. under Ger
tain limitations. The secretary explains hi
plans so plainly, and its advantages are de
veioped by him with such remarkable clear
argument in its support would be superfuous
/ shall therefore content myself with an un
qualified Endorsement Of the secretafy's pro
posed changes in the law, and q brief and i'm
perfect statement of their prominent features
II is proposed TO repeal all laws providing
for the deposit OF United States bonds as Sc
curity for circulation; TO permit n%aeional bank
to issue circulating notes not exceeding, /
amount 70 per cent. Of their pa1d-up ana unini
With the government as a guaran
tee fund in United States legal tende
: notes, including treasury notes OF 1924, a sun
| n,,,,l Ia up1olt1t 70 N na~ rant OF the note
they desire to issue, this deposit TO be main
tanned at all times: but whenever any bank re
5 tires any part of its circulation a proportions
.. part OF its guarantee fund shall be returned :
| it to permit the secretary OF the treasury {
/ prepare and keep on hand ready for issue i
| case an increase in circulation is desire
blank national bank notes for eac
/ bank having circulation, and to repea
} the provisions OF the present law mposin
: limitations or restrictions upon banks de
l string to reduce or increasestheir circulation
-, thus permitting such increase or reductio
within the limit Of IS per cent. of capital TO L
| quickly made as emergencies arise.
{ IN ADDITION TO THE
:, required. it is proposed to provide q safety fun
lating notes OF failed banks by imposin
| a small annual tax, say one ha
ca each Per SaH 1sn Until HPG the fun fund is amount st to 5 per cen
of the total circulation outstanding. When
bank fails its guarantee fund is to be paid int
deemed in the first instance frol
+ such safety fund thus augmented
= l alV impairment OF SuCn ItlQ sCIuSeQ tltTeG
: to b. made good from the acknowledgements;
n bic cash assets of said bank. and If thes
should be insufficient such impairment to
r made good by pro rata assessment among II
r other banks, their contributions constituting
first lien upon the assets of the failed bank i
= favor of the contributing banks.
e A FURTHER SECURITY
t it is C contemplated that the existing proViSio
= fixing the individual liabilities of stakeholder
: is to be retained and the bank 'siindebtedne:
= on account OF its circulating notes Is to /
made n first lieu on M its assets,
For the purpose OF meeting the expenses
printing notes, official supervise on ;cancellatiC
. tax of'say one-half OF / per cent. per anuum VI
on the average amount OF notes In circuIatio
t i is further provided that there sha
Of q less denomination than 81
That each national bank, except in case of
!. failed bank, shall redeem or retire its notes
!, the first instance at its own Office or at age
= cies, to De designated by it; that no fixed r
Il serve need be maintained on eoeoul
= of the plan is the exemption of state banl
: from
TAXATION by THE UNITED STATES
, in cases where it is shown to the satisfacti,
d OF the secretary of the treasury and comptrc
Ter of the currency by banks claiming sut
n exemption that they have not had outstandil
of their paid up and unimpaired capita
q that their stockholders are individually Ii
Q BILE for the redemption of their circulatil
t notes to the full extent Of their ownership
d stock; that the liability Of said banks up
o their circulating notes constitutes, und
j. their state law, q first lien upon the
assets. that such banks have kept al
$ maintained d guarantee fund in United stat
" legal tender notes, including treasury notes
it 1890, equal to 30 per cent. Of their outstandil
IS circulating notes, and such banks ha
d promptly redeemed their circulating not
V when presented at their principal or bran,
J. offices.
D IN CONCLUSION.
1t is quite likely that this scheme may
* uSefuliy amended in some OF its details. buf
% am satisfied it furnishes a basis for a We
: great Improvement in our present banking al
ii currency system. / conclude this ommuni
Is ton fully approaching that the respun,
re btlity for all legislation affecting {
ie people of the United States rests up
their representatives in the congress. a
assuring them that whether in aaecordan
is with recommendations I have made or not
re shall be glad to cooperate in perfecting al
IF legislation that tends to the prosperity al
le welfare of our country.
IN tSlgnedi GROVER
Executive Mansion, December 8
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