Evening star. [volume] (Washington, D.C.) 1854-1972, 1894-12-10

it had not been for the Canadian banks,
who sent currency into this country, seri-
Gus results might have ensued.
The proposed plan contemplates that the
current redemption as well as the final
redemption shall be met by the
banks. The daily redemptions now run
Into the millions. This is not due to worm
out or worthless currency, but the New
York banks find themselves overloaded.
They send national bank notes to the
deemed in United States notes or other
legal classes of currency. The treasury
then sends word to the national banks to
redeem these notes that the subtreasuries
have takeT. in. 1t sometimes takes the
national banks two three months to
take up their notes.
1T results" said the Secretary, ''in
keeping a very large sum suspended in the
air. We have paid it out and will event
ually get it back, but in the meantime this
large sum is held up"
Mr. Carlisle said the proposed plan would
exactly reverse this system.
Mr.. Walker asked if Mr.. Carlisle had yet
drawn a bill embodying his plan. The
Secretary replied that he had dictated n
rough draft this morning. and he would
submit it to the committee. 1t was a
tentative measure, and he would change it
IN some details.
Circulation of silver Certifcntes.
Mr.. Carlisle next took up the fifth prop
oSitioH OI ms pan, VIZ. NO
bank note to be of less denomination than
SO, and all notes of the same denomina-
tion to be uniform in design; but banks de-
string to redeem their notes in gold may
have them made payable in that coin.
The Secretary of the Treasury to have
authority to prepare and keep on hand
ready Tor issue upon application a reserve
OF blank national bank notes for each
banking association having circulation"
hn dnSiv iv.,hi pf
this section. 1t would encourage the cir
culaton of the silver certificates of small
denominations. The national bank notes
being above SO would give clear field
TO the silver certificates under So These
certificates were now crowded into the
treasury. IL they were to be kept as a
part of our money, they should be forced
into use, and this would accomplish that
end.
Representative Hall Of Missouri asked as
TO the gold provision in the Secretary's
plan.
Mr.. Carlisle said this had been put in
because of the gold banks on the Pacific
coast. mainly at San Francisco, which had
little paper and much gold. 1t was not
intended to apply to the country at large.
Mr.. Sperry asked If silver certificates We're
redeemed in gold.
NO" said the Secretary ''there is n
popular impression to that effect but it is
not correct. There are only two classes of
notes redeemed in gold, viz, the green
DdChS ana tne treasury notes under the
Sherman act OF 1880
Mr.. Carlisle then took up section II, the
state bank feature OF his plan. viz: Cir
culatinC notes issued by banking corpor-
alton, duly organized under the laws Of
any state, and which transacts no other
than a banking business. shall be exempt
from taxation under the laws of the
United States, when ii is shown to the sat
isfaction of the Secretary of the Treasury
and the controller of the currency:
First. That such bank has at no time
had outstanding its circulating notes i'm
excess OF rs per cent of it's paid-up and
unimpaired capital.
Second. That its stockholders are in
dividually liable for the redemption of it's
circulating notes to the full extent of their
ownership of stock.
Third. That the circulating notes con-
stitute by law a first lien upon all the as
sets of the bank.
Fourth. That the bank has at all times
kept a guarantee fund In United States
legal tender notes, including treasury notes
of 1870. equal to 80 per cent of its out
standing circulating notes, and
Fifth. That it has promptly redeemed
it's notes on demand at its principal office.
or at one or more of Its branch offices, II II
has branches"
State Banks.
Mr.. Carlisle said as to this that he would
consider such state bank notes safc--per-
haps perfectly safe would be too strong
but reasonably safe.
He suggested a change in the third pro-
vision, so that the lien would not cover
the funds of guardians and other cestui
Qui trusts.
Mr.. Cox Of Tennessee the author Of the
state bank bill defeated last session. asked
how state banks would be compelled to
observe these conditions.
Mr.. Carlisle said the treasury officials
would exert proper efforts to see that the
conditions were observed. The books and
nn n
spected and if access was refused the fed
eral officials would determine on tax
Mr.. Carlisle said he did not believe in the
authority of the federal government to
exert much authority over state institu-
tions. His idea that the federal
thority did not go beyond imposing a tax
as means of compelling the state institu-
tion to observe certain federal conditions.
MY position would lead to the logical
conclusion that all tax on state banks
should be repealed" said the Secretary,
but that may not be practical at present:
But there should be the least exercise of
authority possible. We do not insist that
they shall do so and so. But we say. If you
do not do so and so will tax you.
1.-The tax will be payable annually. The
hank will naturally apply for an exemption
from the tax. The treasury will say, you
must fully satisfy us on your business
that it is according to the government
conditions-or we must decline to exempt
you from the tax
Mr.. Johnson of Ohio referred to the old
wild cat days.
THAT is thing of the past" said the
Secretary. You could 10 more resume the
wild cat system than you could revive the
conditions which made 1t possible. We
have advarced far beyond the possibilities
of a wild cat system"
The Secretary said the 10 per cent tax
proposed on state banks was sufficient to
wipe out their circulation in case they did
not observe good conditions. 1t was prac-
tically prohibitory tax.
Mr.. Carlisle added that in his Judgment
the tax on state banks was unconstitu-
tional. The courts thought otherwise
however.
At this point Mr.. Carlisle said he would
submit his bill and appear tomorrow morn
ing If desired, to go over it in detail. 1t
was arranged to have the bill printed. A
recess was taken until 2 o'clock, when Con-
troler of the Currency Eckels' statement
will be heard.