The Mt. Sterling advocate., 1894-12-18
The Two Plans.


isle plan. They differ just where
they might be expected to differ. Inc
Baltimore plan is projected for the
benefit of the Government, or OF the
people for whom the Government Is
an agent.
The Baltimore plan provides to
make the Government the guarantor
of every note issued by the banks
The Carlisle plan proposes that the
banks shall guarantee their own notes
Mr.. Homer, the putative father OF
of the Baltimore plan, says that hie
scheme amply secures the Government
from any loss on its guaranty Mr.
Carlisle says in effect: "Very well !;
we will give the banks the same safe
guards that YOU offer to the Govern
ment and some others. LII your
scheme will save the Government
harmless, certainly mine will do as
much for the banks.
Somehow Mr.. Homer is not con-
vinced by this reasoning. lie said 70
the Banking and Currency Commit
lee that "it was too much to ask OF one
national bank to become responsible
for all other banks in which 1t had no
direct concern" But why? Every
other national bank would In IKE
manner be responsible for the notes OF
this one. And the responsibility
which the banks as whole assume is
precisely what they ask the Govern
ment to assume. They say the Gov
ernment would thereby incur no risk.
Then the banks would incur 10 risk
If it is too much to ask a bank to be
| responsible for the notes of other
banks with which it has no direct con-
cern, is it not too much to ask the
Government to guarantee the notes of
all the banks with which it has no di-
rect concern? For the Government
proposes that the banks shall have all
the safeguards that they proposed to
give the Government, and 3Oper cent.
addition;l.
Mr.. Horace White in his argument
referred to the statistics OF bank NOR
tality in the past thirty-one years.
This is familiar reference among
bankers, and is worthy of some atten-
ton. In substance it is that the loss
to the Government on the notes OF
failed banks, for which it was secured
by the deposit of bonds, would have
been but little more than million
and a quarter of dollars since the sys-
tenn was instituted, if no bonds had
been deposited. The fallacy of this
argument is found in the assumption
that bankers would have been as pru'
dent if they had given no security tc
Government as they were when the
Government held 500 to secure every
800 of their circulation. Moreover, II
must be noted that whatever this
proves as to the security of the Gov
} ernment it proves equally as much
for the security of the banks.
One of the professed objects of botf
of these plans is to get the Govern
ment out of the banking business. The
difference is that in one of them, Mr.
Carlisle's accomplishes the desired OBJ
iect, while the other does not. Tht
Baltimore plan not only throws th'
whole burden of redemption on th'
Government, but it makes the Gov
ernment the guarantor Of every not
issued by thousands of banks. Th'
Government becomes the accommoda
, tion acceptor of all these bills. Fo
q this liability there is no consideration
. The banks are unwilling to assume {
q similar liability, though they get il
, exchange for it valuable franchise
1t may be said that the Governmen
is now the guarantor of all nationa
9 bank notes. So it is, but the Govern
Z ment owes these banks IL per cent
more money than the whole amour
@ of the notes. 1t assumed this liabil
!. ity for the purpose of floating it
q bonds in time of stress, which was
valuable consideration. The guar
anty which it gave 10 its creditors 70
a valuable consideration is no prece
dent for loaning its credit to bank
or its creditors for no consideration q
q all. Moreover, the ultimate liabilit
of the banks for the currency issue