Evening star. [volume] (Washington, D.C.) 1854-1972, 1894-12-04

used In the redemption OF Its notes, and II
this fund shall be impaired by the redemp-
ton of the notes of failed national banks,
and the Immediately available cash assets
Of such banks are insufficient to re-estab
fish the fund. it shall at once be made good
by pro rata assessments upon the other
banks, according to the amounts of their
outstanding circulation; but there shall be
first lien upon all the assets of the failed
bank, or banks to reimburse the contribut-
ing banks. The safety fund may be in
vested in outstanding United States bonds
having the longest time to run, the bonds
and the interest upon them to be held as
part Of the fund and sold when necessary
| to redeem notes Of failed banks.
WILL
Repeal the provisions Of the reorganiza-
ton and extension act of July IL, 1882, ini-
posing limitations upon the reduction and
| Increase of national bank circulation.
Repeal all provisions of the law requiring
| banks to keep a reserve on account Of de-
rOSitS-
| The Secretary of the Treasury may, in
| his discretion, use any surplus revenue of
| the United States in the redemption and re-
tirement OF United States legal tender
| notes, but such redenptions shall not In
j the aggregate exceed an amount equal to
| seventy per cent of the additional circula-
ton taken out by national and state banks
! under the system herein proposed.
| XI.
| Circulating notes issued by a banking
| corporation, duly organized under the laws
| of any state, and which transacts no other
| than banking business, shall be exempt
| from taxation under the laws of the United
| States, when 1T is shown to the satisfaction
| Of the Secretary of the Treasury and the
controller of the currency:
| a. That such bank has at no time had
outstanding its circulating notes in excess
| of seventy-five per ceItum Of Its paid-up
and Iniinpaired capital.
CD That its stockholders are individually
| liable for the redemption of its circulating
notes to the full -exteDt Of their ownership
| of stock.
| c. That tn. circulating notes constitute
! by law first lien upon all the assets of The
bank.
o. That the bank has at all times kept
! guarantee fund In United States legal
! tender notes, including treasury notes OF
| 1oN. equal TO thirty per centum of it's out
standing circulating notes; and
| o. That Ii has promptly redeemed its
| notes on demand at its principal office. or
| at o3c or more of its branch offices, # 1t
| has branches.
The Secretary of the Treasury may, under
proper rules and regulations to be estab
| lshed by him, permit state banks to pro-
cure and use In the preparation of their
notes the distinctive paper used In printing
United States securities but no state bank
shall print or engrave It's notes in similtude
OF United States note, or certificate, or
national bank note.
National Bank Reserves.
The Secretary goes into detail in explana-
ton of the purpose and advantages of the
different provisions of this plan. and, as
| might be expected, makes a very strong
| and plausible argument. With respect to
the proposition for the repeal of all stat
| utes requiring national banks to hold
fixed reserve against deposits, he says:
THE necessity for holding a sufficient re-
serve against deposits Is not Questi oned,
and In fact, the business Of receiving de-
posits and discounting paper ought never to
be conducted without 1t, but 1t should be
held for actual use when the occasion
arises, and not made legally inaccessible
at the very time when it was theoretically
supposed to be beneficial in sustaining the
credit of the bank and affording relief to
its customers. To provide for reserve
which cannot be utilized even at a time of
the greatest stringency and distrust with
out mourning the penalties of forfeiture,
affords a most striking illustration of the
| impolicy of legislative interference with
the natural laws Of trade and finance. 1t
is not the duty or province OF the govern
ment to control or regulate the private Of
fairs of the people. except for certain WELL
defined purposes, and as the custody and
| use of funds belonging to depositors are
matters which affect only the interests CT
| the immediate parties they should be left
| to their own judgment and discretion. The
| duty of the government, so far as it has any
duty in the premises, is simply to provide
that all the currency issued under its au-
thority is sufficiently secured to prevent its
loss or depreciation in the hands of the
people, who are compelled to receive and
pay 1t out in the transaction of business;
but a bank Is not dependent upon the gov
eminent for authority to receive deposits,
and its use for that purpose by the public
Is as purely voluntary as the credit ex-
tended TO any other corporation or to
private individual"
Reference to Silver.
Speaking generally of the plan. he says:
zone beneficial effect of requiring each
bank to redeem Its own notes will be the
promotion Of more careful and conserva-
tive management of It's affairs, thus avoid
| Ing to a large extent the causes which have
produced a majority of the failures hereto
| fore. Governmental responsibility for the
redemption of any part of the obligations
| of the banks has a strong tendency to en-
| courage speculative adventures and care
less methods, which would not otherwise
be permitted by the directing officials, and
the banking business, like all others, should
be conducted upon the credit and at the
risk Of the parties most directly Interested
In its success.
composed of so many different kinds of
currency would seem to require the enact
ment of such legislation as will provide
place in which each can be safely and con-
yeniently used, and this can be done
without discrimination against any OF
Them 1t ought not to be omitted from any
plan which proposes permanent changes In
the system. The policy of various other
countries in this respect appears to nave
enabled them to avoid the diftic ultes en-
countered here in the attempt to keep the
less valuable coins and their representa-
| tives in circulation, without arrangement or
the currency or disturbance of the public
| finances"
The Secretary closes the purely financial
| branch of his report with this reference to
| silver:
'"The experience of this country under
| the act of February %. 1875, which limited
silver certificates to denominations OF ten
dollars and over, and under the act of
August 4, 1885, which removed that re
striction, justifies the belief that the
change now proposed would result in a
greatly increased use of silver coins and
certificates and that they would be much
less likely to return to and remain In the
treasury than at present AT the time of
the passage Of the act last referred to,
permitting the issue Of silver certificates
in denominations of one, two and five dol
lars, standard silver dollars not represent
ed by certificates he'd accumulated in the
treasury to the amount of $93,959, $50, al
though the total coinage up to that date
was only $235 643. 2S6. Within four months
after that date although in the mean
time the coinage progressing at the
usual rate, the amount of free silver held
in the treasury was reduced to 59,h6S,