The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1894-12-11
He Tells Where 1t Differs From
the Baltimore Bankers.
STATE BANKS A GOOD THING.
Not Governments Duty 10 Protect
National Bank Depositors.
senator Morgan Advocates the Mica
raguA Canal IN . Set sp.eeh-The
Income Tax Appropriation TO BE
Reported Today.

WAsHrSsTos CRY, Dec. fo-secretary
Carlisle appeared before the house COM
mittee on banking and currency today TO
present in detail the features of the new
currency plan proposed in his annual re-
port and Endorsed in the presidents mes
sage. Besides the full membership
of the COMMITTEES. Senior Romero
the Mexican finance minister. and
many members OF congress were pres
ent. Carlisle TOOK up eacn section of
his recommendations. First, TO repesl ali
laws requiring or authorizing q deposit Of
United states bonds as security for eircu-
lstion, and second. 10 permit national
banks to issue notes to an amount not ex-
ceedIng - per cent. of their paid up and
unimpaived capital, but TO require each
bank, before receiving the notes. TO de-
posit a guarantee fund, consisting Of
United States legal tender notes including
treasury notes OF 1890, 10 the amount OF 80
per cent. upon the circulating notes ap-
piled for. This percentage depends upon
the circulating notes outstanding. and is
70 be maintained at all times, and when
ever the bank retires its circulation
in whole or in part its guar
antee fund TO be returned to it in proper
tion 10 the amount of notes retired. Car
Isle said he was satisfied that the present
law requiring the deposit of bonds TO
cure circulation prevented elasticity of
the currency. The provision outlined"
said Carlisle. gives ample protection
without deposit of bonds as required by
the present law" Carlisle said the prac-
tical value of reserve fund Of cur
rency was shown in 1893. There
vas a demand for money aggre-
eating S40,0O00O0. The treasury
did its best TO meet the stringency, but by
the time the notes were ready to dis
tribute the demand had gone by and
many packages OF notes were returned un-
paid. The secretary invited criticism on
this particular section.
Chairman Springer asked how the secre-
tary's plan differed from the Baltimore
plan. Carlisle explained the technical
difference. The Baltimore plan proposed
10 deposit 50 per cent. under certain con-
ditions, while the treasury plan proposed
to deposit 80 per cent. When a bank fails
the treasury plan contemplated an assess
ment on all the national banks. they in
turn having lien on the failed bank.
Representative Hail. OF Missouri, sug-
gested that there was prevailing opinion
that it was unsafe TO place the power TO
issue currency in the hands of corpora
tions and banks.
'It will work automatically" said Car
isle THE banks viii not expand the
currency unless the public needs il. Their
interest will be 10 expand and contract SIS
the common interests demand II. These
interests will therefore control at all
times" The secretary said this flexi-
bility was much more desirable than
rigid system by which certain
amount OF currency was outstanding.
At one time tue stringency Was so great
that the banks drew out $4,000. 600 under
pressure, and if it had not been for Cana
dian banks, which sent currency into this
country, serious results might have en-
sued. Mr.. Carlisle said that the ultimate
Inability was on the government by the
Baltimore system. and on the banks by
his plan.
Mr.. Johnson asked If the ultimate liza
bility of the government would inspire
more confidence in the currency. The
secretary said il undoubtedly would.
but that bis plan would insure ample
protection and therefore ample con-
hdeuce. He explained that, IN case OF
the failure Of bank. its 80 per
cent goes into a general safety fund, and
II the assets OF the failed banks are not
sufficient 10 meet ali the liabilities without
carrying tae general safety fund below the
= per cent, then all the banks are assessed
To meet the liabilities. The banks then
have lien on the assets OF the failed
bank.
Concerning the state hank feature Of the
plan. the secretary said: 1T suggests
merely 4 pan by which state banks could
act If they saw it, But the government
has no direct concern with state inst!tG-
tons"
The secretary then took up the PROPOSE
tian thar 10 national bank notes hs issued
os less denomination thaa SO. 1t would
encourage the circulation Of silver coins Of
small denominations.
Mr. Speyry asked II silver certificates
would be redeemed in gold. Ne, - said
Carlisle. "theve are Ia @ classes Of notes re-
deemed n gold, viz: The greenbacks, and
treasury notes under the Sherman act Of
ls9Q"
Concerning the ninth provision, to re-
peal all the provisions Of the law requir-
ing banks 10 keep reserve on account Of
the deposits, the secretary said: The
p-esentl law keeps bank from using is
reserve st time when Il needs IL most"
Mr.. Cobb. Of Alshama, asked: "Do you
hold that the government owes 10 obUga-
t{on 20 aeposito-s9" NO more" said
the secretary, than IS obliged 10 protect
rriyate citizens who invest their funds in
manufacturing concerns. corporations.
etc."
Comptroller % the Currency Eekels ap-
rearsd before the committee and m.de n
slabcrats statement lie conteuded that
the national banking Laws were not 20 be
lightly dealt With. and shoald NOT Re
altered unless it vas s6so gtely known
that TIM change would be beneficial