The Yale expositor., 1894-12-07
hanks and Currency.

hanks ana Currency.
Questions relating to our banks and cur
rency are closely related to the subject
| just referred TO. and they also present
some unsatisfactory features. Prominent
among them are the lack OF elasticity in
our currency circulation and it's frequent
concentration in financial centers when
| IL is most needed i'm other parts Of the
country The absolute enforcement of the
government from the business OF banking
| Is the ideal relationship of the government
| to the circulation of the currency of the
country This condition cannot be imme-
| diately reached; but as c step I'm that d.
| rection and as means of securing a
| more elastic currency and obviating other
| objections TO the present arrangement OF
bank circulation, the secretary OF the
| treasury presents in his report scheme
modifying present banking laws and pro-
viding for the issue of circulating notes
by state banks free from taxation under
certain limitations.
The Baltimore Plan.
The secretary explains his plan so
plainly and its advantages are developed
by him with such remarkable clearness
that any effort on my part to present an
argument in it's support would be SUI
perfiuous. 1 shall therefore content my
self with an unqualified Endorsement Of
the secretary's proposed changes in the
law, and a brief and imperfect statement
of their prominent features. It Is pro-
posed to repeal all laws providing for
the deposit of United States bonds as
security Tor circulation; to permit nation
al banks TO issue circulating notes not eX-
ceeqlnS In amount % per cent or their
| paid-up and unimpaired capital provided
| they deposit with the government, as n
! guarantee fund, United States legal ten
| der notes, including treasury notes of 1890.
| a sum equal in amount to 30 per cent Of
| the notes they desire to issue, this de-
| lr. fFs.
| whenever any bank retires any part Of
| of it's circulation proportional part Of
| its guarantee fund shall be returned TO it,
J TO permit the secretary Of the treasury TO
prepare and keep on hand ready for issue
| in case an increase In circulation Is de-
sired, blank national bank notes for each
! bank having circulation, and to repeal
! the provisions of the present law im-
| posing limitations and restrictions upon
| banks desiring TO reduce or increase their
clrculauon-thus permitting such increase
| or reduction within the limit Of 40 per
cent of capital TO be quickly made as
| emergencies arise.
| In addition to the guarantee fund re-
7 CURED, IL is proposed to provide a safety
| fund for the immediate redemption of
| the circulating notes OF failed banks, by
| imposing a small annual tax. say one-half
| of per cen., upon the average circulation
| of each bank, until the fund amounts TO
| . per cent of the total circulation out
| standing. When a bank falls Its guar
! antee fund is TO be paid into this safety
! fund; its notes are TO be redeemed in
| thus augmented-any Impairment OF such
| fund caused thereby to be made good
| from the Immediately available cash
| assets of said bank, and II these
| should be insufficient, such impairment 10
| be made good by pro rata assessment
| among other banks, their contributions
| to constitute a first lien upon the assets
of the failed bank in favor of the con-
| tributing banks As a further security II
It contemplated that the existing provi-
| sion fixing the individual liabiity of
| stockholders Is to be retained, and the
| banks Indebtedness on account OF it's cir
| culating notes is to be made first lien
on all its assets. For the purpose Of
| meeting the expense of printing notes,
| official supervision, there shall be i'm
| posed tax OF say one-half of / per cent
per annum on the average amount or
| notes in circulation.
II is further provided that there shall
| be no national bank notes issued of less
| denomination than $40; that each ma
| tional bank, except in case of failed
! bank, shall redeem or retire its notes In
| the first instance at It's own office or at
| agencies to be designated by II, and that
| no fixed reserve need be maintained on
| account of deposits
Another very important feature OF this
plan Is the exemption of state banks
| from taxation by the United States, in
| cases where IL is shown TO the satistac-
| tion of the secretary OF the treasury ana
| comptroller of the currency by banks
| Claiming such exemption that they have
not had outstanding their circulation notes
| exceeding 10 per cent OF their pald-up
ana unlmDdlTeu Cdplldls lhdl AhNAA
| stockholders are individually liable for
| the redemption of their circulating notes
| 10 the full extent of their ownership OF
stock; that the liability Of said banks
| upon their circulating notes constitutes
| under their state laws first lien
upon their assets; that such banks
| have kept and maintained n guar
| antee fund in United States legal tender
| notes including treasury notes or lS9O
| equal TO 30 per cent of their outstanding
! circulating notes and that such banks
have promptly redeemed their circulating
| notes when presented at their principal
or branch offices. 1t is duite likely mat
| this scheme may be use-dlly amended In
some of it's details; but 1 am satisfied
| IL furnishes n basis for a very great Inn
provement in our present banking ana
| currency system
/ conclude this communication fully APP
! preciating that the responsibility for all
| legislation affecting the people OF the
] United States rests upon their represen-
| tatives in congress, and assuring them
| that whether in accordance with recon-
| mendations l have made or not, L shall
| be glad to cooperate in perfecting any
| legislation that tends to the prosperity
and welfare OF our country.
| GROVER CLEVELAND.
Executive Mansion, December. 3, 1894.