Phillipsburg herald. [volume] (Phillipsburg, Kan.) 1882-1905, 1894-12-13

but the congress having failed TO confer sucl
authority resort was neceo arily had TO the
resumption act OF 1875, and pursuant 10 III
provision, bondE we're issued drawing In teres
at the rate OF five per cent per annum ant
maturing ten years after their issuing that
being the shortest time authorized by the act
lam glad TO say however, that on the sale OF
those bonds the premium received operated q
reduce tho rate OF interest TO DO paid by the
government To less than three per cent
Nothing could be worse or further removed
from sensible finance than the relations ex.
lstlng between the currency the government
has issued, the gold held for It's
| redemption and the means which
must BIO resorted to for the purpose OF replen.
ishlng such redemption fund when impaired
Even II the claims upon thisfund we're con.
lined TO tho OBLIGATIONS originally intended
ana II the redemption OF those obliga lions
meant their cancellation tho fund would be-
very small But these OBLIGATIONS when re-
ceiyed and redeemed in gold are not cancelled
but are re-issued and may do duty many times
| by way OF drawing gold from the treasury
Thus we have an endless chain In operation
constantly depicting tho treasury gold and
never near final rest, As II this was not
Dad enough we have u statutory declaration
that 10 Is the policy OF the government
TO maintain the parity between gold and sill .
| yer aided the force and momentum OF the OK.
hausting process and added largely to the cur.
rency obligations claiming this peculiar gold
redemption. Our small gold reserve is thus
subject to draw from every side The de-
mands that increase our dan er also increase
the necessity OF protecting this reserve
against depletion and II Is most unsatisfactory
to know that the protection afforded is only
temporary palliation, IL Is perfectly and pol
pably plain that the only way under present
conditions by which this reserve when
dangerously depleted, can be replen.
ished, Is through the issue and
sale OF the bonds OF the gov.
eminent for gold; and yet congress has
not only thus far declined to authorize the
issue OF bonds best suited to such purpose,
but there seems disposition in some quar-.
ters to deny both the necessity and power for
tho issue OF bonds at I'LL / cannot for
moment believe that any Of our citizens are
deliberately willing that their government
should default In its pecuniary obligations, or
that its financial operations should DO re.
duced TO o silver basis At any rate /
should not feel that my duty was
done II 1 omitted any effort could
make TO avert such calamity As long
therefore as no provision is made for the
final redemption or the putting aside of the
currency obligation now used to repeatedly
uHu NOllo bdHIly uEbW lTOul IlO BOVCTUulbQGl LB
gold and as long as no better authority for
bond issues is allowed than at present exists
such authority will DO utilized whenever and
as often as IT becomes necessary to maintain
suflcient gold reserve and in abundant time
TO save the credit OF our country and mako
good the financial declarations OF our govern.
ment Questions relatlnt to our banks and
currency are closely connected with the sub.
ject just referred to and they also present
some unsatisfactory features
New Banking System Advocated.
Prominent among them are the lack OF elias
ticity In our currency circulation and Its fire.
quent concentration In financial centres when
1t is most needed in other parts OF the country,
The absolute enforcement of the government
from the business of banking Is the ideal rela
tionship OF the government to the circulation
OF the currency OF the country This condi.
ton cannot be Immediately reached but as
step in that direction and as O means of secur
ing more elastic currency and obviating
other objections to toe present arrange.
ment Of bank circulation the secretary
Of the treasury presents in his report
scheme modifying present banking laws and
providing for the issue Of circulating notes by
state banks free from taxation under certain
limitations 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 arguments in its
supports would be surpuhous l shall there
fore content myself with an unqualified In
dorsement OF the secretarys proposed
changes in the law and o brief and imperfect
statement of their prominent features
1t Is proposed to repeal all laws providing
for the deposit Of United States bonds as Sc
curity for circulation to permit national
banks to issue circulating notes not exceeding
d., ep fInt,
impaired capital provided they deposit with
the government as guarantee fund in United
States legal tender notes including treasury
notes Of 1890 q sum equal in amount to 81
per cent OF the notes they desire to issue, this
deposit to be maintained at all times but
whenever any bank retires any part OF its cir
culation o proportional part Of its guar
antee fund shall be returned to 1t; to
permit the secretary Of the treasury
to prepare and keep on hand ready for issue
In case an increase in circulation is desired
blank national bank notes for each bank hav-
ing circulation and to repeal the provisions
OF the present law imposing limitations and re-
strictions upon banks desiring to reduce or in
crease their circulation, thus permitting such
Increase or reduction within the limit of
iseventy-hve per cent of capital to be quickly
made as emergency arise In addition to the
guarantee fund required 1t is proposed to pro-
vide o safety fund for the immediate redemp-
tion OF the circulating notes Of failed banks
by imposing o small annual tax say one half
of one per cent upon the average circulation
of each bank until the fund amounts to five
per cent OF the total circulation outstanding.
When bank fails its guarantee fund Is to be
paid into this safety funds and its notes are
to be redeemed in the first instance from such
safety fnnd thus au ,mented any Impairment
of such fund caused thereby to be made good
from the Immediately available cash assets OF
said bank, and IL these should be insufficient,
auch impairment to be made good by pro-
rata assessment among the other banks, their
contributions constituting first lien upon
the as cts of the failed bank in favor of the
contr buting banks
AS a further security it is contemplated
that the existing proposition fixing the indi.
vidual liability OF stockholders is to be re-
tanned and the banks indebtedness on ac-
count of its circulating notes Is to be made
first lien on oil its assets. For the purpose OF
meeting the expense of printing notes. off,
cials, supervision, cancellation and other like
charges there shall be imposed tax Of say
one-half OF one per cent per annum upon the
average amount of notes in circulation 1t is
further provided that there shall be
no national bank notes issued OF
less denomination than ten dollars;
that each national bank, except in case oil q
failed bank shall redeem or retire its notes in
the first instance at its own oflce or at
agencies to be DESIGNATED by it, that no fixed
reserve used be maintained on Account OF de-
posit5.
Another very important feature of this plan
Is the exemption of state banks from taxa.
tion by the United States in cases where 1t Is
shown to the satisfaction of the secretary OF
the treasury and comptroller OF the currency,
by banks claiming such exemption that they
have not had outstanding their circulating
notes exceeding seventy-fve per cent Of
their paid up and unimpaired capital
that their stockholders are individually liable