The Helena independent., 1894-12-04
BANKS AND CURRENCY.

BANKS AND CURRENCY,
Endorsement Of tho Baltimore Plan" Tor
Now Currency,
| Questions relating 10 our bnnlSs and cur
| rcncy are closely connected Win The SUD
jtct iupt referred to- and they also present
some unsatisfactory fcaturNa. l'romlhrnt
among them are the lnCk oi elasticity w
our currency circulation. and lm frequent
concentration IN financial eeniera Wheh
I ID In most needed In other parts OF the
country The ahnolnte divOrccmont OF the
povernmcnt from the buhlncsH OF banking
/ IA the ideal relationship OF the govern
mont TO the circulation OF the currency
! Of the country. Thla condition cannot
/ bs Immediately reached, hut as step IN
that direction. and al a means OF securing
a more elastic currency and ohVlatlnE
other objections TO the present arrange
mcnt OF bank circulation. the secretary
ot the treasury presents In his report a
scheme modifying the present banking
laws and providing for the Issue Of circu-
latlng notes hy state banks free from taN-
alton. under certain limitations. The sec
! rctnry explains his plan so plainly and
Its advantages are developed by him with
such remarkable clearncsa that any EFFORT
on my part TO present argument In It's
support would be superiluous. | shall,
therefore. content myself with an unquali-
hed indorscment nf the secrctary'a pro-
posed changes In the law, and brief and
Imperfect statement OF their prominent
features.
u Is proposed 10 repeal all laws providing
for the deposit OF United States bonds as
security for circulation. TO permit nation
al banks TO issue circulating notes not eN-
ceeding Ia amount 70 per cent Of their paid
up aud unlmpalred capital, provided they
T a al = "A n
tee fund in United States legal tender
notes, including treasury notes OF 1890
sum of equal amount TO 80 per cent OF the
notes they desire To Issue, this deposit 10
be maintained at all times. but whenever
any bank retires any part OF its ctrcula-
tiou a proportionatc part of It's guarantee
fund shall be returned To II 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 hank notes for each bank having
circulation ana TO repeal the provisions
of the present law imposing limitations
and restrictions, thus permitting such In
crease or reduction within the limit OF the
75 per cent OF capital to be quickly made,
as emergencies arise.
In addition 10 the guarantee fund re-
quired. II is proposed 10 provide a safety
fund for the immediate redemption OF the
circulating notes OF failed banks 10y im-
posing a small annual tax, say one-half
OF one per cent upon the average circu-
lation of each bank until the fund amounts
TO ilve per cent OF the total circulation out
standing. when bank fails its guarantee
fund is to be paid into this safety fund,
and its notes are To he redeemed In the
first instance from such safety fund thus
augmented. any impairment OF such fund
caused thereby 10 be made good from the
Immediately available cash assets OF said
bank, and II these should be insufficient,
such impairment to be made good by pro
rata assessment among other banks, the
contributions constituting "A first lien upon
the assets Of the failed bank In favor Of
their contributing banks,
AS a further security. II is contemplated
that the existing provisions fNing the in
dividual liabilities OF stockholders Is TO be
retained. and the banks Indebtedness on
account OF its circulating notes Is 10 be
made a first lien on all it's assets. For the
purpose of meeting the expense of print
ing notes, official supervision, cancella-
tion, and other like charges. there shall
be paid tax, say one-half OF one per
cent per annum, on the average amount
OF notes In circulation. IL is further pro-
vided that there shall be no national bank
notes issued of less denomination than
ten dollars; that each national bank. eN-
cept in case of failed bank. shall release
W itlilf lAH huAf0 vi llt llI5l lllFldHit at
its own office or at agencies TO be origin
ated by IL. and so the liked reserve may 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 satisfaction of
the secretary OF the trasury and comp
troller OF the currency, by banks claiming
such exemption. that they have not had
outstanding their circulating notes ex-
ceeding 75 per cent of their paid up and
unimpnlred capital; that their stockhold-
ers are individually liable for the redemp-
tion OF their circulating notes TO the fun
extent of their ownership of stock; that
the liability OF said banks upon their cir
culating notes constitutes. under their
state law. a first lien upon their assets;
that such banks have kept and maintained
a guarantee fund in United States legal
tender notes, including United States issue
OF 1880, equal to 30 per cent OF their out
standing circulation notes. and such
banks have promptly redeemed their cir
culating notes when presented at their
principal or branch offices.
II is quite likely that this scheme may
be usefully amended In some OF Its de-
tails, but | am satisfied II furnishes a
basis for very great Improvement In our
present banking and currency system.
conclude this communication fully ap-
preclating that the responsibility for all
legislation affecting the people OF the
United States rests upon their represen-
tatives In the congress, and assuring them
that. whether in accordance with the rec
concentrations | have made or not, | shall
be glad TO cooperate In perfectlng any
legislation that tends to the prosperity
and welfare of our country.
GROVER CLEVELAND.
Executive Mansion, Dec. 3. 1894.