Santa Fe daily New Mexican. [volume] (Santa Fe, N.M.) 1885-1897, 1894-12-11

and instructive.
~ have" said he, in response to ques-
| tisn as to the merits Of the Carlisle sys-
TEN of currency reform so heartily en-
dorsed by President Cleveland, "looked
pretty carefully into the plan suggested
! by Sec. Carlisle and must say that it is
great improvement upon the present
financial system. 1t
| HAS MANY ADVANTAGES
over the law as it at present exists and is
therefore move IN the right direction in
a matter Of very urgent Importance. The
law, as it new stands, is 4uch that it is
positively a losing business for national
banks to issue money. In the case of
| our bank, for instance, in order to issue
money under the present. banking law we
were obliged to deposit $4,000 in gov
eminent bonds costing us $4,000. Upon
these bonds we were able under the law
10 issue only 80 per cent in notes, thus
giving US $36,00O for circulation in place
of the $4,000 paid for the bonds. In
addition we are obliged to pay the gov
eminent a per cent tax on the circula-
ton amounting to $1,000, so that really
this bank in issuing $4,000 has lost in
circulation $13,80O. Another trouble
about such system is that
THERE 10 NO FLEx1BlLIrY,
the basis of the circulation being fixed
amount of government bonds. This be-
ing the case there was no opportunity for
the banks to come to the relief of the
people in such an emergency as the panic
Of 1893"
"What will be the difference in things
under the Carlisle systems"
swell, the radical principle underlying
that system 10 the dive rcement of the
government from. the banking bust
ness. Under that system the
First National Bank of Santa Fe
with its $l5O,OO0 capital could issue IS
per cent of its capital in notes. This
would give us $1l2,600 increase in cir
culation. We would, however, be called
upon to deposit guarantee fund of 30
per cent of the notes issued which would
amount to $33,750, thus allowing this
bank net increase in Its currency of
$78,75O. The value of such an amount
ISSUED AT SUCH TIME @
as the panic of last year would have been
incalculable. This issue would not, how.
ever, under the Carlisle plan be guar
anteed by the government"
"How does that system differ from the
Baltimore plant
SIT differs first and foremost in the fact
ment guarantees the payment Of all note,
No lssl., ala
does not assume any responsibility.
think the latter plan is to that extent dsfec
tive, because while money issued without
government guarantee might be perfect
~ safe it would not have the confidence
Of the public to the extent that money
witt.
THE GOVERNMENT BACK OF IT
would ossess. For this and other rea
sons greatly prefer the Baltimore plan
The Baltimore plan is advantageous tt
the banks to an extent greater than tn
Carlisle plan, because it requires no de
post to protect the issues made by tn
bank. It provides that banks may issu
50 per cent of their capital and in al
emergency rs per cent more. This latter
that banks will not be tempted to issu
more money than they need. Take thi
i. bank for example. With our capital Q
Sl50,000, we could issue $4,000 in note
for circulation, to be followed in case o
emergency by $37,500 more, thus givini
! us $112,5CO additional circulation. As W
} WOULD HAVE NO DEPOSIT
to make, we would thus be able to en-
large the circulating medium Of thi
bank to the net extent Of $112,5o0 unde
the Baltimore system against an increas
of only S7S,75O net under the Carlisl
plan. The banks generally prefer tn
Baltimore plan because it confers create
privileges on them and at the same tim
incidentally puts more money in circula
ton. This currency would be perfectl
safe, because it's payment would b
guaranteed by the government
"3nt how would the government b
protected on its guarantee In case o
3 bank failures?" was asked.
THAT question is easily answered as
matter Of experience. During the thirt,
years existence of the national banks
the government, even had it had ne de
po.its OF bonds for its protection, woul'
have lost less than 41,O00,0OO. In othe
words an annual tax upon nationa
bank issues of 8-lO0 of per cent during
the last thirty years would have prevent
| ed any loss by the government from
bank failures, even
WITHOUT GENT OF BONDS
: deposited. Therefore, small annual ia.
without any deposit would be amply sui
ficient to protect the government in tn
light of experience. Now the Baltimor
system provides for this by condition
that an annual tax, aggregating in tn
end s per cent of the circulation, shall b
paid by the banks to make up common
: fund from which, the government is to b
reimbursed in case of loss from BAN
failures. The effect Of this provision /
to cause a community of interest betwee
tho various banks and at the same tim
to insure an absence Of loss to all partie
!. concerned. The banks thus contributing
to the redemption of the notes Of
failed bank are to be reimbursed by hav
+ ing, under this Law, first lien or the as
sets Of that bank, and even II they did los
a little in the long run by reason of thei
community OF interest with weake
banks, they would