The herald., 1894-12-03

l
sale one to enter on. He says:
The change thus outlined will, on
investigation Il is believed, prove to b
safe IN ahording complete security to
the householder and give TO tho business
intsrssts OF the country bank note ia
sue responsive to their needs."
Continuing, the com ptroller says:
The pro6t on the issue OF circula lation
to the banks by such change would be
20 Augmented that it 10 giving to the m
. franchise for which 1t 10 suggested
they should be called upon to make pro.
per return to the general govern m ent.
This return should not, however, be OF
such character as to defeat the ends
sought in the privilege given. The our
rency REDEEM ption of the legal tender is.
sues and the treasury issues under the
act OF 1890, and the re-issuing instead OF
cancellation of the same, must always
create distrust Of the governments q
credit abroad and at home 80 long as
the laws on the statute book remain un,
changed.
The general government ought to be
wholly free from the direct issuing and
redeeming OF no.es to pass as money
among the people. No govern ment has
ever yet successfully engaged in so do
ing and the experience of the govern
ment OF the United States has proven no
exception to the rule. The general cost
and loss entailed upon the government
and the period of uncertainty to the gov
ernments credit and the stability OF our
monetary Bystem have been go great as
to make the legal tender and treasury
iesues OF 1890 one OF the extraordinary
burdens placed upon the people.
"These Issues ought to be redeemed
and cancelled and the government thus
enabled to retire from the banking bus
ineas, a business for which II is 60 poorly
equipped. The intention OF those who
first authorized the legal tender issuea
was that it should 80 retire at the EARL
lest practicable moment. The fret con-
gressional enactment signed by Presi-
dent Grant after his inauguration as
chief executive. was one re- asserting the
determination of the government to pre-
serve unquestionsd the public faith and
the closing clause of it was 'snd the
United States also solemnly pledges its
faith to make provision at the earliest
practicable period for the redemptio of
United States notes in coin.'
I'm tho light of the present condition
OF the governments fnancee," the
comptroller continues, that which
ought to have been done when there
wae surplus in the treasury cannot
now be undertaken, and the same con-
ditions must continue to weaken the
country's credit and plague the lines OF
business, unless q means 10 devised for
removing these issues from the channel
OF current redemption, until such time
ne the government tinds itself in q posi-
tion to do that which was the intention
OF all, gradually redeem and cancel them.
The ultimate redemption Of coin OF
course must all be upon the government,
but the embarrassment does not arise
from their ultimate, but from their cur.
rent redemption.
ut ie therefore suggested that il con.
gress shall repeal the provisions. OF the
present act requiring the national banks
to make deposit OF government bonds
in order to secure circulating notes and
substitute therefor provision giving
them instead the right to iseus the same
against their assets. il incorporate there
in. and a. part thereof, that - Q pre-
requisite to go doings the banks be COM
PEELED to deposit with the treasurer OF
the United States legal tender issues or
Issues under the act Of 1890 equal in
amount to the difference between the
percentage of their capital stock of issue
granted against their assets and the
total OF such capital stock.
"The deposits thus made ought to
remain with the treasurer until the
bank ceases either through voluntary or
involuntary liquidation to do business
and in either case the government
ought then to redeem and cancel such
treasury issues deposited.
'.As against this deposit OF legal ten
der and treasury notes 30 made there
should be issued to the banks, dollar
for dollar, national bank notes, either Of
the same or different design as might be
deemed best. The percentage OF the
bank notes issued against their deposit
should be free from any taxation inns
posed upon circulation and ought to be
such a percentage as is deemed equitable
to be used as a partof the banks legal
reserve held against deposit.
"The government should not under.
take or in any wise become responsible
for the current redemption Of these
notes. Its responsibility ehould end
with it's redemption OF the notes depos-
tied to secure such circulation when the
bank ceases to exist. At present cur
rent redemption fund of five psr cent OF
the outstanding circulation ia iound
sufficient and it is probable that in the
future no greater amount would be re-
quired.
'The elasticity of issue in the nation
al bank circulation will bs found in the
percentage of issue against assets sub
ject to the necessary rate of taxation
and insured by an sdeonate safety fund
to guarantee the note holders against
loss. The government will be aided,
the bank giving in exchange a dollar
for every dollar deposited, and thus re.
lisved OF the loss incident to deposing
an amount OF it's capital stock in ex-
No violent contraction OF the currency
would follow such o course, but when.
ever contraction occurs 1t would be not
less gradual than at other times, the
expansion incident thereto.
ut 10 suggested that as a necessary
element to securing the proper elasticity
issue in our bank notes currency, sec.
tion nine, act OF July ~. 1892, regulat.
ing the retirement and issuing of circu-
lation to banks within fixed period Of
time should be repealed, aud also that
an amendment should be made to tho
law necessitating the banks keeping in
the office OF the com ptroller of the cur
rency q sufficient amount OF blank notes
as will enable them to secure circulation
at once instead Of after = period OF
delay.
"Suggestions have been received from
q question of banking and currency sys-
-Lk ~ ~, h. -