The Mankato free press. [volume] (Mankato, Blue Earth County, Minn.) 1879-1924, 1894-12-07
nANKs AND CURRENcY.
Recommendations of Secretary Carlisle
Heartily Endorsed.

currency are closely connected with the
subject just referred to- and they also
present some satisfactory features. Prom
inent among them are the lack of elastic
ity In our currency circulation and its
frequent concentration in financial CEN
ters when it is most needed in other parts
of the country.
The absolute enforcement Of the bust
ness of banking is the ideal relationship
of the government to the circulation of
the currency OF the country.
a State Bank Scheme.
This condition cannot be Immediately
reached, but as a step in that direction
and as a means of securing a more elastic
currency and obviating other objections
to the present arrangement of bank circu-
lation, the secretary of the treasury pre-.
sents 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 argument in
its support would be superhuous. l shall
therefore content myself with
An Unqualified Endorsement
of the secretary's proposed changes in the
law and brief and imperfect statement OF
their prominent features. 1t is proposed
TO repeal all laws providing for the de
post of United States bonds as security
for circulation; to permit national banks
to issue circulating notes not exceeding in
amount IS per cent Of their paid UP and
III impaired capital provided they deposit
with the government as a guarantee fund
in United States legal tender notes, not
including treasury notes of 1880, sum
equal in amount to so 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 It's circula-
ton, a proportionate part of its guaran-
tee fund shall be returned to
it; to permit the secretary
of treasury prepare and keep on hand
ready for issue, in case on increase in cir
culation is desired, blank national bank
notes for each bank having circulation,
and to repeal the provisions of the present
law imposing limitations and restrictions
upon banks desiring to reduce or increase
their circulation-thus permitting such in
crease or reduction within the limit of rs
per cent of capital to be quickly made as
emergencies arise.
A Safely Fund.
In addition to the guarantee fund re-
CURED it is proposed to pro vide u safety
fund for the immediate redemption of the
circulating notes Of failed banks by impos,
ing small annual tax, say one half
of per cent, upon the average circula-
ton Of each bank until the fund amounts
to per cent OF the total circulation out
standin When a bank fails its guaran-
tee func is to be paid into this safety fund
and its otes are to be redeemed in the
first Instance from such safety fund thus
augmt ed-any impairment of such fund
caused aereby to be made good from the
immed tely available cash assets Of said
bank, and if these should be insufficient,
such impairment TO be made good by pro
rata assessment among the other banks,
their contributions constitutinga first lien
upon the assets of failed bank against con
tributing banks.
a Further Security.
AS further security it is contemplated
that the existing provision fixing the indi-
vidual liability of stockholders is to be re
tanned and the banks Indebtedness On
account of its circulating notes is to be
made first lien on all it's assets.
For the purpose of meeting the expense
of printing notes, official supervision, can
collation. and other like charges there shall
be paid tax say one-half of 1 per cent per
annum on the average amount of notes in
circulation.
1t is further provided that there shall be
no national bank notes issued of less de-
nomination than ten dollars: that each
national bank, except in case of failed
bank, shall redeem or retire its notes in
the first instar ce at its own Office, or at
agencies to be designated by it, and that
no fixed reserve be maintained on account
of depositors.
Another Important Feature.
Another very important feature of this
plan is the exemption of state banks from
taxation by the United States in cases
where it is shown to the satisfaction OF
the secretary of the treasury and comp
troller OF the currency by banks
claiming such exemption that they
have not had outstanding their circulating
notes exceeding rs per cent of their paid
up and unimpaired capital; that their
stockholders are individually liable for the
redemption of their circulating notes tc
the full extent of their ownership of stock;
that the liability of said banks upon their
circulating 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 treasury notes of
1890, equal to 80 per cent of their out
standing notes, and that such banks have
promptly redeemed their circulating notes
when presented at their principal or
branch offices.
1t is quite likely that this scheme can be
usefully amended in some of it's details,
but / am satisfied it furnishes basis for
very great improvement in our present
banking and currency system.
Willing to Help Congress.
I conclude this communication fully ap-
preciating that the responsibility for ali
legislation affecting the people of the
United States rests upon their representa-
tives in the congress and assuring them
that whether in accordance with recon-
mendations have made or not, shall be
glad to cooperate in perfecting any legis-
lation that tends to the prosperity and
welfare of our country.
GROVER CLEVELAND.
Executive Mansion Dec 3, 1884,