The advocate., 1894-12-05

both the necessity and power for the Issue OF
bonds at all. / cannot for q moment believe
that any Of our citizens are deliberately willing
that their government should default in Its
pecuniary obligations, or that its financ ial
operations should be reduced to silver basis
AT any rate / should not feel that my duty was
done II / omitted any effort 1 cOulc
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
and constantly draw from the government it's
gold, and as long as no better authority fol-
bond Issues Is allowed than at present exists
such authority will be utilized whenever and
as often as 1t becomes necessary to maintain
sufficient gold reserve and in abundant time tc
save the credit of our country and make good
the financial declarations Of our government
Questions relating to our banks and currency
are closely connected with the subject referred
to; they present some unsatisfactory features
Prominent among them are the lack OF elaSti'
city In our currency circulation and its fire.
quent concentration In financial centerS wher
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 q.
tlonship Of the government to the circulation
Of the currency OF the country. This condition
cannot be Immediately reached but as q stepir
that direction and as meaus OF securing Q
more elastic currency and obViating other OBJ.
ieCtions to the present arrangement
OF bank circulation the secretary o,
the treasury presents his reported scheme
modifying present banking laws anc
providing for the issue OF circulating notes By
state banks free from taxation under certain
limitations. The secretary explains his plar
so plainly and It's advantages are developed By
him with such remarkable clearness that any
effort on my part to present arguments in Its
support would be superauouS. l shall therefore
content myself with an unqualified indOrse.
ment Of the secretary's proposed changes il
the law and brief and imperfect statement Of
their prominent features.
Il 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
In amount rs per cent. Of their paid up and un.
impaired capital, provided they deposit with
the government as q guarantee fund in United
States legal tender notes, including treasury
notes OF 1890, sum equal In amount to 30 pei
cent Of the notes they desire to issue, this de.
poslt TO be maintained at all times but when
ever any bank retires any part OF its circula.
tion proportional part Of its guarantee
fund shall be returned to It; to per.
NIT the secretary Of the treasury tc
prepare and keep on hand ready for issue IL
case an increase In circulation is desired blank
national bank notes for each bank having cir
culstion, and to repeal the provision OF the
present law imposing limitations and restric.
tions upon banks desiring to reduce or increase
their circulation. thus permitting such increase
or reduction within the'limit Of Is per cent. o,
capital to be quickly made as emergency may
arise. In addition to the guarantee fund re.
quired It Is proposed to provide n safety fund
for the immediate redemption Of the circulating
notes of failed banks by imposing 3
small annual tax, say one-hali
Of per cent upon the average circulation Of
each bank until the fund amounts to B per cent
Of the total circulation outstanding. When o
bank fails It's guarantee fund Is to be paid
into this safety fund and It's notes are to be re-
deemed In the nrst instance from such safety
fund thus augmented; any impairment Of such
fund caused thereby to be made good from the
Immediately available cash assets OF sait
bank and II these should be insufficient sucl
impairment to be made good by prorata as
sessment among the other banks, theil
contributions constituting a first leI
upon the assets Of the failed bank in
favor OF the contributing banks
That each national bank, except in case Of q
failed bank, shall redeem or retire its notes In
the first instance at its own offlce or at agencies
to be designated by it, that no fixed reserve
used 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 1t Is shown
to the satisfaction OF the secretary Of the treas
ury and comptroller Of the currency by banks
claiming such exemption that they have
not had outstanding their circulating
notes exceeding Is per cent OF
their paid up and unimpaired capital:
that their stockholders are individually liable
for the redemption OF their circulating notes to
the full extent OF the ownership OF stock; that
the liability OF such banks upon their circulat-
ing notes constitutes under their state law a
first lien upon their assets; that such banks
hnun liant and maintained q n1lnrnnfen fund In