The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1894-12-12
Carlisle's Banking System.

A matter of general interest in the
annual report of Secretary Carlisle,
which President Cleveland endorses, is
plan for a new system of banking.
The existing national system, like every
other product of republican statesman
ship, has always been denounced by
the democracy. To the statesmen of
that party the SYSTEMS great fault is
that it is of republican origin.
The ostensible reason for devising a
new system is that the national bonds,
which constitute the security for the
circulating notes, will be retired by re-
demption in the course of time, and
that it is not good financial policy to
maintain public debt for the purpose
of sustaining banking system. This
contingency, prior to the last national
election, had been foreseen and had
been the subject OF much discussion.
Under the various administrations prior
to the present, the national debt had
been disappearing, and it seemed only
a question of time-and not long
time-when the matter of providing
substitute for the national bonds as
security for the circulation of the ma
tional banks would demand action. But
the financial situation has changed.
One hundred million dollars have been
added to the nations bonded debt.
When the government will be able to
resume the payment of its bonds, no
man can tell
There does not appear to be press
ing need of providing a new banking
system, either by reason of the prob
able disappearance of the national
bonds from the market, or-much
less--by reason of any fault in the ex-
listing system. That system is the best
and safest ever devised for this country,
and the people are anxiously asking,
What shall be conceived in its stead
when the national debt shall be paid and
new form of security must be provided?
Though premature, Secretary Carlisle ,
answer to this question is interesting.
He proposes that national banks shall
be permitted to issue circulating notes
to the extent of seventy-five per cent
of their paid-up and unimpaired capt.
tai, provided they deposit with the gov
eminent legal tender notes to the eX-
tent of thirty per cent of their circula-
ton. A bank of 800 900 capital would
thus receive $4,000 in circulating
notes, and would deposit with the gov
eminent $22 500 in legal tender notes
Its net maximum circulation would
therefore be fifty-two and one.half per
cent of its capital. The plan contem
plates the repeal of the tax on state
banks when the outstanding circula-
ton does not exceed seventy-fve per
cent of the capital. Stockholders, in
state or national banks, are made in-
dividualy liable for lhe redemption of
circulating notes to the extent of their
stock, and, further, in the case of STATE
banks, liability on acc Dunt of circulate
ing notes is m de a fist lien on the
banks assets. A bllhol er of ma
lional bank, under this plan, might
never lose dollar by the failure
of the bank, but it is clear that the Sc
curly you'd be weaker than under the
present system. In that, protection to
the holders of circulating notes is iron
clad.
The repeal of the tax on stat, banks
would open the foodgates of a va
REG ted curr, ncy only less desirable
in some respects than the "wildcat
currency" of the era of state banking g.