The enterprise. [volume] (Wellington, Ohio) 188?-1899, 1894-12-05

authority had existed to issue the bonds
Of the government bearing q low rate OF
interest and maturing within short period
but the congress having failed to confer suoh
authority resort was necessarily had to there
sumption act Of 1875 and pursuant to its pro-
visions bonds were issued drawing interest at
the rate Of 8 per cent. per annum and maturing
ten years after their issue, that being the
shortest time authorized by the act am
glad to say, however, that on the sale OF these
bonds the premium received operated to reduce
the rate Of interest to be paid by the govern
ment to less than per cent
Nothing could be worse or further removed
from sensible finance than the relations
existing between the currency the gov
ernment has issued, the gold held for
It's redemption, and the means which
must be resorted to for the purpose OF replen-
ishing such redemption fund when impaired.
Even II the claims upon this fund were con-
fined to the obligations originally intended and
II the redemption OF these obligations meant
their cancellation, the fund would be very
small. But these obligations when received
and redeemed in gold are not cancelled but are
reissued and may do duty many times by way
F, OF drawing gold from the treasury. Thus we
have an endless chain in operation constantly
depicting the treasury gold and never near
final rest Asif this was not bad enough, we
have, by statutory declaration that it is the
policy Of the government to maintain the par
ity between gold and silver, aided the force
and momentum Of this exhausting process and
added largely to the currency obligations claim
ing this peculiar gold redemption. Our small
gold reserve is thus subject to drain from every
side. The demands that increase our danger
also increase the necessity Of protecting this
reserve against depletion and 1t is most unsat-
isfactory to know that the protection afforded
is only temporary palliation 1t is perfectly
and palpably plain that the only way under
present conditions by which this reserve when
dangerously depleted can be replenished Is
through the issue and sale Of the bonds OF the
government for gold; and yet congress has not
only thus far declined to authorize the issue OF
bonds best suited for such purpose, but there
seems disposition in some quarters to deny
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 gov
ernment should default in its pecuniary obliga-
tions or that its financial operations should be
reduced to silver basis. At any rate l should
not feel that my duty was done II I omitted any
effort could make to avert such calamity. As
long, therefore, as no provision is made for the
Anal redemption or the putting aside Of the
currency obligation now used to repeatedly and
constantly draw from the government its gold,
and as long as no better authority for bond is
sues is allowed than at present exists, such au-
thority will be utilized whenever and as often
1T becomes necessary to maintain sufficient
gold reserve and In abundant time to save the
credit Of our country and make good the finan-
cial declarations Of our government
Questions relating to our banks and currency
are closely connected with the subject just re-
ferred to, and they also present some unsatis-
factory features
! Prominent among them are the lack Of elas-
ticity in our currency circulation and its fre-
quent concentration In financial centers when
1t is most needed In other parts OF the coun-
try.
The absolute enforcement of the government
from the business Of banking is the ideal rela-
tionshlp Of the government to the circulation
Of the currency Of the country.
This condition cannot be immediately
reached, but as o step in that direc-
tion and as ameans OF securing o more
elastic currency and obviating other objec-
tions to the present arrangement OF
bank circulation, the secretary Of the
treasury presents in his report scheme
modifying present banking laws and pro-
viding for the issue of circulating notes by
state banks free from taxation under certain
limitations.
Z 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 superfiuous. shall, therefore, con.
tent myself with an unqualified indorsement
Of the secretarys proposed changes In the law
and brief and imperfect statement OF their
prominent features
1t Is proposed to repeal all laws providing foI
the deposit of United States bonds as security
for clrculation; to permit national banks to
atr 1att nofa pOta nU n nj
rs per cent. of their paid up and unimpaired
capital, provided they deposit with the govern
mont, as O guarantee fund, In United States
legal tender notes. including treasury notes OF
| 1890 o sum equal In amount TO 30 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 circulation
@ proportional part Of It's guarantee
fund shall be returned to it; to per-.
init the secretary Of the treasury tc
prepare and keep on hand ready for issue In
case On increase in circulation is desired blank
national bank notes for each bank having cir.
culatlon and to repeal the provisions Of the
present law imposing limitations and restrict
ions upon banks desiring to reduce or increase
their circulation thus permitting such In
crease or reduction within the limit Of rs pei
cent. OF capital to be quickly made as emer-
gencies arise,
In addition to the guarantee fund required, 1t
is proposed to provide safety fund for the
immediate redemption Of the circulating
notes OF failed banks by imposing o
small annual tax, say one-half of one
per cent. upon the average circulation
Of each bank until the fund amount to lye per
cent. of the total circulation outstanding
When bank fails It's guarantee fund is to be
paid intothis safety fund and its notes are to be
redeemed In the first 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 said bank
and II these should be insufficient such impair
ment to be made good by pro rata assessment
among the other banks, their contributions
constituting first lien upon the assets Of failed
bank in favor OF the contributing banks.
As further security, 1t is contemplated that
the existing provision fixing the individual liza
bility Of stockholders Is to be retained and the
banks Indebtedness on account OF Its circulate
ing notes is to be made q first lien on all Its
assets.
For the purpose OF meeting the expense OF
printing notes, official supervision, cancella-
tion and other like charges there shall be Inn
posed o tax OF say one-half of one per cent. pcr
annum upon the average amount OF notes In
circulation. N h
1t is further provided that there shall be no
national bank notes issued OF less denomina-
tion than ten dollars 6
, thai each national bank except In case Of .
failed bank, shall redeem or retire its notes In
the first instance at its own once or at agencies
, TO be designated by IT, and that no hxed re-
. serve need be maintained on account Of de.
posits
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
treasury and comptroller Of the currency BY
, banks claiming such exemption that
they have not had outstanding their
rIrcplating notes exceadlnR " ner cank