Asheville daily citizen. [volume] (Asheville, N.C.) 1890-1900, 1894-12-03
of the government to meet Atate
pecuniarv obligations.

1t would have been we'll i. IN this emer-
eency authority had existed to ISSUE the
bonds of the government bearing low
rate OF interest and maturing within a
short period, but the Congress having
failed to confer such authority, resort
was necessarily had to the resumption
act Of 1885, and pursuant to its provi.
siOns bonds were issued drawing interest
at the rate OF 5 per cent. per annum and
maturing 10 years after their issue, that
being the shortest time authorized by
the act. am glad to saw, however, that
on the sale of these bonds the premium
received operated to reduce the rate of
interest to he paid by the government to
less than three per cent.
Bad Finance.
Nothing could be worse or further re.
moved from sensible finance than the
relations existing between the currency
the government has issued, the gold held
for its demption and the means which
must be resorted to for the purpose OF
repleuishing such redemption fund when
impaired. Even if the claims upon this
fund were confined to the obligations
originally intended and if the redemption
OF these obligations meant their cancela-
ton the fund would be very small; but
these obligations when received and re-
deemed in dollars are not cancelled but
are reissued and may do duty many times
BY way of drawing gold from the treas.
urv. Thus we have an endless chain in
operation constantly depicting the treas
ury's gold and never near final rest. As
il this was not bad enough, we have, bv
a statutory declaration that it is the
policy OF the government to maintain
the parity between gold and silver,
aided the force and momentum of this
exhausting process and added largely to
the currency obligations. Our small
gold sreserve is subject to drain from
every side. The demands that increase
our danger also increase the necessity of
protecting their reserve against depletion
and it is most unsatisfactory to know
that the protection aft rded is only
temporary palliation. Itefftctually shows
that only way under present conditions
there can be rcplenishment is through
issue and sale OF the bonds of the gov
ernment Tor gold, and yet Congress has
not only thus far declined to authorize
the issue of bonds best suited to such
purpose, bot there seems disposition
IN some quarters to deny both the me-
cessity and the power for the issue OF
bonds at all.
Against II silver Basis.
cann't tor a moment btlleve that
anv of our citizens are deliberately will
inc that their government should de.
fault in its pecuniary obligations or that
its financial operations should be reduced
to silver basis. At any rate should
not feel that my duty was done it |
omitted anv ttfort could m axe to avert
such a calamity. As long, therefore, as
no provision is made Tor The final re.
demption or the putting aside OF the cur
rency obligation now used to repeatedly
and constantly draw from the govern
ment its gold, and az long as no better
authority for bond issues is allowed than
at present, just such authority will be
utilized whenever and as often as be-
comes necessary to maintain sufficient
gold reserve and in abundant time to
save the credit OF our country.
Our Currency Not Elastic.
Questions relative to our banks and
the currency are closely connected with
the subject just referred to and they also
present some unsatisfactory features.
Prominent among them are the lack OF
elasticity in our currency circulation and
its frequent concentration in financial
renters when il is most needed III other
| rkc ut ta Tha phc nlt,ta IL
vorcement of the government from the
circulation of the currency of the coun'
: try is a condition that cannot be imme-
diately reached. but, as step in that
direction and as a means OF securing a
more elastic currency and meeting other
objections to the present arrangement
, OF bank circulation, the St tcretary OF the
: Treasury presents in his report scheme
: modifying banking laws and providing
: for the is-ue OF circulating notes by state
banks free from taxation under certain
> limitations. | content myself with ar
unqualified endorsement of the secrc
} tary's proposed changes.
The Details of the Plan.
1t is provided TO repeal all lawsprovid
ing for the deposition of United State,
:. bonds as security for circulating notes
l not exceeding in amount rs per cent. o
!, their paid up and unimpaired capital
+. provided they deposit with the gov
ernment as "a guarantee fund in Unitct
States legal tender notes, including treas
: ury notes OF 1890, a asumequalin in amour
to 80 per cent. of the notes they desire t.
II issue; this deposit to be maintained n
i all times, and whenever any bank retire
n anv part of it's circulation proportion
r ate part of its guarantee fund shall b
e returned to it; to permit the secretary G
the treasury to prepare and keep o.
hand ready for issue, in case an increas
n in circulation Is desired, blank nationa
, bank notes for each bank having circula
: tion; to repeal the provisions {
y the present law imposing limita
h tions and restrictions upon bank
re desiring to reduce or increase thei
Il circulation, thus permitting such increas
,e or reduction within the limit of IS pt
il cent. Of capital to be quickly made @
t emergencies arise.
le safety Fund.
ID In addition to the guarantee fund r
IT, quired. it is proposed to provide safet
:. ~ fund for the redemption of the circulatiu
ID notes Of failed banks, by imposing
I'd small annual tax, say one-half OF one p
a cent. upon the average circulation
We each bank until the fund amounts to fl,
I'd per cent. of the total circulation ou
a standing. When bank fails its guara
le- tee fund is to be paid into this safe
On fund and its notes are to be redeemed
a the first instance from such safety fur
thus augmenting any impairment OF su,
tund caused thereby to be made goo
he from the Immediately available ca
Il, assets Of said bank, and If these shou
=. be insufficient such impairment to
nd made good by pro rata assessme
.es among the other banks. their coutrib
he tions constituting first lien upon t
=. assets OF the failed bank in favor of I
~. US. contributing banks.
~ As further security it is contcmplat
W. that the existing provision fixing the
- 20 dividual liability Of stockholders is to
81 gu ret tanned and the bank q Indebtedness
y. o' account of its circulating notes is to bt
aus '.s first lien on all its assets. For the p,
eu pose OF meeting the expense of printi