The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1894-12-19

uSft plan because IL MaOe no pTOVlsloii
for the custody Of the 80 per cent.
deposit. That he says els met fully
and fairly. because it deprives the
State hanks of all opportunity or
power to touch this reserve except
by retiring their circulation. When.
ever a State bank retires it's circula-
ton, or any part of it, proper pro-
portion of the guaranty fund will be
returned to it by the State official. J"
Chairman-Are not these condi-
tions on which q State bank may issue
circulating notes substantially the
same as are imposed upon national
banks
Secretary Carlisle-They are al
most precisely the same so far as re-
CARDS the guaranty fund, but there is
no requirement here that the State
banks shall keep a safety fund Of 5
per cent. The safety of the State
bank notes is made to depend on the
assets of the bank, on its commercial
credit, on the individual liability of
| It's stockholders, and on the fact that
it must deposit 80 per cent to secure
ifs circulation. It's notes are first
lien uponsits assets, and, if this does
not make reasonably safe note am
not able to devise law that would
dosso.
..The currency issued by State
banks" said Mr.. Carlisle, in response
to query by Mr. Brosius, "de-
pends. in the first place, on the assets
of the bank, and in the second place
on the individual liability of each
stockholder of the bank, and in the
third place on the deposit of the 80
per cent. guarantee fund y
Mr.. Brosius-I am excluding all of
the notes of the State bank except
the additional 70 per cent. That de-
pends for It's security on the. assets
of the bank.
Secretary Carlisle-And on the in
dividual liability OF the stockholders.
Mr.. Brosius-It depends upon the
solvency of the banks debtors and
upon the solvency of the stockhold-
ers. Is it not possible, in that view
of the case, that bank might be so
badly broken that its notes will not
be redeemed at all ?
Secretary Carlisle-All things are
possible. l will not undertake to say
what is not possible.
Mr.. Brosius-You admit that, it is
possible
Secretary Carlisle-Ob, certainly.
Mr.. Brosius-That possibility is in
the nature of a residue of risk, and
after all, the security is attained
which is attainable. My inquiry is,
would it not be better, under your
bill, to put that residue of risk on the
government of the United States
rather than on the note holders?
Secretary Carlisle-Better for
whom
Mr.. Brosius-Better for the people
of the United States.
NOT THE Governments BUSINESS.
Secretary Carlisle think not.
My theory is that the government oil
the United States should be discon-
nected entirely, if possible, from the
banking business and should not in
cur any liability in connection with
that business, except to see that it
throws such safeguards around the
issue of bank notes as to make them
sound in the hands of the people.
Mr.. Brosius--ls that objection OF
yours Constitutional one or prac-
tical one?
Secretary Carlisle think it both
Constitutional and practical. think
that when the government embarks i'll
business that belongs to private cor
poration it is going into business
in. which it is likely to suffer.
Later in his examination Mr.. Car
Isle said: "This bill does not require
State bank to comply with any con.
ditions whatever. 1t leaves the
State banks in the condition of com.
plying with them, if they choose, or
of paying the tax on their circulation
if they do not comply with them. The
tax is already on their notes, and my
proposition simply is that if a State
bank desires to exempt Itself from the
payment of tax which the Supreme
Court of the United States has held
to be Constitutional tax, it shall do
so by complying with certain condi-
tions. In other words l recognize
in that statute of the United States
which puts tax upon the issue of
State banks no validity at all except
as revenue measure / personally
question the right of the Congress of
the United States to prohibit, direct.
ly or indirectly. the issue of notes of
a State bank when it is authorized to
II IL II