The record-union., 1894-12-04
, financial declarations of our Govern
BANKS AND CURRENCY.

IlGLb.
BANKS AND CURRENCY.
Questions relating to our bonds and
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
It's frequent concentration in financial
centsrs when 1t is most needed iii other
parts Of the country. The absolute di-
vorcement of the Government from the
business of banking is the ideal relation
ship OF the Government to the circulation
OF tho currency of the country. This
condition cannot be Immediately reached.
but as step in that direction, and as a
means OF securing = more elastic cur
rency. and ouviating other objections TO
tho present arrangement OF bank circula-
ton, the Secretary of the Treasury pre-
sents III his report scheme modifying
the present banking laws, and providing
Tor the issue OF circulating notes by State
banks free from taxation under certain
limitations. The Secretary eX plains 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
superiluous. shall, therefore, content
myself with an unqualified Endorsement
OF the Secretary's proposed changes i'll
the law, and make brief and Imperfect
statement OF their prominent features.
CHANGES SUGGESTED.
1t is proposed 20 repeal ali laws pro-
viuing for the deposit OF United States
bonds AS security Tor circulation; to per-
init national banks TO Issue circulating
notes not exceeding III amount 10 per
cent. OF their paid-up and uEimpaired
capital, provided they deposit with tho
Government as Il guarantee fund in
United states legal tender notes lnclud-
ing Treasury notes OF 1890 u sum of
equal amount to 30 per cent. OF the notes
they desire 10 issue, this deposit to be
maintained at all times, but whenever
any bank retires any part OF its circula-
ton proportionate part of its guarantee
fund shall be returned to il; TO permit
the Secretary of the Treasury 10 prepare
and keep ON hand ready Tor issue i'll
case an increase III circulation is desired
blank national bank notes tor each bank
having circulation, and to repeal the pro-
visions OF the present law imposing linn
itatiOns and restrictions upon banks de-
string TO reduce or Increase their circula-
ton, thus permitting such increase or re-
duCtion within the limit of the 10 per cent
OF capital to be quickly made as emer-
genclcs arise. In addition TO the guar
antee fund required, it is proposed to
provide Il safety fund for the Immediate
redemption Of the circulating notes OF
tailed banks, by imposing small annual
tax, say One-half of L per cent. upon the
average circulation oil each bank, until
the IunC amounts to . per cent. on the
total circulation outstanding.
When bank tails its guarantee fund is
to be paid into this safety fund, and it's
notes are to be redeemed in the first in
stance from such safety fund thus aug
mented, ana the impairment OF such
fund caused thereby 10 be made good
from tho Immediately available cash as
sets Of said bank, and If these should be
lnsu illclent, such impairment TO be made
good by pro rata assessment among other
banks, their contributions constituting a
first item upon the assets of the failed
bank in favor of the contributing banks.
AS a further security, 1t is contem plated
that the existing provision liking the in
diviGual liability OF stockholders is TO be
retained, and the banks Indebtedness on
account of its circulating notes is to be
made first lien on all the assets. For
the purpose of meeting tho expense Of
printing notes, Official supervision, col
lection and other like charges, there shall
be made a tax say OF Oue-half OF one per
cent. per aunum on the average amount
of notes in circulation.
1t is further provided that there shall
be no national bank notes issued Of less
denomination than $40; that each ma
tlonaI bank, except in case of d failed
bank, shall redeem or retire its notes i'll
the nrst instance at its own office or at
agencies to be designated by it, and that
no liked reserve may 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, i'll cases