The comet. (Johnson City, Tenn.) 1884-1916, 1894-12-27
The Two blAns.

night be expected to differ. The Bal
,imore plan is projected for the bene-
it OF the banks, the Carlisle plan for
The benefit of the Government, or OF
the people for whom the Government
is an agent.
The Baltimore plan proposes TO
make the Government the guarantor |
OF every note issued by the banks
The Carlisle plan proposes that the
banks shall gua antee their own notes
Mr.. Homer, the putatiye father OF the
Baltimore plan, says his scheme am
ply secures the Government from any
loss on its guaranty. Mr.. Carlisle Gays
in effect; Every well; we will give
the banks the same safeguards that
you offer to the Government and some
others If your scheme will save the
Government harmless, certainly mine
will do as much for the banks.
Somehow Mr.. Homer is not con-
vinCed by this reasoning. He said to
the Banking and Currency Commit
tee that "it was too much to asG oil
one national bank to become RESPONSE
BILE for all other banks in which they
had no direct concern" But why?
Every other national bank would in
like manner be responsible for the
notes OF this one. And the RESPONSE
bility which the banks as whole as
sumo is precisely what they ask the
Government to assume. They say
the Government would thereby incur
no risk. Then the banks would incur
no risk. II it is too much to ask q
bank to be responsible for the notes Of
other banks with which it has no di.
rect cotcern, is it not too much to ask
the Government to guarantee the
notes OF all the banks with which il
has no direct concern? For the Gov
eminent proposes that the banks
shall have all the safeguards that
they proposed to give the Government
and 80 per cent additional.
Mr.. Horace White in his argument
referred to the statistics Of bank NOR
tality in the past thirty'one years
This is q familiar reference among
bankers, and is worthy OF some atten
ton. In substance it is that the loss
to the Government on the notes Of
failed banks, for which it was secured
by the deposit Of bonds, would have
been but little more than a million
and a quarter OF dollars since the sys
tenn was instituted, if no bonds haC
been deposited. The fallacy of THU
argument is found in the assumption
that bankers would have been as pru
dent if they had given no security tc
the Government as they were wher
the Governmon emit held 500 to secure
every 500 of Oheir circulation. More
over, it must be noted that whatever
this proves as to the security of tn,
Government tproves equally as muct
for the security of the banks.
One of the protested objects OF both
of these plans is to get the Govern
ment out OF the banking business
The difference is that one of them
Mr.. Carlisle's, accomplishes the de
sired object, while the other does moi
The Baltimore plan not only throw
the whole burden of redemption oil
the Government, but it makes tn
Government the guarantor of ever
: note issued by thousands OF banks
| The Government becomes the accom-
mediation acceptor OF all these billl
For this liability there is no consider
alton. The banks are unwilling to al
sumo similar liability, though the
get lie exchange for it valuable frar
chise.
It may be said that the Govern
ment is now the guarantor OF all ma
tional bank notes. So it is, but tn
Government owes these banks II pc
cent more money than the Who'll
amount of the notes. It assume
this liability for the purpose Of floaf
ing its bonds in time OF stress, whicl
was a valuable consideration. Th
guaranty which it gave to its creditor
7 for valuable consideration is no pre-
, cedent for loaning its credit to bank
, not it's creditors for no consideration
at all. Moreover, the ultimate liabi
ity OF the banks for the currency is
sued is guaranty of sound and con
servatiye banking, while the guarant
OF the Government is no assurance a
i all in this direction.
e In adopting new financial syster
to get the Government out OF the banl
ing business, we should make sur
that we accomplish the end desired
To make the Government the guaral
tor of all the currency is not to a
j. tain the object contemplated. Th
! Baltimore plan fails at the most essei
y tial point, while the Carlisle plan a
49, L. -. i 4