Staunton vindicator. [volume] (Staunton, Va.) 1860-1896, 1894-12-14
Secretary car|isIe's New
Banking Plan.
New

The followingis in brief Secretary Carlisle
plan of banking which is recommended b,
| the President in his message to congress, tt
be substituted for the present one:
| /. Repeal the law requiring OF authorizing
the deposit of e. S. bonds as security fol
circulation.
| 2. Permit national banks to issue notes tt
the amount not exceeding rs per cent. of theil
paid up and unimpaired capital, but require
| each bank before receiving notes to deposit {
guarantee fund consisting of U. S. Legal
tender notes, including treasury notes Of 1890
! to the amount of so per cent. upon the circu
latng notes applied for. This percentage
| of deposits upon the circulating notes out
standing to be maintained at all times and
| whenever bank retires its circulation il
| whole or in part its guarantee fund to be re-
turned to it in proportion to the amount Of
notes retired.
3. Retain the provision of the law making
stockholders individually liable and provide
that the circulating notes shall constitute a
first lien upon the assets of the bank.
4. Impose tax of one-half of one per cent
per annum, payable semi-annually, upon the
average amount of notes in circulation to de-
fray the expenses of printing notes. official
supervision, cancellation, etc.
5. No national ba NIX note to be of less de-
nomination than $40 and all notes of this
but banks desiring to redeem their notes in
gold may have them made payable in that
coin. The Secretary of the Treasury to have
authority to prepare and keep ON hand ready
for issue upon application a reserve of blank
national bank notes for each banking associa
ton having circulation.
6. Require each national bank to redeem
its notes at its own Office OF at its own Office
and agencies to be designated by it,
Z. 10 provide safety fund for the imme
date redemption of the circulating notes OF
failed bank, impose tax of per centum
per annum upon the average circulation OF
each bank until the fund amounts to five pei
centum OF the total circulation outstanding
require each new bank and each bank taking
out additional circulation to depositit proper
proportion of this fund before receiving notes
When bank fails, IFS guarantee fund held
Oh deposit to be paid into the safety fund and
used in the redemption of its notes, and if
this fund shall be impaired by the redemp-
ton OF the notes Of failed national banks, and
the Immediately available cash assets of such
banks are insufficient to re-establish the fund,
it shall at once be made good by pro-rata as
sessments upon the other banks, according to
the amounts Of their outstanding circulation;
but there should be a first lien upon all the
assets of the failed bank OF banks, to reim-
burse the contributing banks. The safety
fund may be invested in outstanding U. S.
bonds, having the longest time to run, the
bonds and the interest upon them to be held
as part of the fund and SO drawn on when
necessary to redeem notes of failed banks.
8 Repeal the provisions OF the organization
and the act of July II, 1892, imposing the
limitations upon the reduction and increase
of national bank circulation.
9. Repeal all provisions of the law requiring
banks to keep reserve on account of depos-
its.
10. The Secretary of the Treasury may, in
his discretion, use any surplus revenue of the
U. S. in the redemption in the retirement in
the U. S. legal tender note, but such redemp-
tons shall not in the aggregate exceed an
amount equal to 70 per cent. of the additional
circulation taken out by national and State
banks under the system herein proposed.
II. Circulating notes issued by banking
corporation, duly organized under the laws
of any State, and which transacts no other
than banking business, shall be exempt
from taxation under the laws of the United
States, when it is shown to the satisfaction of
the Secretary of the Treasury and the Comp
troler of Currency
|. That such bank has at no time had out
standing its circulating notes in excess of Is
per centum OF its paidup and unimpaired cap
ital.
II. That It's stockholders are individually
liable for the redemption of its circulating
notes to the full extent of their ownership of
stock.
Ill. That the circulating notes constitute
by law first lien upon all the assets Of the
bank.
". That the bank has at all times kept a
guarantee fund in U. S. legal tender notes,
including treasury notes of 1890, equal to 80
per centum of its outstanding circulating
notes, and,
V. That it has promptly redeemed its notes
on demand at its principal Office, or in enc or
more of its branch offices, if it has branches.
y. The Secretary of the Treasury may, I'M
der proper rules and regulations to be estab-
lished by him, permit State banks to procure
and use in the preparation of their notes the
distinctive paper used in printing U. S. secu-
rites; but no State bank shall print OF en-
grave its notes in similitude of u S note OF
certificate or national bank note
x & = $ i p =
In the case Of State banks the Secretary
says that the guarantee fund will constitute
permanent reserve which, together with the
individual liability of stockholders and the
first lien upon all the assets, will make their
circulating notes entirely safe. In his opin-
ion the imposition of a tax by the Govern
ment upon State banks of issue is an uniusti-
fable if rot an unconstitutional interference
with the authority of States; but as its valid
ity has been judicially sustained and its re-
peal seems impracticable at this time it is
proposed to exempt institutions conducted
under conditions that will protect the holders
of their paper. While direct government su-
pervision ought not to be provided, the re-
quirement that bank must satisfy the Off
Gals of its standing will enable them to adopt
such measures as are necessary to ascertain
material facts
The present requirements Of a deposit of
bonds to the extent of 90 per cent. of the par
value of circulating notes is said to deprive
bank of its resources when most needed. The
necessity for holding a sufficient reserve is
not questioned, but it should, says the Secre-'
tary. be held for actual use when needed. At
present, when bank finds its reserve below
the requirement, 1t is compelled to call in its
loans, thereby increasing distrust, which iu-
dicious use of the reserve would relieve. The
duty OF the government is simply to provide
against loss or depreciation in the peoples
Aa ndS of notes iSsu ed uuder It's authoritu .rlo