Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1894-12-05

The Issue of Bonds.
During the last month the gold reserve in the
treasury for the purpose of redeeming the notes
of the government circulating now In the hands
of the people became reduced, and its further
depletion in the near future seemed certain,
THAI it became necessary to repenish the reserve
and thus maintain popular faith in the ability
and determination Of the government to meet,
as agreed, it's pecuniary obligations. 1t would
have been well if, in this emergency, authority
bearing low rate of interest and maturing
within short period. But the congress having
failed to confer such authority, resort was neces
sarlly had to the resumption act of 1919. and,
pursuant to it's provisions, bonds were issued
drawing interest at the rate of per cent. per
annum ana maturing ten years after tnelr IS
sue that being the shortest time authorized by
the act | am glad to say, however, that on
the sale of these bonds, the premium received
operated to reduce the rate of interest to be
paid by the government to less than per cent.
from sensible finance than the relations existing
between the currency the government has issued,
which must be resorted to for the pur-
pose of replenishing such redemption fund when
were confined to the obligations originally in
tended, and if the redemption of these. obliga-
lions meant theN cancellation, the fund would
be very small. BIT these obligations, when
ceived and redeemeN in gold, are not cancelled,
by way of drawing gold from the treasury.
Thus we have, an en%ess chain in operation
never near a final rest. AS if this was not bad
enough, we have, by statutory declaration
maintain parity between gold and silver, aided
the force and momentum of this exhausting
process and added largely to the currency OBJ
legations claiming this peculiar gold redemp-
ton. Our small gold reserve is thus subject
our danger also increase the necessity
Of protecting this reserve against depletion, and
lection afforded is only a temporary palliation.
1t is perfectly and palpably plain that the only
way under present conditions by which this
serve, when dangerously depleted be
plenished, is through the issue and sale of bonds
of the government for gold; and congress has
declined authorize
of bonds best suited to such purpose, but there
seems a disposition in quarters to deny
both the necessity and power for the issue of
I cannot for a moment believe that any of our
citizens are deliberately willing that their gov
eminent should default in It's pecuniary o6l1ga-
reduced to silver basis. At any rate, l
should not feel that my duty was done if I
calamity. AS long, therefore, provision
is made for the final redemption or the putting
repeatedly and constantly draw from the gov
eminent its gold and as long as no better au-
thorityL for bond issues is allowed than at
present exists, such authority will be utilized
whenever, and as often as it becomes necessary
to maintain sufficient gold reserve and in
abundant time to save the credit of our country
and make good the financial declarations of our
FavOrs n New Currency System.
Questions relating to banks and currency
are closely connected with the subject just re-
ferred to and they also present some unsats-
factory features. Prominent among them
the lack of elasticity in our currency circulation
and it's frequent concentration in financial cen
ters when it is most needed in other parts of
the country The absolute enforcement of the
government from the business of banking is the
ideal relationship Of the government to the cir
culation of the currency of the country. This
condition cannot be Immediately reached, but
a step in that direction, and as a means of
securing Il more elastic currency and obviating
other objections to the present arrangement Of
bank circulation the secretary of the treasury
presents in his report a scheme modifying pres
ent banking laws and providing for the issue of
circulating notes by state banks free from taxa
ton under certain limitations. The secretary
explains his plan plainly and its advantages
ness that any effort my part to present argu-
ment in its support would be supertluous. shall
endorsement of the secretary's proposed changes
in the law and q brief and imperfect statement
of their prominent features.
The Proposed Plan.
1t is proposed to repeal all laws providing for
the deposit of United States bonds as security
for circulation; to permit national banks to Is
per cent. of their paid-up and unimpaired capt.
tai, provided they deposit with the government
der notes, including treasury notes of 1890, a
sum equal in amount to 80 per cent. of the notes
they desire TO issue. this deposit to be main
tained at all times but whenever any bank re-
tires any part of its circulation a proportional
it; to permit the secretary Of the treasury to
prepare and keep on hand ready for issue In
case increase in circulation is desired, blank
national bank notes for each bank having cir
cuatiOn and to repeal the provisions of the pres
ent law imposing limitations and restrictions
upon banks desiring to reduce or increase their
cfrculation-thus permitting such increase or re-
duction within the limit of rs per cent. of CAPT
tai to be quickly made as emergencies
arise In addition to the guarantee fund re-
fund for the immediate redemption Of
the e1Tcuitng notes OF failed 90 banks ,a 6y
of per cent. upon the average CIRCULATION of
each bank until the fund amounts to 3 per cent.
OF the total circulation outstanding When a
bank fails, its guarantee fund is to be paid into
this safety fund, and its notes are to be re-
deemed in the first instance from such safety
fund thus augmented-any Impairment of such
fund caused thereby to be made good from the
Immediately available cash assets of said bank
and if these should be insufficient, such i'm
pairment to be made good by pro rata assess
ment among the other banks, their contributions
constituting a first lien upon the assets Of the
failed bank in favor of the contributing banks
the existing provision fixing the individual liza
bility of stockholders is to be retained and the
banks Indebtedness on account of its circulat-
ing notes is to be made a first lien all it's
assets For the purpose of meeting the ex-
cancellation and other like charges, there shall
be paid a tax, say one-half Of 1 per cent. per
annum the average amount of notes in circu-
lation. 1t is further provided that there shall
be no national bank notes issued Of less de-
nomination than $40 That each national bank
or retire its notes in the first instance at it's
and that no fixed reserve need be maintained on
account of deposits
Exemption of State Banks.
Another very important feature of this plan
is the exemption of state banks from taxation
to the satisfaction of the secretary of the treas
ury and comptroller of the currency by banks
claiming such exemption that they have not bad
outstanding their circulating notes exceeding rs
per cent. Of their paidup and unimpaired capt.
tai; that their stockholders individually liza
BILE for the redemption of their circulating notes
to the full extent Of their ownership of stock;
that the liability of said banks upon their cir
culating notes constitutes under their state law
first lien upon their assets; that such banks
have kept and maintained a guarantee fund in
United States legal tender notes including the
treasury notes of 1890 equal to 80 per cent. Of
their outstanding circulating notes, and that
such banks have promptly redeemed their circu-
lating notes when presented at their principal or
branch offies.
1t is quite likely that this scheme may be use
fully amended in some of it's details; but am
satisfied it furnishes a basis for very great
Improvement in our present banking and cur
rency system
L conclude this communication fully apprre-
ciating that the responsibility for all legisla-
ton affecting the people of the United States
rests upon their representatives in the congress
and assuring them that whether, in accordance
with recommendations | have made not.
shall be glad to cooperate in perfecting any
legislation that tends to the prosperity and
, welfare of country.
GROVER CLEVELAND.
Executive Mansion, Dec. 3. 1894.
MAY LOSE HIS LIFE.