The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1894-12-11

Mr.. Carlisle said this would be the
case until the end OF the year when
the tax became payable; the bank
/ would be free to issue its notes as it saw
fit but with the knowledge that It
would have to pay the tax If the gov
eminent conditions were violated
Mr.. Springer asked why the state
banks Should not be subject to exactly
the same conditions of reserve etc, as
national banks. Mr.. Carlisle added
that. in his judgment the tax on state
banks vas unconstitutional The courts
thought otherwise. however.
AT this point Mr. Carlisle said he
would submit his bill and appear to-
morrow II desired to go over it in de-
tail. It was arranged to have the bill
printed
Comptroller EcIxeIs Appears.
A recess was taken until 2 clock
When the committee re-assembled.
Comptroller Eckels appeared and made
his statement Nothing, he said, ought
to be dine by Congress looking to a
change Of the present banking system
unless the resultant effect should be
beneficial both to the banks and public.
The extent of the banking interests Of
the country, represented in capital of
$3.50. 000. 0O0 in deposits So. 400, 900, 900, and
in depositors about 1900, 600. Such enor-
nous interests being invoived, any new
system to be inaugurated must at the
outset command the confidence Of the
people. The national banks system now
in vogue might be said to be a national
habit. Most of those who made use of
1T knew little or nothing of the new
system Therefore, nothing in the
present system should be altered until
1t could be improved upon to the pro-
motion of bushes interests of the peo-
pie. In this country. the note issuing
function was an incident, the deposit
accounts the principal. In other coun-
tries 1t was different. IN France, Ger
many and Russia, the issuing function
was paramount In England, ireland,
Scotland and Canada the system more
nearly approached ours. The scheme
which he had suggested in his report
was intended to disturb as little as
possible the existing order of things.
In order to make any system success
full, the notes issued must be immed-
lately, not ultimately, convertible into
coin. This was the first consideration.
After this came, If the banks could be
given the power to expand the curv
rency in times of stringency, the two
main objects of a currency system would
be obtained. In this system he pro-
posed so per cent deposit upon which
bank notes could be issued To the ex-
tent of deposit these notes were csnso-
lutely safe. The other so per cent
would be secured by safety fund
raised by proper taxation. Frankly he
did not consider such deposit neces-
sary, but the exigencies of the war
made 1T necessary. The legislation of
that period had created a currency
which in and Of itself, in his opinion.
could not have maintained itself had
not the government endowed it with a
legal tender quality.
Danger to Orr Credit.
The existence OF these legal tenders
today was the greatest danger to the
credit of the United States at home
and abroad. Compared to it, the defects
of the banking system were only an
inconvenience. The legal tenders called
Tor gold and must by law be reissued.
The drain of gold could be made con-
unuous and the confidence of the people
would be shaken both here and abroad
AS long as trade relations between this
and other countries existed, our none
tary laws must be regardful of the sys-
TENS Of other countries. The public
credit abroad must be maintained by
the redemption of those. notes in gold.
Undoubtedly the manly thing to do.
he said, was to redeem and to retire
the notes. The authority TO do this had
been given Secretary McCulloch, b,It it
had been. rescinded. 1t could be done
now out Of the surplus revenues or by
means of funding bonds. It was now
proposed to give the banks a valuable
franchise, and it was proper that they
shall make a fair return. In order to
secure the current redemption of those
legal tender notes, the banks, fcr the
privilege Of issuing notes on their cap
ital stock against their assets, should
be made to deposit legal tenders with
the government as a reserve fund. To-
day under the national banking act
S165, 100000 of legal tenders he'd for re-
serve funds were taken out OF circula-
ton. Under his system he proposed 80
per cent. Of the circulation would be
deposited in legal tenders, for which
circulating notes would be issued dollar
for dollar. This would in no wise de-
crease the volume of currency. The
operation of this plan would be to inn
lnediately withdraw S340, 900, 900 of the
legal tenders from the $3.50, 600, 900 of
legal tenders now used to drain the
treasury of gold. This should be done
by every bank for the privilege Of a
future issue Of notes against its as
sets. Now unless there was a. sufficient
profit in circulation banks would not
matter. The complaint under the pres
ent system was that there was no pro-
fit in circulation. About $207, 900, 900 in
national bank circulation was outstand-
ing. Certainly under the proposed SyS-
tenn there would be a considerable pro-
fit in the present circulation and in
times of demand the profit by taking
cut notes against assets would Tnateri-
ally increase. As to the question of
elasticity. it was governed by two
things-the demand and the in1medi-
ate convertibility of the notes. To the
extent of 30 per cent. of the notes the
currency would be elastic. This plan
would relieve the treasury of $4,000 600
of greenoacks and furnish an elastic
currency for the people and a proflta-
BILE currency for the bank. He argued
the inherent right OF the government
TO make issues of legal tender bat
questioned its expediency. AS to the
safety of the notes, history would re-
peat itself. 1t was safe to say not a
note would have suffered loss if gov
eminent bonds had not been deposited
in the treasury vaults here. The act of
1874 in England pretends TO have been
enacted to make the note holder of the
Bank Of England secure, yet
as matter of fact it was an act to
limit the circulation. The f15,000,000 Of
uncovered notes of the bank that is
those who had not pound of gold be-
hind them) were just as secure as those
covered by gold. The act of 1874, Which
attempted to fix the amount of I'M
covered notes, had to be amended three
years later to give the Bank of England
authority to issue above the amount
fixed by the pool act. The notes is
sued by the Bank of England I'M
covered have always been as good as
others. The best assets of any bank
or other financial institution was re-
deemable paper. This was apparent
during the panic last year, when bonds
dicnoCa of while cOy1 ueJ.ti-