The record-union., 1894-12-08
Special to the REcoRD-UNTov.

for the speedy consideration of the fnan-
clal plan proposed by the President and
Secretary Carlisle was arranged by the
tfouse Committee on Banking and Cur
rency to-day. Three resolutions were
passed.
The first resolution specifies that Secre-
tary Carlisle and Comptroller of the Cur
rency Eckels be invited before the COM
mittee at 10 A. NJ. Monday, and the hear
ing will close Saturday, December 18th.
The sentiment among the Democrats
was for proceedings as fast as possible,
and reporting The bill before the holiday
recess.
The second resolution authorized Chair
man Springer to invite member of the
committee next week to give their views.
This was carried, although Walker and
Johnson (Reps.) opposed it.
The resolution adopted authorized a
call OF the committee at any time, and
makes i've quorum. This is to pre-
vent delays in the speedy presentation of
the bill.
The meeting disclosed that there would
De no factlous opposition from Republi-
cans toward getting the bill before the
House.
While Mr.. Carlisle's plan is favorably
commented upon by many prominent
members of both houses, there are others
whose opinions are of value, who argue
that the plan proposed by Comptroller
Eckels in his annual report has superior
merit, ana when thoroughly understood
Will meet with general approval. 4
prominent Senator who is recognized as
an authority on financial matters ex-
planned to representative OF the AssO-
clated Press his views on two of the
plans. He said:
mir. Carlisle's plan for currency reform.
when applied 10 practice Will produce
the following result: Taking. for the
purpose OF Illustration, bank having
SIU0,OU0 capital: Such a bank would be
entitled to issue notes up to the limit of
$4,000 20 per cent of the capitaD. But
before doing SO must deposit legal ten
der notes 10 the amount of 81. 500 go
per cent. of circulation. This in effect
would be equivalent TO a net issue of
So, 800 in circulation by the bank, or
900 received in notes from the Gov
ernment, minus 81, 800 in notes depos-
tied with the Government. Upon this
So, 500 OF currency the bank would earn
its profits, provided it could keep them
In circulation, alter deducting costs for
redemption tax for safety fund and tax
for administration of Comptroller's bu-
reau. AS q plan for relieving the Gem
eral Government from the burden and
charge for redeemiDg United States
notes. it would, according to the Secre-
tary'S estimate, result in securing the
temporary deposit of S22l 900, 600 OF these
notes with the Government, if the ma
tional and State banks now in existence
should take out circulation to the full
amount proposed.
Let US see how this result could be ar
rived at. Atpresent the capital Of all ma
tional banks in existance is about $685.
000,0G0.. Ii to this is added S332 000, 900 as
the capital of State banks availing them
selves of the privilege, a. total capacity of
81 ,000, 600 600 would be had as the basis
upon which TO issue money. Assuming
that all the banks possessed of this cap
ital issued currency up to the full limit of
10 per cent, we VIII have an issue of
bank currency to the amount of 500, OOO.-
900. Against this legal tenders to the
amount OF 80 per cent of circulation must
be deposited, or S225, 100000. What will
be the effect of this upon the volume OF
money in circulation? Add bank notes
issued, $50 000, 900, less national bank
currency retired, Sl72 000, ,O00 legal ten
ders, deposited and withdrawn from cir
cuIaJiOn, S22o, COS, 900; total 1897 ,000, ,UOO
Net increase in circulation, S353, 900, 600.
Assuming that this increase could be
kept in circulation, withdrawal of S225,-
000,000 of United States notes is effected
temporarily, but as there are sos, 600, 900 of
these altogether outstanding, there would
still remain outstanding a major portion
OF the mass of about 81, ,000, 600 to haFass
the treasury by presentation for redemp-
ton in gold. If the $3.50, 600, 900 is not
kept in circulation, the amount of legal
tender secured by redemption of circula-
ton would be added to the large sum
now funded. Again, if the legal tenders
deposited by the banks are to be used for
redemption OF these notes on presenta-
ton, there would be no difficulty in pro-
curing any amount of them by present.
ing bank notes.s
$50 much for the practical working of
the Secretary's plan, and we now take
look at the plan proposed by Comptroller
Eclleis. As he gives few figures on which
TO base compilation, but simply outlines
the principles of the plans, only nv.
pothetical illustration of its practical
workings can be made. Taking bank
with 100000 capital, as in the other case,
the Comptroller's plan appears to require
that that bank deposits with the treasury
$4,000 in United States notes or legal ten
ters (for cancellation in exchange for
which it will Immediately receive $40, ,O00
in bank notes for the current redemption
of the bank notes of this class upon the
failure of liquidation OF the bank. This
| feature, therefore, Is neither expansion
nor contraction of the currency: simplv
the exchange of one kind of currency for
another just as good, but for the purpose
and with the effect of entirely relieving
ll0 Ol DuTuGn ana cost OF
current redemption during the existence
of the bank receiving and issuing the
same.
Under this branch of the ComptrolIer,s
plan, with the present capital of national
banks, viz, S66S 600, 600, S334, ,00O coo of legal
tender would be Immediately retired and
withdrawn from the possibility of being
redeemed in gold by the General Govern
ment, while banking capital of ST.
| 100000 you'd serve as basis for retiring
| the entire issue, both of United States
and Sherman Act notes, amounting to-
gether to about SOS, ,000, ,00O
Passing to the other feature of Mr..
! Eckels' plan, it is found that bank with
| 500, 900 capital could also issue as much as
$4,000 OF safety fund notes, constituting
a first lien upon its assets and upon the
| liability of its shareholders, and redeem
able upon the failure of the bank
promptly out of safety fund.- created
| by light tax upon all banks issuing this
kind of circulation. 1t is upon this class
of notes that the banks should make a
profit which should be clean one over
and above the light expenses for cost of
redemption and taxation for the safety
| fund. and for the cost of operating the
Comptroller's bureau. It is on this class
of currency that the element of elasticity,
would be found, Tor which the banks
could issue either none at all or as much
as 30 per cent. of its capital.