The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1894-12-05

OK assa.ns .aa tts prfaefs2I o. demand a. iss
rvsncfpai oesce or At oae OF more o. It's branch
af2 TIE seeresary 81 IRE treasury nsy, un1er
rrcxer rules ard rsxuIafEans 10 Re established
g nm, permit iHeir Eosss 70 = PRIZES e sne
distinctive rspsr Cssi n printing United states
securities o1s no STATE o&ak s1all p-anE cr en-
grave iss notes 1. .Insslfnse O. United States
2ese OF csrtiscats OF asssczsl b1uk note
wzrHpsawaI or PAPEz MONEY
Whatever may be the objections 70 the
Issue and circulation OF United states
legal tender paper upon either consfitu-
tional or financial grounds. il has become
so incorporated into our currency system.
and constitutes 50 large part Of our act
i've circulation. that IL could not be sud-
denly Withdrawn without producing. in
the present state Of our laws, considerable
disturbance IN the financial operations OF
the government IS veil as the business OF
the people. and, therefore, the plan now
suggested provides for the gradual retire
ment by the use Of surplus revenues here
after recsiTed. 8 process which will prob
ably require several years for its compile
ton. As these notes cannot be retired
until other forms of currency OF an equal
amount have taken their place, there will
be neither forced contraction or expansion
OF the circulation on account Of the change.
as the plan suggested proposes 10 exempt
the government OF the nited States from
all liability for the redemption OF national
bank notes and place the sole responsibility
upon the banks themselves, guarantees
fund of NOS less than 30 per cent upon the
outstanding circulation is regarded as
very proper and necessary feature of the
system.
STATE BANK TAX UEJusrrFIARIE
"In my opinion the imposition of tax
by the Federal government upon the use
OF circulating notes lawfully issued by
state banks is an unjustifiable if not an
unconstitutional interference with the
authority of the several states but its
validity has BEEN JudicIaily sustained, and
as IL does not appear 10 be practicable 10
repeal IL absoiu tei y at this time, il Is pro-
posed TO avoid IFS prohibitory effect by
exempting from taxation the notes of such
banking institutions as may be organized
and conducted under conditions which
will amply protect the holders Of their
paper. While direct governmental super
vision Is not and ought not 10 be provided
for, the requirement that a bank, in order
20 secure exemption from taxation, must
satisfy the secretary OF the treasury and
the comptroller of the currency that II has
complied with all the conditions imposed,
will enable those officials TO adopt such
measures as may be- necessary in each
case, 10 secure every material fact involved
in the inquiry.
The NATIONAL BANK EESERNEs
at will be observed that the plan sub
mlsted proposes the repeal of all the pro-
visions of existing laws which require
nationsl BANKS TO hold a fixed reserve
against deposits, and as it is a departure
from the practice which has prevailed
continuously for more than thirty years Il
Is proper TO state briefly the reasons which
have prompted me 10 MAKE this sugges-
ton. When the national banking system
49,.
by many as doubtful experiment at first,
and various precautionary restrictions
were imposed for the security of the note
holder and deposition. which practical ex-
periencc has since shown TO be unneces-
sary and sometimes harmful. Among
these are the requirements that bonds
shall be deposited to secure so per
cent. of their par value ia circaat-
ing notes. and that fixed re-
serve, which cannot be lawfully dimin-
ished, shall be held on account of
deposits. The consequence OF this last
requirement is that hen a bank stands in
need OF all its resources il cannot use them
without violating the law The necessity
for holding q sufficient reserve against de-
posts is not questioned, and in fact the
business OF receiving deposits and dis
counting paper ought never to be con-
Quoted without it, bat lI should De he'd
for actual use when the occasion arises
and not made legally inaccessible at the
very time IL was theoretically supposed TO
be beneficial IN sustaining tie credit Of
the bank and affording relief 10 is Gus
toners. Under the present law, when the
bank finds its reserve IN danger of redue-
ton below the legal requirements Oh
account of the demands of its dspositors
IL is compelled at once to call in It's loans,
thereby increasing the distrust and aggra-
waiting the situation, which q iudicious use
of the reserve would have relisyed aud be-
side, al such times, in order TO protect the
reserve, which Is then practically useless
for all practical purposes, clear
ing house certificates, various forms Of
time checks and bills and other devices OF
doubtful LEGALITY are habituaIiy resorted 10
for the purpose of supplying a circulation
to take the place of the lawful money lying
idle in the vaults of the banks. To pro-
vide for reserve " hich cannot he uti god
even at time of the greatest stringrncy
and distrust, without mourning the penal
ties Of forfeiture, affords most striking
illustration OF the impolicy IF legislative
interference with the natural laws of trade
and finance. LII is not the duty or province
OF the government to control or seEul ste
the private affairs OF the people. except Tor
wel4-dsnned purposes. aud as the cust04y
and use OF funds belonging TO depos.io-s
are matters which affect oaly toe inter
ests OF the Intermediate party, they shoe q
discretion. The duty of the govern
mens, 80 far as it has any duty "a
the premises. IS simply 10 provide
that all the curreacy issGel under
It's authority is sufficiently secured - pre-
vent Its loss or depreciation Ia the haa.ts
Of the PEOPLE, who are conn led 30 re-
celve and pay IL ont in the transactions Vi
business; but a bank Is not dependent
upon abe government for authority 10 re-
eeiye deposits, anu = Use for that purpose
by the public IS az purely voluntary rs
credit extended 10 any other corporation
or 10 private individual Every proaeFsv
managed bank, III LET. free to c0aauel IS
own deposit and discount business Ia the
manner most advantageous 10 ITS own IN
forests and the interest Of as depas.tors.
@ill keep on hand q reasonable reserve tg
meet not only the ordinary demands uuoa
y, but 80 provide log sQcA emergencies as
are liable 30 oscus ia tie Community aEcfe
u Is located; bat u ought nos be prohibited
~ iaS from using such reserve f5r
the only purpose q Ees deSirrtd
10 accom- pllsh. The requirement. that
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