The representative. [volume] (St. Paul, Minn.) 1893-1901, 1894-12-05
AGAINST THEIR. ASSETS

~ al amount eQudl 10 dt FEAST % per cent
| OF their unimpaired capital"
| The comptroller foll6wsRthis suggestion
| with the further one 9or the maintenance
of safety fund to bel provided by gradu-
! ated taxation upon the outstanding crcu-
| lation of the banks until Tie same shall be
| equal to not less than 81 per cent of the
total OF such outstanding circulation, this
| fund to be held by the government an
agent only and for THE 5purpose of inn
| mediately redeeming the NOTES of insolvent
banks 1t is immedia tely to be replenished
out of the assets of the banks, on which
it shall have a first and paramount lien
and from assessmentsto the extent of the
double liability on the shareholders The
| comptroller says: u
Whatever other changes, if any, it would
be necessary to make IL the present system
| relative to current redemption of bank
! notes and the governments position tow
ard the same and kindred matters, it is
not necessary to set forth. If the recon-
| menda ton here made together with that
which will follow, should receive consider
| alton at the hands of congress bill drawn
after careful study and investigation of the
| whole subject would necessarily embody
all the details incident to a change from
| bond to a safety fund security a basis
i for bank circulation.
| The comptroller then cites such proof
| and gives such statistics as seem to him
| to make the suggested a perfectly safe
| plan to enter upon. He says:
| THE changes thus outlined will, upon in
| vestigation, it is believed, prove to be safe
| in affording complete security to the rote
| holder and give to the business interests
| of the country bank note issue responsive
| to their needs
| Continuing, the comptroller says: "The
| profit upon the issue of circulation to the
| banks by such change would be aug
mented that it is giving to them a fran
| chse, for which it is suggested they should
| be called upon to make proper returns to
rQtJ1 she
not, however, be of such a character as to
DEFEAT THE ENDS
| sought in the privilege given. The cur
| rency redemption of the legal tender is
| sues, and the treasury issues under the
| act of 1890, and the reissuing instead Of
| cancellation of the same must always ere
| ate distrust of the country's credit abroad
and at home so long as the laws now upon
the statute book remain unchanged.
The general government ought to be
| wholly free from the direct issuing and
redeemng of notes to pass as money
among the people. No government has ever
Yet successfully engaged in so doing and
| the experience of the government of the
| United States has proven exception to
| the rule. The general cost and loss en-
! tailed upon the government and the periods
| of uncertainty IS to the governments ere
dit and the stability of our monetary
system, have been so great as to make
| the legal tender and treasury issues of
| 1890 one Of the extraordinary burdens placed
| upon the people.
"These issues ought to be redeemed and
| cancelled and the government thus enabled
| to retire from the banking business, a
| business for which it is poorly equipped.
| The intention of those who first author
| lied the legal tender issues was that it
should retire at the earliest practicable
moment. The first congressional enactment
| signed by President Grant after his in
| auguration chief executive was one
| reasserting the determination of the gov
eminent to preserve unquestioned the pub
| lie faith and the closing clauses of it
was: And the United States also solemnly
pledges itself to make provision at the
| earliest practicable period Vor the redemp-
ton of United States notes jim coln.'
In the light of the present condition
| of the governments finances, that which
| ought to have been done when there was
a surplus in the treasury cannot now be
undertaken and the samesconditions must
continue to weaken the 'country's credit
and plague the liner Of business, unless
| a means is devised for removing these
| issues from the channel of current re-
demption until such tfrGe as the government
finds itself in a position 10 do that which
at first was the intentsof 4ll-gradually re-
deem and cancel them. The
| ULTIMATE REDEMPTION OF COIN
of course must all be- upon the govern
ment, but the embarrassment does not
arise from their ultiNste,2 but from their
current REDEMPTION -; e
| 1t IS, therefore suggested Cndt IL con-
/ gress shall repeal the provisions of the
| present act requiring 1.-THE natiOhafe banks
| to make deposit of government bonds in
order to secure CIRCULATING notes and sub
| stitute therefor provision giving them in
| stead the right to issue the same against
their assets it Incorporates therein, and as
| part thereof that as prerequisite to
| so doing the banks be compelled to de-
post with the treasurer of the United
| States legal tender issues or issues under
Yo1 in, nY1Y1f fn h0 r
ference between the percentage of their
| capital stock of issues granted against
| their assets and the total OF such capital
stock The deposits thus made ought to
remain with the treasurer until the bank
| ceased either through voluntary in
voluntary liquidation, to do business, and
in either case the government ought then
to redeem and cancel such treasury notes
deposited.
..As against this deposit of legal tenders
and treasury notes so made there should
| be issued to the banks, dollar for dollar,
| national bank notes, either of the same or
different design as might be deemed best.
| The percentage of the bank notes issued
| against this deposit should be free from
| any taxation imposed upon circulation and
| ought to be such percentage as is deemed
| equitable to be used as a part of the
banks legal reserve held against deposits.
The government should not undertake or
| in any wise become responsible for the
current redemption of these notes. It's re-
! sponsibility should end with it's redemption
| of the notes deposited to secure such cir
| culation when the bank
| 1858 CEASES TO EXIST.
| At present a current redemption fund of
| 5 per cent of the outstanding circulation
| is found sufficient and it is probable that
| in the future no greater amount would be
| required.
| 1.-THE elasticity of issue in the national
bank circulation will be found in the per-
| centage of issue against assets subject to
the necessary rate of taXatiOns and insured
by an adequate safety fund to guarantee
the note holders against loss. The govern
ment will he aided the bank given in eX-
change a dollar for every dollar deposited
and thus relieved the loss incident to de-
posting an amount of it's capital stocks
in excess of the return in notes granted it.
No violent contraction of the currency
would follow such course, but whenever
contraction has occurred it would be not
less gradual than at other times the ex-
| pansion incident thereto.
| ut is suggested that as a necessary ele-
| ment to the securing of proper elasticity
| of issue in our bank note currency, sec
ton g. act July H. 1892, regulating the
| retirement and issuing of circulation to
banks within a fixed period of time should
| be repealed, and also that an amendment
should be made to the law necessitating
the banks keeping in the, office of the
comptroller of the currency a sufficient
amount of blank notes as will enable them