The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1894-12-11

itory tax.
State bank could not issue Its notes for
a year without observing conditions or pay
ing the tax, as the tax was payable an
Mr. Carlisle said this would be the case
until the end of the year, when the tax
to issue its notes as it saw fit, but with
the knowledge that 1t would have TO lay
the. tax If the government conditions we're
violated.
Mr.. Springer asked why the State banks
should not be subjected to exactly the same
conditions of reserve, ETC., as national
Mr. Carlisle said that in his Judgment
the tax on State banks was unconstitu-
tional. The courts thought otherwise, how
ever. At this point Mr. Carlisle said ne
would submit his bill and appear tomorrow
n Was arraneed sde to 70 have the the nl printed
A recess was taken until o'clock
Controller EciSels's Statement.
When the committee reassembled Control
Ter of the Currency Eckes appeared and
made his statement. Nothing, he said,
ought to be done by Congress looking to
change of the present banking system,
unless the result should be Beneficial
both TO the banks and the public. The ex-
tent Of the banking interests of he coun-
ry represent in capital $3.50, 0O0; in de-
posits, s., 400 900, 600 and in depostors about
100000 Such enormous interests being in
viewed, any new system tc be ;naugurated
must at the outset command the confidence
Of the people. The national banking sys-
tenn now in vogue might be said to be
national habit. Most of those who made
use of it know little or nothing of other
systems. Therefore nothing in the present
system should be altered unless it could
be improved on to the promotion of the
business interests of the people. In this
fha
incident, the deposit accounts The prlnci-
pal. In other countries ii was different. In
France Germany and Russia the issuing
junction was paramount In England,
Ireland. Scotland and Canada the system
more nearly approached ours.
The scheme which he mad suggested in
his report was intended to disturb as lit
tie as possible the existing order OF things
In order to make any system successful
ultimately, convertible INTO coin. This was
the first consideration. After this came. if
pand the currency W n times se Of strinvenex
the two main objects of a currency system
would be obtained. In his system he had
bank notes should be issued. TO the ex-
tent OF the deposit those notes were abso-
lutely safe; TIE other SO per cent would
be secured by safety fund raised by proper
taxation. Frankly he did no. consider such
deposit necessary. But the ex'gencies of
ton of that period mad created a currency
which, in and of itself. in his opinion, could
not have maintained itself had not the
government endowed it with lega; .enoer
quality. The existence OF these legal ten
dres to-day was the greatest danger to The
| credit or the United states at nome ard
abroad. Compared to it me defecfs of the
banking system were only an Inconvenience
| The legal tenders called for gold anil must
BY law DC reisSueds The drain of gold could
| be made continuous and the confidence of
the people must be shaken both here ard
| abroad. AS long as trade relations be-
| tween this and other countries ex.sted cur
| monetary laws must be regardful of the
| systems of other countries. The putl lie
credit abroad must lie maintained by the
redemption Of those notes in gold. Un-
| doubtedly the manly thihg 20 DO, he said.
| was to redeem and 10 retire these notes.
| given Secretary McCullocl but !, had teen
! rescinded. 1t could be done now OUT IF the
surplus revenues or by means of funding
| bonds.
NATIONAL BANKS.
| 1t was now proposed to give the banks
| valuable franchise and it was proper that
they should make a fair return. In order
| to secure the current redemption of those
| legal-tender notes, the banks, for the priv
| ilege of issuing notes on their capital stock
| against their assets should be made to de-
| posit legal tenders with the government as
| reserve fund. To-day, under the national
! banking act, $165, 100000 of legal tenders
held for reserve funds were taken out of
| circulation. Under the system he proposed
80 per cent. of the circulation would be
| deposited in legal tenders, for which cir
| culating notes would be issued dollar for
| dollar. This would in no wise decrease the
volume of currency. The operation of this
| coo of the legal tenders from the
| S4SO,OoOOOO OF legal tenders now used to
drain the treasury of gold: This should be
done by. every bank for the privilege of
| future issue of notes against its assets
| Now, unless there was sufficient profit in
circulation banks would not take. it out.
L ma for ho
plaint under the present system was that
/ there was no profit in circulation. About
s2Ol, 100000 in national bank circulation was
| outstanding. Certainly, under the proposed
| system there would be a considerable profit
| in the present circulation, and in times Of
demand the profits, by taking out notes
| against assets would materially increase.
| AS TO the question of elasticity, elasticity
| was governed by two things-the demand
notes To the extent of so per S cent % Of the the
| notes the currency would be elastic This
plan would relieve the treasury of $4,000 :
| 600 of greenbacks and furnish an elastic
| currency for the people and profitable
| currency for the banks. He argued the
inherent right Of the government 10 make
| issues of legal tender but questioned its
| expedfency. As to the safety of the notes.
| history would repeat itself. 1t was safe
loss if government bonds had not been de-
| posted 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 mat
ter of fact 1T was an act to limit the circu-
| lation. The ff5.000 900 of uncovered notes
| of the bank (that is. those which had not
| a pound of gold behind them) were Just
| secure those covered by gold The
| act of 1874, which attempted to fix the
amount OF uncovered 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
issued by the Bank OF England uncovered
| have always been good as others The
| best assets of any bank other financial
institution were redeemable paper This
| was apparent during the panic last year
| when bonds were hard to dispose of while
| convertible paper was acceptable every
| where. The bank assets and credit behind
| the uncovered notes to be issued under the
| proposed system for this country would
| make them entirely safe. Mr.. Eckels said
| in conclusion that while Secretary Car
| Isle and he agreed TO the general prn-
ciples they differed somewhat as TO meth
1 DDS.
| The members of the committee then PRO-
pounded their interrogatories. In reply 70
| Mr. Johnson he said that in his opinion the
| dangers of State bank circulation were
| overestimated. 1t should be remembered
that thirteen States by law prohibited such
| issues.
| In reply to Mr.. Brosius as to whether
with the large amount of money in circu-
lation OUTSTANDING there any urgent
| necessity for change of the system, Mr.
Eckels replied In the negative as far as
| the necessity for a greater abundance OF
| money was concerned. but emphatically fn