The Washington times., 1894-12-03
CURRENCY OF THE COUNTRY.
Suggestions Regarding Change in the
National Bank Law.

Suggestions Regarding a Change in the
National Bank Law.
The report OF Hon. James II. Eckels, Comp
troller of the Currency submitted tc Congress
to-day, gives full information in regard to the
organization. supervision. and liquidation Of
the national banks for the year ended Octo-
ber 81, 1894.
The feature of the Comptroller's report is
its discussion of the currency question and
the defects which are said 10 exist in the note
issuing powers vested in national banks.
1T is a duty OF government" he says, "to
see that the currency which circulates among
the people shall always be Of the highest
character the soundness OF which should
never be a subject of inquiry. For thirty years
the American people have had such bank
currency, and having seen the value of 1t
both here and abroad they will not be con-
tent to have any innovation made unless such
new departure insures not only equal. but
better results.
lit is respectfully suggested that only as
good, but better results would be attained if
the present bank act were amended by repeal
ing the provision thereof requiring each
bank, as prerequisiteto TO entering the system
and issing bank note currency, to deposit
government bonds. In lieu OF such provision
should be- substituted one permitting the
banks to issue circulating notes against their
assets to an amount equal to at least 90 per
cent. of their unimpaired capital.
In the light of the present condition OF the
governments finances y the Comptroller con-
tinues. that which ought to have been done
when there was a surplus in the Treasury
cannot be undertaken and the same condl-
tions must continue 10 weaken the country s
credit and plague the lines ofbusiness unless
a means is devised tor removing these issues
from the channel of current redemption until
such time as the government finds itself in d
position to do that which al first was the in
tent OF all-gradually redeem and cancel
them
If the franchise is granted the banks of is
suing circulating notes against their assets
instead OF against bond security. 1t is sug-
gested that the banks II re turn should recon-
pense the government by relieving the Treas
ury Department of the current redemption in
coin of the present Treasury issues. The ul-
innate redemption, ofcourse. must fall upon
the government, but the embarrassment does
not arise from their ultimate, but their cur
rent redemption.
1T is therefore suggested that II Congress
shall repeal the provisions of the present act
requiring the national banks to make a de-
posit of government bonds in order to secure
circulating bonds in order TO secure circuiat-
ing notes, and substitute therefor provision
giving them instead the right to issue the
same against their asserts, it Incorporates
therein and as part thereof that as prereq-
uisite TO so doing the banks be compelled to
deposit with the Treasurer of the United States
legal tender issues or issues under the act OF
1890 equal in amount to the difference between
the per centage 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 Treasury until the bank ceased,
either through voluntary or involuntary LID
uidauon. to do business, and in either case
the government ought then to redeem and
| cancel such Treasury notes deposited. 1t is
| only by such deposit during the life of the
| bank that the issues named can be removed
| from current presentation for redemption.
'The elasticity of issue i'll the national bank
circulation will be found in the percentage OF
! issue against assets, subject to the necessary
rate OF taxation. and secured by an adequate
| safety fund to guarantee the note-holders
! against loss on account of the notes of insol-
! vent banks and current redemption fund
! maintained for daily redemption, and the
| government will be aided, the bank given in
| exchange dollar for every dollar deposited,
! and thus relieved of the loss incident to de-
| posting an amount of its capitoal stock in
! excess of the return in notes granted it. No
violent contraction of the currency would
! follow such a course; but whenever contrac.
ton occurs, it would not be less gradual than
st other times the expansion incident thereto. y