Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1894-12-13
FOR AN ELASTIC CURRENCY
Views of ex-Comptroller of
the Currency Lacy.
HE FAVORS THE CANADA SYSTEM
There the Banks Issue Notes
on Emergency.
In Times of Financial Depression, He
Claims, This Issue Of Notes Relieves the
stringency of the Money Market-How
CaAadiar Banks Helped Chicago.

\ CHICAGO, ILL.,, Dec. 7.-The gentlemen
of the Sunset Club sat down to dinner last
night at the Grand Pacific. Secretary
Post introduced Mr.. Il. S. Lacy, ex-
Comptroller of the Treasury. as chairman
of the after-dinner financial discussion.
In taxing the chair Mr. Lacy. who is
now president of the Bankers National
Bank, outlined what he considered to be
the most need Of reforms in the financial
system. He said that the currency OF this
country lacked elasticity and drew COM
parison between the system in vogue in
Canada and that ofthe Unted.States, with
the conclusion i'll favor of the Canadian
system.
Iii the Canadian banks it was stated that
there was the power to issue notes at any
time to meet an emergency, these notes
being withdrawn when the necessity for
their existence had passed
Mr.. Lacy said that in the panic of 1898.
the ability of Canadian banks to issue
notes to meet an emergency enabled them
to do much to relieve the stringency in the
Chicago money market. When these
notes had served their purpose they were
returned and passed out of existence.
"By empowering banks to issue notes."
concluded MIR. Lacy, there will be an
elasticity of currency that will prevent
stringency."
LIABILITY ON THE BANKS.
WASHINGTON, Dec. 10.-Secretary
Carlisle appeared before the House COM
mittee on banking and currency to-day,
| to present in detail the features Of the
new currency plan proposed in his an
nual report and endorsed in the Presi-
dents message.
Mr.. Carlisle adopted an easy, conver-
sational style of address. He said he
was ready to answer questions from the
committee MS well as elaborate his own
views. He took up each section OF his
recent recommendations.
"First-Repeal all laws requiring or
authorizing the deposit of the United
States bonds as securitysfor circulation.
And second-Permit national banks
to issue notes to an amount not exceed
ing rs per cent of their paid-up and un-
impaired capital, but require each bank
before receiving notes to deposit a guar
antee fund, consisting of United States
legal tender notes, including Treasury
notes of 1890, to the amount of 30 per
cent upon the circulating notes applied
for. This percentage of deposits upon
the circulating notes outstanding to be
maintained at all times, and, whenever
bank retires its circulation, in whole
or in part, its guarantee fund to be re-
| LuTu6u W ~ III pIOpOlhOh W thC dllouih
of notes retired.
Mr.. johnson of Indiana asked if the
Baltimore plan did not contemplate
government liability.
Mr.. Carlisle said the ultimate liability
was on the government by the Balti-
more plan and on the banks by his
plan. The banks were compelled to
keep the safety fund always intact. As
fast as depleted the banks had to bring
it up again.
In practical operation, the secretary
said, the reserve sum was always much
lower than the law contemplated. A
recent investigation showed it was down
to five or six millions, whereas it was
presumably much larger for the purpose
of protection. The proposed plan con-
templates that the current redemption,
as we'll as the final redemption, shall be
met by the banks.
Mr. johnson asked If the ultimate
liability of the government would moi
inspire more confidence in the currency
"Undoubtedly," said the secretary, "li
the United States government stand:
J behind national bank note it inspires
absolute confidence; but my idea is tha
the proposed plan will! ensure ample pro
lection, land therefore ample confidence.
CIRCULATION MAY BE REDUCED.
, "rhe bank may not at once reduce
said the Secretary, "but if the public
I does not want money, the bank will
withdraw circulation, as there will be {
! small tax ON it,
n "The bank will go to the limit of it!
: circulation at the outset, will it notl' >
4. aueried Mr.. johnson.
4 "Probably, yes, at the start" said Mr.
Carlisle, "but if there is no demand foi
A what is issued the notes will be slowly
y but surely retired. The tax on thu
!. notes is not much, but it is enough Il
n keep the issue beyond what the public
v needs
Representative Hall of Missouri asked
r as to the gold provision in the secrc
tary's plan.
n Mr.. Carlisle said this had been put il
J. because of the "gold banks" on thu
: Pacific coast, mainly at San Francisco
4 which had little paper and much gold
e 1t was not intended to apply to th